One of the conceits of Capitol politicians – much on display during this election year – is that they finally balanced the state budget after years of deficits.
Gov. Jerry Brown is especially prone to making the claim, particularly when he grants audiences, as he often does, to out-of-state journalists who don’t know better.
It simply isn’t true, or at least isn’t when one looks at the state’s finances holistically, rather than piecemeal.
To Brown, et al, the budget is balanced because it provides enough money to pay the obligations that he and the Legislature choose to pay. But when what they choose not to pay is included, the budget is billions, even tens of billions, of dollars out of balance.
They choose, for instance, not to include a $70-plus billion shortfall in the trust fund that pays teachers’ pensions. The California State Teachers’ Retirement System says it needs another $4.5 billion a year to cover the unfunded liability that’s growing by $20 million a day.
No one questions that number, and the money must come from the state, from school districts that get most of their money from the state, or from teachers themselves.
They also choose not to include a $60-plus billion unfunded liability for the health care of retired state employees and there’s really no way for that debt to be shared. It will be paid, sooner or later, from the state budget – and it, too, is growing by the day.
There’s also an unfunded liability of some dimensions for state workers’ pensions.
The state Department of Transportation has revealed another mounting debt that’s being ignored – deferred maintenance of the 50,000 lane-miles of state highways. California has some of the nation’s worst pavement conditions as 35 million vehicles run up 300 billion miles of pavement-beating travel each year.
Over the last four years, $3.9 billion has been spent on long-neglected highway maintenance and reconstruction projects, mostly from bonds and federal “stimulus” grants. However, the state’s own plan says $2.8 billion is needed each year, only a quarter of which is being budgeted.
Add it all up, and California is ignoring at least $10 billion a year in debt payments that current politicians are avoiding but that their successors and taxpayers will have to shoulder at some point.
That doesn’t count, by the way, the billions of extra dollars in constitutionally protected spending for school aid and payments to counties for realignment of criminal justice and other programs that are being financed through temporary increases in sales and income taxes.
What happens when those taxes expire in a few years, but the spending obligations lodged in the state constitution continue?
A balanced budget? California is like a family that makes minimum credit card bill payments and ignores its mortgage.