It’s happening again. People who should know better are pointing to California’s current budget surplus as proof that the state, the world’s fifth largest economy, is in sound financial shape. That figure is also being used to support the claim that California’s relatively high tax burden and onerous regulations are not too problematic, as CNBC’s Robert Frank did on Squawk Box the morning after Tax Day.
The surplus figure cited by Frank and others has two problems: it’s both misleading and paints an incomplete picture of the Golden State’s finances. The truth is that there is no revenue surplus had by California state government. In fact, the state’s long-run obligations far exceed projected revenue collections to the tune of $1 trillion in unfunded pension liabilities alone. When factoring in the cost of non-pension benefits for state workers, such as health care for retired government employees, the debt facing California taxpayers rises further.
“Combining California’s debt with publicly held federal debt, we estimate a total debt-to-GDP ratio of 125% (or 153% using the broader definition of federal debt),” California Policy Center report released in 2017 points out. “This level places California distressingly close to peripheral Eurozone countries that faced financial crises in 2011 and 2012. Portugal’s 2015 debt-to-GDP ratio was 129% and Italy’s was 133%.”
Bill Fletcher and Marc Joffe, authors of the California Policy Center report, breakdown how much of this debt each Californian is on the hook for and find a burden of “$33,000 per resident and $74,000 per taxpayer – excluding their share of federal debt.”
This massive unfunded pension liability, which California taxpayers are on the hook for, is something that state legislators in Sacramento continue to ignore, acting as though the problem will go away on its own (or, more likely, that the federal government will bail them out at the end of the day).
- CRISIS IN SRI LANKA, No Gas, No Food, Country is Bankrupt, Politicians Being Beat, Murdered, Gov Buildings on Fire, Over 3000 killed in last 24 hours
- New York Post: Front Page: “Joe’s Train Wreck”
- A large fire is spreading from a pallet yard behind the US Foods distribution center in Phoenix, Arizona
- From 1958, 2003/06 – CDC Vaccine Adverse Events, Smallpox – Holy Hell
- Madison Cawthorn Kicked Out of Congress for Blowing the Whistle on GOP Orgies and Calling Out Zelensky
- 5th Circuit Court finds SEC operates unconstitutionally
- A “Smallpox-Like Virus” Has Now Spread To Spain, Portugal And The United States
- Is the next Great Muppet Reaping at hand?
- The Only Thing Clear Over the Last Two Years is that Covid-19 Never Existed?
- UTTER CARNAGE: The Stock Market Is Coming Apart Like A 20 Dollar Suit As Fear Sweeps Through Wall Street