Gov. Brown Budget Starts Tackling Pension Debts, but High-Speed Train Boondoggle Persists
The latest revision (PDF) of California's proposed budget offers some sunbeams from Gov. Moonbeam for fiscal conservatives. Democrat Jerry Brown's latest proposal is to actually start paying down the state's massive public employee pension debts and avoid implementing new spending programs.
The result is a $156 billion spending plan that shows the state bringing in $2.4 billion more than expected, but then also having to deal with a 46 percent increase in Medi-Cal expenses because of new coverage due to the Affordable Care Act. Brown predicts these state healthcare costs to rise to $2.4 billion in the next two years, which is problematic because the additional revenue is predicted to be a one-time thing.
Probably the most important news in these parts is that Brown will finally work to address the state's massive pension liabilities rather than just talking about how the state needs to address its massive pension liabilities. He's focusing on the teachers and looking to get the pension fund fully funded in 30 years. The current pension liability is $74 billion. He proposes $450 million for next year to start eliminating the liabilities and requiring teachers and school districts to pay more into the pension funds as well. The problem with such a plan is, obviously, what happens once Brown isn't around anymore, assuming he is even able to get this proposal off the ground. Ultimately, the change could actually be disastrous to some school districts, Chris Reed at CalWatchdog notes, as schools already spend so much of their budgets on compensation, and he predicts a possibility of teachers actually paying less of their own pensions.
Brown notes that the state can't afford to take on pet spending projects, declining to spend $1 billion to launch a universal preschool program. But his godforsaken pet high-speed rail boondoggle is still there, waiting to suck down at least $68 billion. The latest fiscal news on the train has the price of just the first segment of construction already $1 billion higher than the initial estimate of $6 billion, a 15 percent increase. I really am not sure how I am supposed to feel if California's staggering pension obligations ultimately contribute to the death of the train project.
Regular Reason contributor Steven Greenhut analyzed Brown's budget over at the San Diego Union-Tribune. He described it as being about as fiscally responsible as you can get given the current power dynamics in California. Talk about damning with faint praise. Read Greenhut's analysis here.