Skip to comments.California's 'wall of debt' is only a slice of its liability problem
Posted on 01/27/2014 6:22:26 AM PST by artichokegrower
SACRAMENTO -- Gov. Jerry Brown's image as a responsible, penny-pinching steward of California's finances has been cemented in recent weeks because of his renewed call to pay off California's "wall of debt.
That's a term Brown coined when he took office to describe the tens of billions of dollars California owed to public schools and special funds whose coffers were raided to help balance budgets in the past.
But look behind that $24.9 billion wall and you'll see a $330 billion skyline of other liabilities threatening the state's financial health. It includes $80 billion needed to cover teachers' pensions and $64 billion to pay for state workers' health care in retirement -- two particularly troublesome liabilities because the state isn't even making the minimum payments on them.
(Excerpt) Read more at santacruzsentinel.com ...
Pony up your cash there Kalifornikaters. March in a gay parade waving your check stubs!
Same thing with Maryland and O Malley, many on poor and middle class with zero resistance.
In the case of CA, Dems taking complete control of state gov ended the yearly deficits crises with all those tax increases, so in the short term it looks like a big success.
The question is : will all these taxes hurt CA long term? Its sure not Texas.
Clearly, they aren’t high enough.
Maybe they need an illegal alien tax?
Are there that many state employed school teachers? No, but that was what I predicted, that school unions would start infecting every politician with the thinking that the state itself is a guarantor for teacher pensions and benefits because they’ve tapped out school districts which now pay more to teachers who used to work there than they do for their current payroll of teachers.
I can’t preach this enough: Public employees must be paid a flat salary which they can then use to buy whatever benefits they want. No retirement plans for any public employee (and most especially for any politician), no benefits plans, nothing. Heck, I don’t even mind if they give teachers a massive raise to equal all the current benefits while at the same time quashing any future benefits.
The core reasoning for ending this practice is that budgets need to start fresh each year. To have items that tie the hands of future budgets, there is a particular procedure called bonded debt, permitted for infrastructure only, and must be approved by the voters. That should be the only budget item that survives an election and a new school board or city government or county government.
And this is a problem that extends FAR beyond California and touches every city budget, every county budget and every state budget.
CA can solve this issue by raising taxes, floating debt bonds, adding more regulations, creating a new lottery, ..........
The solution to all these problems is to build high speed rail. </sarcasm>
This situation exists due to Taxifornia having a one party rule and basically being a sanctuary state for illegals.
Seriously? With 300 billion in unfunded liabilities? Let me be the first, then, to say that Jerry Brown and his Democratic legislative posse are fiscally irresponsible.
You’re right that it reaches far beyond California.
Let me be the first on this thread to say what is now mathematically obvious to all casual observers:
The defined benefit pension is no longer workable, regardless of whether this pension is being offered by a private sector company or a government employer.
The defined benefit pension should now be regulated out of existence, because offering them amounts to financial fraud.
If employers (private or public) want to offer pensions, then they need to switch to defined contribution pensions, retirement savings plans, etc. But the pension that offers “$X for Y years or service” without any other considerations is done and gone.
Cali, NY, and Ill are the cornerstones of Democrat electoral strategy. (Interestingly some of the most indebted also).
They will be the first to get federally guaranteed state borrowing.
California should just sue the Democrat party. The lawyers know that you sue the organizations that have money. The Democrat party will never be out of money. You can squeeze them a million times, and the unions and the Limousine Liberals will just keep funding them.
And the highest rate of uninformed voters in the country.
“..and one of the highest property tax.”
That simply isn’t true!
Aww come on, don’t you know by now that many FReepers don’t let the truth get in the way of a good CA bashing?
This would make a terrific constitutional ballot initiative.
I'd really like to see the present system defended in court, where a city bucks out of the system at present and states that they are no longer permitting human resource workers to take defacto control over budgets, where the only debt they will recognize is bonded debt approved by the voters. A spirited defense would do wonders; well, I should say spirited appeal, since likely the first court would find for the unions. After all, judges enjoy the same system as other public employees with even stronger benefits. They'd take a tremendous hit to the pocketbook if the present system ended.
One way to do that is to put it in the local charter while simultaneously buying out the liability with a bond issue, an annuity so to speak. It would avoid the court costs, and fully fund the liability while ending the gambit. Some unions might go for that because it might be the only way they could expect to see their retirements funded without a bankruptcy. They'd be selling out their younger "brethren" of course, but since when have we seen such altruism among government workers?