As the #CalExit movement continues to draw favorable press — mostly in liberal publications bitter over Trump’s victory — its downfall just might be found in the fiscal realities facing CalPERS, the agency responsible for managing pensions and benefits for over 2 million California state employees.
CalPERS is preparing for its annual raid on California taxpayer’s wallets.
Step one is downgrading expectations.
CalPERS has been doing this for years. In the past, they would raise the expected rate of return when trying to help Democrats seize control of every lever of power in the state, then downgrade those expectations down the road. This automatically triggers higher contributions from the thousands of local entities whose employees are members of CalPERS. And from taxpayers statewide.
Step two is trotting out stories of retirees who will have their pensions cut.
According to a Fox News report, cuts will be drastic.
“For the first time in its 85-year history, the California Public Employees Retirement System, CalPERS, is drastically cutting benefits for public retirees. Starting January 1st, four retired City of Loyalton public employees will have their pensions cut 60 percent. For 71-year-old Patsy Jardin, that means her pension will drop from about $49,000 a year to a little more than $19,000.
In an interview with the FOX Business Network, Patsy asked, “How am I going to make it now? What am I going to do?”
Fellow Loyalton retiree John Cussins is asking the same question, since his pension will also drop 60 percent, to $1,523 a month.”
What no one is asking is the obvious question: Why is it the obligation of California taxpayers to subsidize pensions that were never adequately funded in the first place? And how does a tiny town like Loyalton justify a $49,000 pension to a city employee that is almost double the average income for American workers?
The answer to the first question is simple. The California Constitution empowers CalPERS to dictate the amount of the yearly contribution by special line item in the budget. The legislature can argue and complain, but in the end, whatever shortfall has befallen CalPERS, they must pay it.
Step three is sticking it to the taxpayers — and robbing local agencies to backfill the CalPERS deficit.
By staging this public kabuki dance, the media carry the narrative that the sky is falling, services are being cut, and that only taxpayers can ride to the rescue and save the plight of millions of state worker’s pensions.
But the truth is this problem is systemic. CalPERS is currently only 65% funded. In plain English, it has .65 in house for every $1 that it owes out. If CalPERS was a private entity, it would be considered bankrupt. But CalPERS can always spread the pain to every working Californian — most of whom have no pension or retirement savings at all.
CalPERS offers a glimpse into the realities #CalExit faces. California is a debtor state, when you add up all the promises to public sector unions, illegal aliens and poor people. Federal matching funds make up a significant portion of California’s state budget. (Believe me, I was serving in the legislature as we hammered out a budget plan that was more dependent on federal matching funds than anything else.)
How California plans to provide for the retirements of the 2 million people dependent on CalPERS if California secedes is anyone’s guess. But if past behavior is any indicator, it will simply steal even more money from local services and taxpayers in the form of higher contributions — and continue the cycle.
But the real question is: Will there be enough taxpayers left in California to subsidize the massive public sector union pension payouts?
On top of that burden, California taxpayers are on the hook to subsidize the most generous handouts to illegal aliens in the country — among them, free college tuition and free healthcare.
And not only that, but when millions of hard-working taxpayers flee California for the rest of America, that will cut off the main source of funding for California’s budget: personal income tax revenues.
How do you keep the welfare state going without robust income tax revenues and all those Federal matching funds, when California is home to almost a third of the nation’ss welfare recipients, but only 12% of its population?
That’s why #CalExit is nothing but a leftist fantasy of free love and free lunch — with no one left to finance it.
Would the last sane person to leave California please turn out the lights?