The state of California's real unfunded pension debt clocks in at more than $500 billion, nearly eight times greater than officially reported.
That's the finding from a study released Monday by Stanford University's public policy program, confirming a recent report with similar, stunning findings from Northwestern University and the University of Chicago.
To put that number in perspective, it's almost seven times greater than all the outstanding voter-approved state general obligation bonds in California.
Why should Californians care? Because this year's unfunded pension liability is next year's budget cut to important programs. For a glimpse of California's budgetary future, look no further than the $5.5 billion diverted this year from higher education, transit, parks and other programs in order to pay just a tiny bit toward current unfunded pension and healthcare promises. That figure is set to triple within 10 years and -- absent reform -- to continue to grow, crowding out funding for many programs vital to the overwhelming majority of Californians.
Raising taxes isn't going to solve this alone. We *have* to cut government spending. That means cutting some government programs. I do not understand why liberals refuse to accept that.
What can we do about this? For the promises already made, nothing. They are contractual, and because that $500 billion of debt must be paid, retirement costs will rise dramatically no matter what we do. But we can reduce the sizes of promises made to new employees and require full and truthful disclosure so that pension debt can never again be hidden.
The governor tried that a few years ago, with a ballot initiative in a special election. The CTA clucked with glee when they fought that initiative and it lost. Good job, u-bots. Let's kill that goose and see if we can still get golden eggs.
A step in the correct direction would be to convert California into a right-to-work state. The unions (public and otherwise) have morphed into mind-altering, blood-sucking leeches that driving into wall in order to supported the "privilege" of union workers.
ReplyDeleteI really believe California has become ungovernable. It doesn't matter who the next Governor is because they will have to deal with a state legislature that is absolutely horrible. What has happened to this once great state?
ReplyDeleteIt's UAW redux.
ReplyDeleteThe lavish compensation and benefits packages that were negotiated back when the auto companies had their defacto monopoly on car sales in the U.S. and the UAW had its defacto monopoly on labor to the car companies were unsustainable once competition started to rear its ugly head. So the UAW was forced to accept pay scales commensurate with the value of the job but to maintain some credibility part of the package was grandfathering the old payscales and benefits for employees with sufficient tenure and just letting nature take its course.
Pretty annoying if you're a newer UAW member. The same thing'll happen in California now that the law of financial gravity is reasserting itself.
Isn't this the same general problem that hamstrung American autoworkers? Their pensions let some of them retire millionaires. Of course, the companies could have gotten out from under those obligations had they been allowed to go through bankruptcy. Don't you wonder why the Obama government stopped them?
ReplyDelete(Hint: It has to do with unions...)
“I really believe California has become ungovernable. It doesn't matter who the next Governor is because they will have to deal with a state legislature that is absolutely horrible.”
ReplyDeleteOne thing I think is a problem is something that Reagan called his biggest mistake as governor. He approved full time legislators. You employ people whose only job is to spend other people’s money to insure reelection and you get people you don’t care that they are bankrupting the state.
In Texas we have a part time legislature that meets every 2 years for 140 days. And the general consensus is it would be better if they met for 2 days every 140 years but we still are in much better shape than CA, NY and other states with “professional” politicians who really need to learn what it’s like to have a job.