This is the third in a four part series on the Public Employee Pension Transparency Act of 2013, also known as PEPTA.
To “protect” the federal government from any responsibility for state or local fiscal problems, Reps. Nunes, Ryan and Issa, in the House, and Sens. Burr, Coburn and Thune, in the Senate, have introduced PEPTA, which if it became law, would prohibit the federal government from bailing out states or localities, and would force states and localities to meet certain federally established pension reporting requirements in order to maintain their right to issue tax free municipal bonds. Failure to comply with the requirements of the Act would mean that states and localities would have to go to the taxable bond market to raise funds for infrastructure and other legitimate state and local activities.
So, if you thought that efforts to tax municipal bonds were the only legislative threat to the future of tax exempt municipal bonds, think again.
PEPTA would direct the U.S. Department of the Treasury to issue new public pension plan reporting requirements that public pension plan sponsors and administrators would have to follow when reporting their assets and liabilities.
Rep. Nunes, in a statement outlining the reasons for this bill, said that it was necessary for states and local pension plans to disclose their liabilities in a “uniform and transparent manner based on widely accepted accounting principles.” Without these new and transparent reporting requirements, he added, state and local pension plans would continue to hide significant fiscal problems behind various and misleading state and local pension plan reports.
What Rep. Nunes did not state is that all public pension plans are subject to stringent state and local reporting requirements that are set in state statutes and local ordinances and regulations; that all reporting must meet generally accepted accounting principles established by the Governmental Accounting Standards Board (GASB), which just this year issued new reporting requirements designed to highlight the unfunded liabilities associated with public pension plans; and that these reports are subject to review by elected officials, trustees, auditors, and the general public.
He also did not state that since 2008, 45 states have adopted legislation to reform their state and local pension systems. These reforms were adopted to ensure the long term viability and sustainability of their pension systems and were done without any prodding or initiative by the federal government.
What he also did not say is that Wall Street bankers and investors, who until now have had little control over the nearly $3 trillion in public pension assets, are eyeing those assets as yet another pool of funds from which to draw substantial income.