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

  • Race to the bottom
    The worst, based on actions, stats & statements over the past year Government agencies NSA Supreme Court CIA FISA Court FBI Homeland Security Pentagon DEA […]
  • Where is the counter culture when we need it?
    From 50 years of our overstocked archivesSam Smith, 2012 - The other day I got a call from a student working on a college paper about Coffee 'n Confusion, a Washington coffeehouse the local police had tried to close down in the late 1950s as an offense against the community's welfare. I had covered the story as a radio reporter and still had the ta […]
  • Fox News pulled from Dish Network
    Slashdot  - Fox News and Fox Business were pulled by Dish Network over the weekend, as both continue to argue over a fee agreement. From the article: "Dish said in a statement early Sunday morning that 21st Century Fox had blocked access to the two networks after Dish balked when rates for other networks owned by the media conglomerate were made a part […]
  • NYC police declare war on mayor
    Melissa Melton, Activist Post -  The New York Police Department has declared “war” after two officers were killed Saturday in their squad car while taking part in an anti-terrorism drill by a gunmen said to be taking revenge for the death of Eric Garner.In the wake of the shootings, the NYPD’s union New York Patrolmen’s Benevolent Association issued this bul […]
  • Some memories
    PD JamesLauren BacallMaya AngelouPhilip Seymour Hoffman […]
  • Great moments with Jeb Bush
    Newsweek - The collapse of InnoVida Holdings LLC in 2011 didn’t get much traction in the media. Except in South Florida, where a small group of investors lost more than $40 million on a scheme to market hurricane- and earthquake-resistant homes assembled from prefabricated plastic panels. The company CEO had promised a highly publicized roll-out in Haiti fol […]
  • Word
    Work like you don't need the money. Love like you've never been hurt. Dance like nobody's watching. -- Satchel Paige […]
  • What's happening
    Back in May 2009, the Pew Research Center’s Forum on Religion & Public Life conducted surveys and found that the more religious an American is, the more likely he or she is to support torture.There are fewer Americans in prison, jail, probation, or parole than any time since 2003How well is your state doing? […]
  • Jazz break
    Chet Baker, "Autumn Leaves" […]
  • Pocket paradigm
    War is doing things overseas that we would go to prison for at home.- Sam Smith […]
  • Five years of failure
    From 50 years of our overstocked achivesSam Smith, 1986 - I was asked to give a toast at the fifth anniversary celebration of the DC Community Humanities Council. Here is what I said: Five years ago the DC Community Humanities Council was formed, charged with the diffusion of ideas, the encouragement of thought and the inspiration of rational discourse withi […]
  • Study: Red light cameras don't work
    Ars Technica - The Chicago Tribune released the results of a study it commissioned on injury crashes and red light cameras, revealing that while right angle crash incidents have been reduced, rear-end crashes that resulted in injuries went up 22 percent. The results of the study throw cold water on the booster efforts of Mayor Rahm Emanuel's administrat […]
  • What's happening
    Science journals screw up hundreds of times each year. This guy keeps track of every mistake.Communities are celebrating three victories against fracking this week. Quebec, New York and New Brunswick all rejected fracking after years of opposition from communities calling for the protection of community health and the environment.In a move cheered by environ […]
  • Word: Palestine
     Carolina Landsmann, Haaretz, Israel - In his address from the White House, Obama said, “Let us leave behind the legacy of both colonization and communism, for the sake of the Cuban people, the American people and the world.”There is another hot-button issue in which Americans must leave behind the legacy of colonialism and communism, and that is the Israeli […]
  • There may be hope for our corporate and political psychopaths yet
    Vox - There’s evidence that psychopaths might have more of a cognitive-processing problem — that they have difficulty paying attention to more than one thing at a time — than an emotional problem. So they focus tightly on a goal (say, stealing money) and lose the contextual information around it (it will make the victim feel sad, it's socially unaccepta […]