A new financial report by California State Auditor and the Bureau of State Audits shows that California is heading down the tubes, and fast–it now has a negative net worth of $127.2 billion. It’s actually worse than that; although the report counted the state’s long-term obligations at $167.9 billion, that doesn’t count unfunded liabilities for state employees’ future pensions or the $60 billion in unfunded liabilities for retiree health care. Both of those costs have been listed by the Governmental Accounting Standards Board and Moody’s as costs that states and localities should include in their budgetary assessments.
If those costs were included in California’s budget sheet, the state’s net worth would decline hundreds of billions of dollars more. Of the $167.9 billion in long-term obligations, $79.9 billion came from general obligation bonds, and $30.8 billion came from revenue bonds which were largely used to build state prisons.
The report asserted that California spent $1.7 billion more in the 2011-12 fiscal year than it took in, leaving the state in arrears almost $23 billion. Of the $127.2 billion spent by the state, roughly half of it resulted from the state issuing general obligation bonds which were then distributed to local governments and school districts for public works projects. Those assets were listed on the balance sheets of the localities involved, while the state accrued the bonded debt.