California is touted now as the nation’s largest economy and also the most populous state. If you look at the headlines, you would think our state is booming. Is doing well good enough? When you read the fine print of the state budget, it has ballooned to a whopping 300 billion dollars. Governor Gavin Newsom is proud that his state will show a deficit this year of ONLY 2 billion.
Imagine that! Being thrilled with a small deficit of 2 billion dollars.
At last count, California required 91 separate taxes from residents and businesses to keep the coffers filled.
When you pull back the public propaganda curtain and actually unveil the reality of what those “not so public” facts reveal, you get a different result.
Behind the curtain is a picture that is rarely shown in public.
A very important liability which is being ignored by nearly everyone is the deficit created by unfunded pension liabilities.
Here is the unexploded financial bomb no governor or assemblyman wishes to discuss.
At last count, California has accumulated an unfunded pension liability of $164 BILLION dollars. This is money owed to current and future retirees.
The concern here is, who cares? Over the past 12 years, this debt has doubled and not been reduced. There is no known plan to fix it. But now Sacramento has a new idea to squeeze local taxpayers. AB 569 proposes to allow local governments to “improve retirement benefits” with “supplemental pension plans.” And who would pay for these side deals? Dear reader, that would be you and me, the taxpayers.
Santa Clara’s current unfunded pension liability is currently $730 million, according to CalPERS actuarial reports for the city. This year, Santa Clara will spend $60 million on pension funding— about 22% of the $280 million general fund, which already has an $11 million deficit.
Now Sacramento wants to add more costs for cities in the form of plan administration and, likely, additional pension contributions. Contrary to the public propaganda about California having the world’s fourth-largest economy, it is also true that we have the second-highest unemployment rate in the country, right below Mississippi.
It would make a lot of sense to put our unemployed to work, use their taxes to reduce the debt and actually fund retirees’ pensions. This is called “priming the pump.” And it makes more sense than pumping up taxpayers’ liability with additions to already generous guaranteed pensions.
Other Milestones:
Milestones – California Fiscal Sense and Nonsense – Opinion
Milestones – Salute to Our Service Clubs – Opinion
Milestones – Majority Rule – Opinion
