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CA:Governing like Davis. For 2nd time in a decade liberals set course for budgetary catastrophe.
California Public Policy Foundation ^ | February 28, 2006 | Ray Haynes

Posted on 02/28/2006 9:21:24 AM PST by John Jorsett

Between 1999 and 2002, state Senate Democrats passed, and Gov. Gray Davis signed, every bill heard by the state Senate Public Employment and Retirement Committee that would increase pension and retirement benefits for state and local government employees. I know; I was the committee’s vice chairman.

Government employee union lobbyists begged for each bill. California Public Employee Retirement System (CalPERS) representatives said the state’s $60 billion surplus meant the system could afford it. It meant the state could skip contributing to the CalPERS fund; that we would never have to contribute to the retirement system again! — even with the increases. Of course, government employee unions control the CalPERS board. They all said the good times would last forever.

I said we were being foolish, that no one can increase benefits without some cost. Eventually, I said, these pension chickens would come home to roost. My witty colleagues then took to calling me Chicken Little, cluck-clucking that “the sky is not falling.”


San Diego is going bankrupt from generous pension benefits. Orange County is talking seriously about filing bankruptcy again to escape its pension liabilities. This year’s estimated state contribution to CalPERS — up from nothing in 1999 — is $3.5 billion; next year’s will be higher.

And this week, the Legislative Analyst’s Office released a report that the cost of retiree health benefits will be “in the range of $40 billion to $70 billion, and perhaps more.” The report identifies two reasons for this increased cost: (a) increased health care costs; and (b) legislatively mandated increased health benefits. Between 1999 to 2000, the Legislature passed more than 30 mandates on health insurers, and costs increased more than 40 percent.

In addition, the Government Standards Accounting Board (GASB) passed new rules on how to account for these increases. GASB statement 45 (GASB 45) increases the information the governments must report to assess their liabilities properly. No longer can the government unions and their management allies cook the books to understate the liabilities. Once all are reported, the government agency must pay all the costs. To put this in perspective, GASB 45 would require the state to pay $6 billion compared to $1 billion today.

This is in addition to the state’s already $2-3 billion increase in pension costs and an existing $5 billion structural deficit. The state is on the brink of a crisis.

As always happens when socialist unions take control of government, California faces an epic spending crisis. I like to use humor in my political writing, but there is no funny way to talk about this situation. Perhaps some cliches would help: the fox is guarding the hen house ... or, Chicken Little has come home to roost. My witty colleagues, when this system collapses, will have to explain to the people how it happened. They’ll need all their wits when that day comes.

TOPICS: Editorial; US: California
KEYWORDS: rayhaynes

1 posted on 02/28/2006 9:21:27 AM PST by John Jorsett
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To: John Jorsett; calcowgirl
Didn't this pension fiasco ensue soon after Willie Brown got onto the CALPERS BOD?

My guess it was he who engineered the opulent benefits crushing the state today by arranging for a fradulent report of the financial impact. The situation stinks of his involvement.

2 posted on 02/28/2006 9:24:40 AM PST by Carry_Okie (There are people in power who are REALLY stupid.)
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To: Carry_Okie
And its not going to get any better with the hammerlock the unions have over Sacramento.

(Denny Crane: "I Don't Want To Socialize With A Pinko Liberal Democrat Commie. Say What You Like About Republicans. We Stick To Our Convictions. Even When We Know We're Dead Wrong.")

3 posted on 02/28/2006 9:30:43 AM PST by goldstategop (In Memory Of A Dearly Beloved Friend Who Lives On In My Heart Forever)
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To: John Jorsett
Government parasites do it again.

Nobody cares enough to do anything about it. Even Republicans grow Big Stupid Government as fast as they possibly can.

4 posted on 02/28/2006 9:33:01 AM PST by Hank Rearden (Never allow anyone who could only get a government "job" attempt to tell you how to run your life.)
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To: Hank Rearden

The Government employee union is to the California Public Employee Retirement System (CalPERS) what the United Auto Workers (UAW) is to General Motors and Ford.

Sounds like an SAT question. I think the only way to save California is through the massive failure of its bureaucracy.

5 posted on 02/28/2006 9:58:08 AM PST by FastCoyote
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To: John Jorsett

"My witty colleagues, when this system collapses, will have to explain to the people how it happened."

That's easy. They'll just blame it on Republicans.

6 posted on 02/28/2006 10:18:19 AM PST by I still care ("For it is the doom of men that they forget". - Merlin, from Excalibur)
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