I am asked on radio shows, almost every time, what will the fiscal collapse of the State look like? I joke that it will look like Greece, but will a California tan.
Our real deficit is north of $61 billion. Our unfunded CalPRS liabilities are now north of $550 billion and growing—CalSTRS is technically insolvent. Neither plan is sustainable.
Unemployment is north of 20%, when you do a complete, honest count. LA, Glendale and others cities are complaining about a sharp rise in crime due to Arnold and Jerry opening the prisoners and allowing criminals back on the streets “to save money and make the criminals comfortable”.
As a society we are coming apart. Brown, Munger and the unions want to separate families and business from up to $180billion, over twelve years, with new taxes.
While we may not riot, we may clog the 10 and 80 freeways to get out of this failed State.
Editorial by Stephen Frank, 6/14/12
In the past year, while the CalPRS team was claiming they would get a 7.75% return on equity they lost $11 billion—down 4.8% for a turn around, not in a good way, of 12%.
“The California Public Employees’ Retirement System, the largest U.S. pension, has seen its market value decline 4.8 percent this year after stocks fell amid the brewing fiscal crisis in Europe and slowing of the U.S. economic recovery.
The fund’s value declined to $226.1 billion as of June 8, down from $237.5 billion at the start of its fiscal year July 1.”
The Governor has created a reform that will save the government pension system—in thirty years. But at least it is something. The Democrats in the legislature will not even hold hearings on fellow Democrat Brown proposal to kick the can down the road for thirty years. Even that is too much for union owned Democrats.
San Diego passed reforms, over the objections of unions that will bring immediate relief and possibly even save it. San Jose pass pension reform, very minor, considering the massive unfunded liability—and it will save that system—in fifteen or twenty years.
In both cases the unions made it clear they want the pension reforms to fail. They sued to stop the implementation of the San Diego and San Jose plans, though they never would save the system in the long run.
Rhode Island is trying to save its system, according to CBS, “Rhode Island has gone further than any other state to cut pensions for current workers under legislation approved last year, and opponents have vowed to challenge it in court, said David Draine, senior researcher at the Pew Center on the States.”
Not much of a change—it will go broke before the changes take affect.
In fact, it has already begun in Rhode Island, cutting of retirement checks now. “in Central Falls, Rhode Island….
For years, city officials promised robust union contracts and pensions without raising revenue to pay for them. Last August, the math caught up with them. Central Falls was broke, its pension fund short $46 million. It declared bankruptcy.”
California’s General Fund will wind up paying for the retirement of teachers, not CalSTRS—just like the Public School Employees’ Retirement System and State Employees’ Retirement System in Pennsylvania….
“PSERS had an accrued unfunded liability of nearly $26.5 billion, the amount of money the fund is short to cover existing retirement benefits. That hole is expected to grow to $43 billion by 2019. SERS is $12.5 billion in the red, and that shortfall is expected to climb to nearly $18 billion by 2018. Unless the stock market makes giant sustained gains, taxpayers will have to refill those funds.”
The unfunded liability of the California teachers’ retirement was $64 billion—last year. That was before it LOST 3.4% over the last six months of 2011…based on a return of 7.75%, though they were told it was going to be much less.
As of today, the minimum deficit of the State of California for 2011-12 is $61 billion—on a General Fund budget of $91 billion and a total budget of $210 billion (when all expenditures are counted).
Brown, Munger and the unions would like to increase our taxes by $180 billion over the next twelve years. At the same time government is limiting the availability of water, 45% increase in Workers Comp costs and real unemployment is north of 20%.
California is not only in a Depression, it is in the midst of a massive fiscal meltdown. The only good news is that Texas and North Dakota are growing and their elected officials are protecting families not unions.
Without serious pension reform, California cities will have to pay more into the system, leaving less money for public safety, roads and education. San Fran and LA both pay approximately 23% of tax revenues to pension systems. Been to either city lately—not nice.
It will take a revolt at the ballot box to fix California government. Nothing less than a Prop. 13 type revolution will save the State from Sacramento.