Jerry Brown's budget address yesterday celebrated the fact that his proposed budget for the coming fiscal year appears to be in the black thanks largely to several billion dollars in new taxes approved by voters last November. However, Brown himself acknowledged that the state faces a 'wall of debt' it accumulated by using borrowing instead of revenues or spending cuts to balance its budget over the last few years. In fact a big chunk of the new revenues from the tax increase, some $4.2 billion next fiscal year, will go to pay off that debt, not to restoring service cuts or providing new services to residents.
That is not the complete extent of the problem, however. As Brown also notes, the state continues to have large and growing underfunded pension and retiree health obligations. The state's own estimates (right) include a looming problem with higher education pensions in the state. California has done little in the way of reform to reduce its pension debt. In fact, as former CalSTRS board member David Crane argued in a Bloomberg column last spring, the state's pension needs will eat up a big portion of the tax increase monies designated for K-12 schools. That's because CalSTRS is asking school districts in the state for billions more in payments for underfunded teacher pensions.It's startling how quickly billions in proposed new tax revenues can disappear into the debt abyss.
Democratic Hustler Politicians + Corrupt Greedy Unions = BANKRUPTCY BABY!