Just one city of 331,000 (and shrinking). Just one workforce. A $20 million shortfall (not $9 million-read the whole excerpt), per year:

Cincinnati taxpayers may have to chip in at least $9 million more a year to the city’s pension fund to keep it funded at current levels, according to actuarial reports submitted to City Council last week.

The report likely will force City Council to make a decision that it put off in March, when the $2.28 billion Cincinnati Retirement System proposed cutting health care benefits to keep the system solvent.

“It’s a big budget issue,” said William E. Moller, the city’s finance director and secretary to the pension fund’s board of trustees. “The system is not in what you would call bad shape. But you raise the funding now because you don’t want to get into a situation you can’t recover from later on.”

Under city ordinances, employees pay 7.32 percent of their paychecks toward retirement, with the city picking up whatever’s needed to keep the system fully funded.

Some years, big investment gains mean the city doesn’t have to pay anything. But next year, the city will have to put in 23 percent of payroll, the actuarial reports say.

The problem: City Council budgeted only 11 percent.

That leaves a $20 million hole to fill. Of that, $11 million comes from self-sufficient city departments – like Water Works and Sewers – that rely on ratepayers for income (that could mostly be privatized at huge savings to taxpayers/ratepayers–Ed.). The remaining $9 million comes from taxpayer-supported departments, leaving less money in the city’s discretionary budget.

This is one small example of a very big problem (about 1/3 of the way through the linked page) in most of the nation’s state and local public pension systems:

More important, there’s another, more ominous trend that threatens to unravel state and local fiscal stability. Rising pension and healthcare costs for retirees and active workers could soon crowd out current outlays for municipal services and require still-higher property and sales taxes. Data on public pension funding needs are notoriously difficult to come by. For example, Federal Reserve data show all state and local government retirement funds had assets of $2038 billion at the end of 2003, and a Wilshire study of 123 state retirement systems found that they were 82% funded at that time …. Extrapolating that to the total of all state and local funds implies a $447 billion funding gap.

But the Wilshire study does not examine whether the actuarial and return assumptions in these calculations are realistic, and the history from private plans hints that they may understate liabilities.

For some perspective: The $447 billion, if correct (and as noted, it could very well be understated), is about 25% of the Social Security NOdometer reading (about $1.73 trillion at the moment) on the left frame of this page–for roughly 11% of the total workforce. *

The current state and local public retirement systems are even less sustainable than the current Social Security system.

This situation represents just one reason why citizen initiatives like the Ohio Tax Expenditure Limitation (TEL), which is on track to appear on the ballot in November 2006, are so important:

Citizens for Tax Reform’s Tax Expenditure Limitation (TEL) Amendment limits state and local government annual spending growth to 3.5 per cent or the sum of the rate of inflation plus population growth. Any year-end unspent revenue over 10 per cent of the budget is to be refunded to taxpayers. Local governments receive a guaranteed five per cent of the previous fiscal year’s aggregate state expenditures, and unfunded mandates are forbidden.

Left on autopilot, public pension costs will bust these perfectly reasonable limits annually. Left to their own devices, lawmakers have shown that they will do anything they can to increase taxes rather than face up to the problem. TEL-like restrictions will force the hard and necessary public pension choices before they eat state and local budgets and economies alive. Experience has shown that nothing else will work.

* – There were 5 million state employees and 14 million local employees in July 2005, according to the Bureau of Labor Statistics (go to the bottom). A 1998 BLS report (PDF, not linked) that is apparently the latest available indicated that 14 million state and local employees had traditional pension coverage; I would estimate that number to be 16 million now based on population and government growth. The 11% referred to above is that 16 million divided by total national employment of 142 million as of July 2005.

From Willisms.com, as he reviews inflation and the historically low level of the misery index (sum of inflation plus the unemployment rate):

Inflation is low, unemployment is low, GDP growth is consistent and strong. It’s time to start calling B.S. on people still bad-mouthing the economy. Just call B.S. Just call B.S. and leave it at that. The evidence is too one-sidedly staggering anymore to pretend like there’s even a debate to be had.

