Categorized | National, State

California Debt Is Much Worse Than You Thought

Crisis Task Force Estimate:

$167 - $335 Billion in the Red

 

Skippy Massey
Humboldt Sentinel

 

When Jerry Brown Brown whisked into the Governor’s Office he gave us the glum news we already knew:  we
were $28 billion in arrears.

Now it turns out the State’s real red ink is far worse than any of us could have known.
The estimate revealed by one blue ribbon commission is, at the very least, shocking.

On Thursday, the State Budget Crisis Task Force released a report estimating that California’s “debt wall” is at least $167 billion and as much as $335 billion, much more than previously projected by state officials, the New York Times reported yesterday.

According to the Times, a spokesman for Governor Brown “did not dispute the report but said the governor was making progress in his effort to restore fiscal balance.”

We’re glad he’s making progress, but the Governor didn’t exactly dispute those disturbing Task Force figures, either.

The Task Force was created last year and charged with analyzing the budgets of six states (California, Illinois, New York, Texas, Virginia and New Jersey).  It was founded by Paul A. Volcker, a former Federal Reserve chairman, and Richard Ravitch, a former New York lieutenant governor, out of “deep fiscal concern for these states receiving insufficient attention in Washington.”

California was chosen by the Task Force because it constitutes the world’s ninth-largest economy and is having more than its share of “intractable fiscal problems.”  The Golden State has also experienced an unusual run of municipal bankruptcies in recent years.

Vallejo, San Bernardino, Mammoth Lakes, and Stockton all filed for bankruptcy protection.  Three of the municipalities suffered under crushing pension obligations.  Stockton, however, is planning a major surprise.  It wants to walk away from the principal and interest owed on one of its bonds.

Analysts are watching California, and especially Stockton, closely.  They’re troubled that should Stockton succeeds, other troubled cities in California and throughout the nation will follow suit.  Some contend that the State of California should be doing more to keep its cities out of bankruptcy and shielding municipal bond investors.

Last year, Brown introduced the ‘Wall of Debt’ concept to encompass various forms of borrowing by the State over the past few years.

According to a Department of Finance report issued in July, the debt wall is $34.2 billion and would drop to $8.9 billion by the end of fiscal year 2015-2016 if voters pass a compromise tax hike plan in November.

The tax hike measure — listed as Proposition 30 on the ballot — would increase the personal income tax by one percentage point for individuals who earn $250,000 annually or couples who earn $500,000 annually, and by two percentage points for individuals who earn $300,000 annually or couples who earn $600,000 annually.  It also would increase the sales tax by a quarter of a cent, among other changes.

State Budget Task Force researchers examined numerous debts that weren’t included in state projections, such as pledges to provide health care benefits and pensions for retired public workers.
They also cited unpaid bills from previous years in the new estimates.

Lo and behold– those figures, California’s true debt, add up to a way significant amount.

According to the Task Force, even if voters pass the compromise tax hike plan — which would provide the state with an additional $50 billion over the next seven years — the state’s debt wall still would exist from somewhere between $167 billion to $335 billion.

That’s a lot of billions.  Like stars in Carl Sagan’s universe, it’s hard to fathom the unfathomable.

The Task Force didn’t provide concrete solutions but suggested two very brief policy recommendations:

It urged the State to ‘rethink‘ how it provides health care and
pension benefits for retired workers.

It also advised that California ‘develop‘ a two-year spending plan
to replace its annual plan.

* * * * * *

That’s it?  Two?  ‘Think’ and ‘Develop’?

There’s a bit more, but in a nutshell, yeah and yup.  It shows that if stupidity got us into this mess, it can get us out.  Last year we said, ‘Things can’t go on like this’, and they didn’t.  They got worse.  Maybe we should be thankful we’re not getting all the government we paid for.

Fortunately California is still running, in spite of it.

 
Here’s a suggestion the Task Force might have made:  When a dog gets a bone, he doesn’t go out and make a down payment on a bigger bone.  He buries the one he’s got.

We can suggest others:  Retire early if you’re a municipal worker having milked it for all it’s worth.  If you’re not so fortunate, make more dough.  You’ll need it.  Buy and rent property.  Good renters are golden.  Buy gold.  It’s shiny, it glimmers, and other people want it.  Go on a diet.

And move.  Out of state.

Hundreds of billions of dollars IS a big deal.  We don’t seem to be able to check debt, so why not legalize it and then tax it out of business?

