It would be tempting to write that the Governmental Accounting Standards Board (GASB) is poised to blow a $3 trillion hole in the budgets of state and local governments. But in fact, if you want to be precise, GASB is getting ready to blow the lid off of the $3 trillion hole that is already there.

The problem is this: State and local governments have, for the most part, woefully underfunded their employee-pension systems. As a result, they have massive unfunded liabilities for future pension payments — liabilities that total as high as $3 trillion, by some estimates. They can’t forgo writing those pension checks, they don’t have money set aside to cover those pension checks, and they are promising ever more generous pension checks in the future.

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