Does the Commonwealth need more money?

 Ms. Leung (Boston Globe, August30, 2022) should be assured that the Commonwealth of Massachusetts definitely does NOT have enough money. The money from the Fair Share tax increase is definitely needed. The amounts that Ms. Leung mentions in her column (Budget Surplus minus payback, $1.9 billion; Rainy Day fund, which should be inviolate, $6.9 billion; Federal Relief, $2.3 billion) are dwarfed by the shortfall in the Commonwealth’s Pension funds, $10.44 billion.   

The State Pension Fund is currently badly underfunded. As of June 30, 2021, the Massachusetts State Pension fund had a shortfall of 23% (assets $36.04 billion, liabilities $46.48 billion). This is worse than the average state which Pew Charitable Trusts estimated to have a shortfall of 16% after the stock market gains of 2020-21. All have probably worsened after August’s stock market losses. 

The budget surplus and the Federal Relief funds ($4.2 billion) should be invested in the Pension Fund. If we added $4.2 billion to the assets of the pension plan, the assets would rise to $40.24 billion, and the shortfall would be reduced to 13% making us one of the better states for Pension Plan financing. With this level of funding, future generations would be less likely to be taxed to make up the shortfall.

Alas, the Massachusetts Teachers Pension Fund will still be badly underfunded. Some of the tax increase on the wealthy should be dedicated to topping up that pension fund.

Submitted to the Boston Globe