David Crane, a lecturer at Stanford University’s Institute for Economic Policy Research, admits that he donated to Gov. Jerry Brown and voted for him in 2010. And yet, says Crane, Brown is guilty of many of the same tricks that earlier California governors pulled to make their budgets seem rosier than they actually are. In fact, Crane says in an op-ed at Bloomberg News, Brown has succeeded, like his predecessors, in “hoodwinking” reporters.
The mainstream media, Crane says, has reported Brown’s management of California’s finances as a success. It is a success, if you use the fairly common standard of cash-based budgeting–which counts even loans as inflows, instead of as liabilities. However, if you look at the state’s actual liabilities and obligations, Crane argues, then Gov. Brown has actually managed the state into a shortfall of at least, through two $3 billion budget gimmicks.
The first gimmick is “to underreport the cost of an employee benefit–retiree health care–by $3 billion,” Crane says. “The governor could have chosen to report the expense at its full size, but to do that under cash-based budgeting, he would have had to actually contribute $3 billion in cash to a retiree health-care trust fund.” Skipping that contribution to the trust fund allowed Brown to bring the state’s budget numbers closer to even.
The second gimmick is to skip “more than $3 billion in required contributions to the state teacher pension fund… the largest “skipped” pension contribution in the country.” Other states have done the same: Illinois, for example, which regularly competes with California for the worst finances in the nation, is a repeat offender.
So the California “miracle” wrought by Jerry Brown is anything but–says at least one savvy Brown supporter.