California has more than a couple of problems. They’ve been carrying huge deficits for a decade even though their state constitution says they have to balance their budget. They balanced it by “borrowing” money from operating accounts like education, pension and by not paying the Federal Government monies they were on the hook for.
Last year they passed a “temporary” tax on the rich to balance the budget and to increase funding for what passes for education on the Left Coast. And this weekend, the ever stalwart loonybin – the New York Times – published a glowing article on the progress made by the most “progressive” government in the nation. Here’s a snippet…
All of it together — the rerouted rivers, the train moving at the speed of Superman, taxing the rich and welcoming a Latino majority — is a road not taken by any other state. You can laugh at the sunbaked barbarians, even wish them ill. But you should not fail to see in their fledgling renaissance another chapter in the American experiment, no less daring than the Golden Gate Bridge or the castle that Hearst erected at continent’s edge.
I’m guessing the author of the above article wrote it from either California, Washington state or Colorado. Marijuana is pretty much legal in those places and you’d have to be stoned to actually believe that crap.
Here’s what the Sacramento Bee noted in a story they published on Thursday, and please note that the Bee is just a very small tad to the right of The Daily Worker.
Were California’s state government a business, it would be a candidate for insolvency with a negative net worth of $127.2 billion, according to an annual financial report issued by State Auditor Elaine Howle and the Bureau of State Audits.
The report, which covers the fiscal year ending June 30, 2012, says that the state’s negative status — all of its assets minus all of its liabilities — increased that year, largely because it spent more than it received in revenue.
The whole article is worth a read. The State Auditor’s report didn’t include some little gems like $60+ billion in unfunded retiree health benefits. It’s an Alice in Wonderland storybook.
There are some other things not noted in the article that should be highlighted if you’re going to try to sell the idea that there’s a “California Comeback” on the way.
Forty years ago California had a school system that was the best in the world. Today, after 40 years of pandering to teachers unions, educators from the US Department of Education and the whims of every progressive minority group, California now consistently ranks in the bottom five of our 57 states.
On the other hand, they are #1 in lots of things. They boast sanctuary cities for illegal aliens, the highest poverty rate in the nation, the highest welfare rate in the nation, the highest unemployment rate in the nation (9.8%) and one of the highest net population losses as people look for opportunity to work rather than loaf on a welfare check. The state is also a fantastic business incubator for Texas as mature companies count the cost of staying in California and are moving, in record numbers, to states like Texas and Nevada.
The problems in California have really just begun because two major cities are in the midst of bankruptcy filings and the result of those cases could have a huge impact on the future of California as well as the future of municipal bond financing and public employee pension in California and across the nation.
The bubble is expanding and may well be burst if the Bankruptcy Court finds in favor of Stockton and San Bernardino and allows them to cut principal off their bonds (no muni bond holder to date has ever lost money) and allows them to reduce their retirement payments to CalPERS, the state employee retirement fund.
It’s not the “Golden State” anymore. Today, California is the “Pyrite State.” As many would-be millionaires found out during the gold rush, pyrite may look like precious gold, but it happens to be common and worthless.
We’ll have more on both of those subjects this week, but it’s possible that the world of state and local government financing – along with the retirement plans of millions of government employees – is about to be turned on its head.
We live in “interesting times.”