Property Taxes, Pension Funding, and Border Security Challenges

On August 1, 2024, Joshua Sharf, Karen Levine, and Chris Harris joined the show. Sharf examines PERA’s actuarial assumptions and reveals Swiss auditing firm Pnyx found a 25% chance the pension system could remain at 60% funding after 40 years despite continued contributions Levine connects Colorado’s wildfires to cascading effects on insurance availability and home financing while noting current market opportunities with significant price. PERA Pension Funding Faces Uncertain Future Start listening at 30:08 – Hour 1 Joshua Sharf, Senior Fellow in Fiscal Policy at the Independence Institute, breaks down the complex financial situation facing Colorado’s Public Employee Retirement Association. Sharf explains that PERA operates as a traditional defined benefit plan covering state workers, teachers, and most local government employees. The plan replaces Social Security for participants, with benefits calculated based on years of service and the average of an employee’s five highest salary years. Recent analysis by Swiss auditing firm Pnyx reveals troubling projections for PERA’s long-term solvency. Sharf notes that unexpected salary increases driven by inflation have added approximately $1.5 billion to the unfunded liability. The firm’s sophisticated mathematical modeling suggests PERA’s investments may return only 6.7% rather than the assumed 7.25%, a difference that compounds dramatically over decades. Most alarming, Sharf reports a 25% probability that PERA could remain at only 60% funding after 40 years, essentially treading water despite $225 million in annual legislative contributions. There exists an 18% chance of reaching 50% funding or less, a point Sharf describes as the threshold of no return where only massive cash infusions or severe benefit cuts could stabilize the system. “There either has to be a massive infusion of cash or a severe cut of benefits.” Joshua Sharf, Senior Fellow in Fiscal Policy, Independence Institute Colorado Wildfires Impact Real Estate and Insurance Markets Start listening at 62:03 – Hour 2 Karen Levine, veteran RE/MAX Realtor, reports on the intersection of Colorado’s wildfire crisis and the housing market. With four fires burning across the state including the Quarry Fire in Deer Creek Canyon near Ken Caryl Valley, Levine connects decades of poor forest management to cascading effects on homeownership. The fires create a chain reaction affecting property values, insurance availability, and financing options. Levine explains that without proper insurance, homeowners cannot secure financing, effectively pricing people out of mountain and foothill properties. She draws a direct line between environmental policies that restrict forest management and the World Economic Forum’s prediction that by 2030, people will own nothing. Despite these challenges, Levine sees opportunity in the current market. Inventory has reached levels not seen in a decade, prices are experiencing significant reductions, and interest rates have begun declining. For buyers willing to navigate the market now, conditions favor purchasing before any significant rate drops bring more competition and push prices back up. “We are seeing significant price reductions on available inventory, and we have more choices than we have seen in a decade as far as housing on the market available to purchase.” Karen Levine, RE/MAX Realtor Border Security Failures Threaten National Safety Start listening at 85:40 – Hour 2