CA Budget “A Fraud”

Inquiring minds are looking at Steven Greenhut’s article in The City Journal where he points to a several ‘inconsistencies’:

Yet just about everyone else on the right and left has ridiculed what Tom Brokaw, moderating the October 12 gubernatorial debate between Democrat Jerry Brown and Republican Meg Whitman, called budgetary “smoke and mirrors.” As Loyola Law School professor Jessica Levinson explained in a Huffington Post column: “California has balanced its budget in part based on the assumption that the state will get $5.4 billion in federal funds. The problem is that the federal government has indicated that it will give something closer to $1.3 billion.” She notes, moreover, that $3 billion of the spending cuts come out of the education budget. Because the size of that budget is constitutionally mandated under the terms of a voter initiative (Proposition 98), those dollars must ultimately be repaid from the state budget—in other words, they’re not really cuts. Delayed tax credits will also have to be paid. And as antitax activist Jon Coupal of the Howard Jarvis Taxpayers Association points out, the budget’s “estimates of future revenue . . . would only be believed by someone who had just put their life savings into Florida swampland.”

But then the ‘pension’ issue makes an appearance:

Current estimates place California’s unfunded pension debt at somewhere between $300 billion and $500 billion, depending on the predictions one uses of future stock market and investment performance. The good news is that Schwarzenegger did insist that some modest pension reforms be part of the budget deal. But at best, these reforms—requiring increased contributions from many existing public employees and slightly reduced benefits in the defined-benefit pension plans of new state workers, depending on final union negotiations—would shave off $100 billion over the next 30 years. Something more has to be done about pension promises to current workers. But despite Republican legislative pressure for a tougher deal, the budget includes only Schwarzenegger’s limited measures.

The pension situation will only get worse. In his post-budget analysis, Orange County Treasurer–Tax Collector Chriss Street wrote: “California’s irresponsible politicians just approved an $86 billion State Budget of smoke and mirrors that pushes approximately $10 billion of their $20 billion deficit to the next administration in January. The budget fancifully estimates the current $3.8 billion cost of funding state pensions will decline. GASB’s [the Government Accounting Standards Board’s] adoption of new accounting rules next year will actually more than triple the annual cost of funding California state pensions to $12.5 billion!” Although some experts believe Street’s number is far too high, there’s little question that the state is going to have to pay more to fulfill pension promises for state workers.

But Jerry Brown has experience. In fact, he has a little too much:

Will the next governor be able to turn things around? During the most recent Brown-Whitman debate, both candidates dealt with budget issues only in vague generalities. Brown, who as governor in the late 1970s helped create the state’s current mess when he approved collective bargaining for state employees, said he would lead by example—that is, he would cut the budget for the governor’s office by 15 percent.

It’s a brave new world…


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