At end of the week, California’s State Auditor released its annual financial report for the state. The report, compiled by Auditor Elaine Howle, found the state has a net worth of -$127.2 billion. If the state were a business, it would be a candidate for liquidation.
CA’s financial situation deteriorated this year, largely because the state spent $1.7 Billion more than it collected in revenue. This over-spending worsened the state’s debt picture.
“Expenses that exceeded revenues and increased long-term obligations resulted in an 81.4 percent decrease in the total net assets for governmental and business-type activities from the 20-10-11 fiscal year,” said the report.
While this report paints a bleak picture of the state’s future, it is also unrealistically optimistic. The report does not include the state’s unfunded liabilities for future employee pensions. It also doesn’t include the $60 billion or more in unfunded health costs for future state retirees.
The state’s balance-sheet may look bad now, but the truth is far worse than even this report suggests.