While Californians bathe Jerry Brown with an almost 60% approval rating, Wednesday’s Los Angeles Times reported that the state is now facing a staggering $340 billion in long-term costs, which calculates to an $8,500 debt for every California resident.
According to the non-partisan Legislative Analyst’s Office, California may be able to pay $140 billion of that off, which includes debts incurred by infrastructure expenditures, but will be stuck with the remaining $200 billion in unfunded liabilities. The report demonstrated that California’s future will be jaded by the exorbitant debt it acquired by agreeing to massive public worker retirement contracts.
According to the Times, the largest portion of the $200 billion shortfall is the $73.5 billion dollars the state owes to the teacher’s pension fund. Moreover, the report offered the assessment that replenishing the pension fund should be a priority for California lawmakers. However, that may be a challenge, as according to one analyst, “it has not been appropriately funded for most of its 101-year history.”
Significantly, Governor Brown has boasted that California is enjoying a budget surplus, but according to National Review Online, the surplus was made possible by putting off the payments that are due to the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS). Both of these unions are severely unfunded and, according to pension officials, the teachers union could completely dry up by 2046.
The report implies that time is running out, and funds are finite. Once the funds are gone, payments have to be made directly from the annual budgets, and that would equate to increased taxes and fewer government services.
According to the report, California needs to be adding $5 billion a year to the teacher pension fund for the next three decades just to get even. Not paying what is due makes it easier to balance the budget now, but it will mean bigger bills for the next generation of Californians if the shortfalls are not addressed.
One other large item that needs to be addressed is the $64.6 billion owed for retired state workers’ healthcare costs. In order to right this wrong, California would need to double what it is currently paying for retiree healthcare.