What happened within minutes Monday may just be coincidence, but if so, it's a cosmically foreboding one.

In Sacramento, Gov. Jerry Brown released the first online ad of his campaign to persuade California voters to endorse his sales and income tax increase measure. One snippet declared that under Brown, "California's bond rating is now positive."

It was, to put it charitably, misleading. In fact, California has the lowest bond rating of any state now and, according to a recent survey by Pew's Center on the States, the worst credit rating record over the past 11 years.

In Pennsylvania, state officials were told by Moody's, a major bond rating agency, that the state is being downgraded because of "large and growing pension fund liabilities."

In Petaluma, the $234 billion California Public Employees' Retirement System revealed that it earned just 1 percent on its investments during the 2011-12 fiscal year that ended June 30.

That's a fraction of the 7.5 percent earnings assumption on which it bases its ability to pay pensions to hundreds of thousands of state and local government retirees, meaning its already large unfinanced obligations are continuing to grow.

CalPERS officials tried to soften the bad news by noting that its earnings over the last 20 years had averaged 7.7 percent, but that begs the question.

Earnings have fallen short of its 7.5 percent target in three of the last five years and its lackluster performance indicates that hitting it in the future may be just wishful thinking.

As pension funds' unfunded liabilities grow, state and local governments are being told to cough up more in contributions, and they must either swallow the increases or persuade their employees to pay more. It's not a coincidence that sharply increasing pension fund demands play large roles in the recent financial struggles of Stockton and San Bernardino.

Were CalPERS and other pension funds to lower their earnings projections to more realistic levels, however, unfunded liabilities would grow even larger and increase political pressure for more money or for significant pension reforms.

At the same time his ad proclaims – falsely – that California's bond rating is positive, Brown is also asking the Legislature to make those significant reforms, warning that the failure to do so could doom voter approval of the new taxes.

But the Legislature is dragging its 240 feet.

Looming, meanwhile, is another potential credit rating downgrade as Moody's and other rating agencies start including unfunded pension liabilities in their calculations of governments' debt load.

What happened to Pennsylvania could easily happen to California unless its politicians pull their heads out of the sand, or wherever they have them buried, and face an unpleasant reality.

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