We Are Out of Money, California Edition
Here's an L.A. Times op-ed by David Crane, an advisor to California Gov. Arnold Schwarzenegger:
The state of California's real unfunded pension debt clocks in at more than $500 billion, nearly eight times greater than officially reported.
That's the finding from a study released Monday by Stanford University's public policy program, confirming a recent report with similar, stunning findings from Northwestern University and the University of Chicago.
To put that number in perspective, it's almost seven times greater than all the outstanding voter-approved state general obligation bonds in California.
Why should Californians care? Because this year's unfunded pension liability is next year's budget cut to important programs. For a glimpse of California's budgetary future, look no further than the $5.5 billion diverted this year from higher education, transit, parks and other programs in order to pay just a tiny bit toward current unfunded pension and healthcare promises. That figure is set to triple within 10 years and—absent reform—to continue to grow, crowding out funding for many programs vital to the overwhelming majority of Californians.
How did we get here? The answer is simple: For decades—and without voter consent—state leaders have been issuing billions of dollars of debt in the form of unfunded pension and healthcare promises, then gaming accounting rules in order to understate the size of those promises. […]
Instead of a government of the people, by the people and for the people, we have become a government of its employees, by its employees and for its employees.
That Stanford study is here [pdf]. And yes, we have been telling you so.
The Reason Foundation, which is the 501(c)(3) nonprofit (donate today!) that pays for Reason-branded journalism, also produces some boffo nuts-and-bolts public policy research and recommendations. Last week the Foundation released a roadmap for "The Next California Budget" (press release here, pdf study here), along with a plan (release here, study here) on how to save a ton of money on the union-mangled sinkhole that is the state's corrections system. There are concrete ways out of this politician-created mess, but it's going to take a category of public servant whose first response to fiscal crisis is *not* "Let's close the parks!"