BizzyBlog being the careful person that he is, I would characterize myself as cautiously optimistic. But I’m a lot closer to “Mr. Willism” than I am to the histrionics (regularly fisked here) of Master of Economic Disaster Paul Krugman.

Oh, those evil car companies!

Hybrids with horsepower (link requires registration; HT Scrivener)? The New York Times does not approve:

Speaking of which, isn’t that what hybrids are all about: conservation, improved fuel economy, weaning the nation off its oil habit? Perhaps not any longer.

The hybrid version of the Lexus sport utility wagon follows in the tracks of the 2005 Honda Accord Hybrid by offering more horsepower than the conventional version of the same vehicle, a markedly different approach than that of economy-focused hybrids like Toyota’s own Prius or Honda’s Civic Hybrid. In this case we’re talking 268 horsepower for the RX 400h, versus 230 for the gasoline-only RX 330.

True, Toyota is not marketing the RX 400h as being environmentally friendly, focusing instead on its performance and typical Lexus luxuriousness. While this may provide the company some absolution, the RX 400h’s failure to deliver, in my experience, even a nominal improvement in gas mileage still seems like a sin of omission. It has been fundamental to the understanding and acceptance of hybrids that they offer better fuel economy than vehicles powered by conventional gasoline engines.

Even at $2.50 – $3.00 per gallon, at least some consumers want power first, environmentalism second. How dare Toyota, Honda, and Lexus meet their wishes?

Instead of the intended fuel economy subsidy Scrivener points out that the $2,000 tax credit a consumer receives for buying a hybrid vehicle amounts to a federal horsepower subsidy.

Maybe it’s time to buy “someone else’s problem”

As might be expected when all new cars from General Motors and Ford have been sold at the employee discount price for the last 60 days or so, USA Today reports a glut of used cars, and that good deals can be had.

GM Ahead of Ford in Blogs

Not that it will be the cause of a complete corporation turnaround, but General Motors’ blog is pretty impressive.

The GM Fastlane Blog is apparently the logical outgrowth of what Bob Lutz started earlier this year. Now there are six categories and posting takes place five days a week. But the awful green background has got to go.

Ford is lagging in blogdom, with no blog presence indicated anywhere on its media home page, and only a few isolated and short-duration blogs elsewhere.

Italian cocaine users have been busted (as a group) by science, the London Times reports:

Analysis of waste water in Italy shows a startlingly high level of drug abuse

THE rivers of Italy are flowing with cocaine, say scientists who have adopted a new approach to measuring the extent of drug misuse. The biggest river, the Po, carries the equivalent of about 4kg (8lb 13oz) of the drug a day, with a street value of about £20,000.

Cocaine users among the five million people who live in the Po River basin in northern Italy consume the drug and excrete its metabolic by-product, benzoylecgonine (BE). This goes from sewers into the river. So a team led by Dr Ettore Zuccato, of the Mario Negri Institute for Pharmacological Research in Milan, estimated the use of cocaine by testing the waters of the Po for BE, and for any cocaine that had passed through the body unaltered or reached the sewers in other ways.

What they found surprised them. They calculated that for every 1,000 young adults in the catchment area, about 30 must be taking a daily dose of 100 milligrams of cocaine, which greatly exceeds official national figures for cocaine use.

According to official Italian statistics, 1.1 per cent of people between the ages of 15 and 34 admit to having used cocaine “at least once in the preceding month.” Almost all cocaine use occurs in this age group.

Assuming that there are 1.4 million young adults in the Po River basin, the official statistics suggest that there would be 15,000 cocaine-use events per month. But the evidence from the water suggests that the real usage is about 40,000 doses a day, a vastly greater figure.

Flashback: A conclusion supporting heavy cocaine use was reached with clever testing at EU Headquarters in Brussels (go to Question 3 at the post).