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Analysis by professors at the University of Chicago and Northwestern University predicts that New Mexico will be one of the states to suffer a collapse of its public pension plan in the next two decades.
They predict that New Mexico will run out of pension revenue in 2023, and the following year be required to pay out $2.6 billion in public employee pensions, a sum representing 46 percent of the entire state annual budget revenue.
“If we are going to keep providing generous pensions to state workers, taxes will have to rise dramatically in the near future to pay for them,” said Professor Joshua Rauh of the Kellogg School of Management at Northwestern University in a news release by New Mexico Watchdog.
Rauh and economist Robert Novy-Marx of the University of Chicago Booth School of Business have developed a model of state pension fund payments across the U.S. and identified 31 states they predict will run out of state pension fund money within the next 16 years.
New Mexico falls within that range. In fact, the Rauh/Novy-Marx model predicts that by 2023, New Mexico’s state pension plan will go bust.
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