(The New York Times and Will Rogers contributed to this article)

 

3 Responses to “California Debt Is Much Worse Than You Thought”

  1. Puzzled says:

    Perfect time to build that high speed rail.What’s a few more billion dollars?

  2. bill masson says:

    Why does anybody thing the feds did not know about this a long time ago .Too big to fail thats California and lets not tell them the whole truth…We do not want the sheep to panic lets just print more cash and all the problems go away FOR CORPORATE AMERICA ANYHOW THE REST OF US BE DAMMED.

Trackbacks/Pingbacks

  1. [...] an unfunded liability and a burden on the taxpayer,” said Thomas Schatz, executive director of Citizens Against [...]


Leave a Reply

HumSentinel on Twitter

RSS Progressive Review

  • A few good words for Iran
    Juan Cole - It is natural that Westerners should find Israel more simpatico than Iran, given the Israeli government’s alliance with the West and Iran’s antipathy. But here are some differences between the two that are in Iran’s favor, which I point out just to balance out the unfair way the two are covered.1. Iran does not have a nuclear bomb and is signator […]
  • Justice Department finds long history of ethnic prejudice by Ferguson police
    Gawker - According to the forthcoming report on the Justice Department's investigation into the Ferguson, Mo. police department for alleged civil rights violations, the department has demonstrated a history of racial profiling that has intensified race relations in the St. Louis suburb.Officials familiar with the report tell the New York Times that the […]
  • U.S. judge rules Nebraska same-sex marriage ban unconstitutional
    Reuters […]
  • America's real exceptionalism: Ignoring the international law it helped create
    Alfred W. McCoy, Mother Jones - After World War II, the US used its triumph to help create the United Nations, push for the adoption of its Universal Declaration of Human Rights, and ratify the Geneva Conventions for humanitarian treatment in war. If you throw in other American-backed initiatives like the World Health Organization, the World Trade Organizati […]
  • Race to the bottom: Local officials
    Chicago police Ferguson police NYC police Rahm Emanuel […]
  • Race to the Bottom: Education
    Common Core Arne Duncan Michelle Rhee Bill Gates Teach for America […]
  • Suicides have soared in past 15 years
    Nature World News - Researchers revealed that in about the last 15 years, suicide rates among US adults have risen by 40 percent. This astonishing number, pertaining to those between 40 and 64 years old in the United States, could possibly be due to the economic downturn of 2007-2009, researchers say...."Relative to other age groups, a larger and increa […]
  • Word: What's wrong with the school testing craze
    Marion Brady, Washington Post - Arthur Costa, emeritus professor at California State University, summed up the thrust of current test-based “reform” madness:  “What was educationally significant and hard to measure has been replaced by what is educationally insignificant and easy to measure. So now we measure how well we taught what isn’t worth learning.”The […]
  • Who's backing the Clinton Foundation
    Global ResearchFounded in 2001 after the end of Bill Clinton’s second term as president, the Foundation has raised and distributed huge amounts of money, reaching nearly $2 billion. After a brief drop in fundraising coinciding with Hillary Clinton’s term as secretary of state from 2009 to 2013, when most foreign donations were discouraged because of conflict […]
  • The growing support for legal pot
    Pew Research […]
  • Word
    You have to take the long view. First, when Moses came down from Mt. Sinai, man has already progressed to the point where a commandment against cannibalism was no longer necessary. And, second, it's like pissing on a boulder. For the first few thousand years, you don't see any effect. But after that, you start to see a definite impact." -- I.F […]
  • Minnie Minoso and Gene McCarthy
    Sam Smith -   During his 1976 presidential campaign, Gene McCarthy and and his manager, Marc Plotkin, were in Florida, Bill Veeck had just announced that he was reactivating Minnie Minoso for eight at-bats so he could claim to have played over four decades. Veeck was always coming up with ideas. Some weren't so great, like putting his players in short p […]
  • Photos from Russia's marches for Boris Nemtsov
     VOX […]
  • Word: Standardized testing
    Bad Ass Teachers Association - We know that we are in the middle of a war, fighting for our schools and our students. One of the tolls in this war is the implementation of high stakes testing. These tests are like weapons, based upon the knowledge that these tests do not accurately measure educational achievement, but are more truly a measurement of the econ […]
  • Study: Armchair socialists more active than centrists
    Science Daily - Left wing 'armchair socialists' are more physically active than people whose beliefs straddle the center of the political spectrum, suggesting that the term 'armchair socialist' is a bit of a misnomer, reveals actual published research.  The researchers analysed responses to the 2005 Eurobarometer survey, carried out on be […]