California has come a long way to dig itself out of budget deficits, but the state remains on shaky ground due to nearly $400 billion in unfunded liabilities and debt from public pensions, retiree health care and bonds, financial analysts say.
It could shift a greater-than-expected portion of the burden for paying off the debt to school districts; makes the state share highly vulnerable to market volatility; and leaves a good chance that the state will pay no more than it would have before the deal was struck. . . Moreover, in the long term, the plan does not ensure that the debt will be paid off by 2046, or ever.
Preliminary tax revenue for January stands at a net $167 million less than estimates in Gov. Jerry Brown’s proposed budget, according to a report Wednesday by the Legislature’s non-partisan fiscal analyst.
School districts are required to begin reporting their share of a pension debt that previously had been reported only by the two big statewide retirement systems for teachers and non-teaching employees.
If Medi-Cal were a state of its own, it would be the nation’s seventh-biggest by population; its $91-billion budget would be the country’s fourth-largest, trailing only those of California, New York and Texas. . . The question California officials now face is how — and on days with a gloomier economic outlook, if — the massive health program can be sustained.
In short, we view a significant majority of what the LAO identified as discretionary resources in the budget as nonrecurring. From a structural standpoint, therefore, California’s fiscal alignment affords considerably less capacity for new ongoing spending initiatives than its current-year bottom line might suggest.
The total liability grew $2.38 billion compared to the prior fiscal year, but the size of the increase was $1.50 billion less than estimated in last year’s report. Health care claims did not grow as rapidly as expected, and changes in health care delivery and assumptions about long-term trends helped to lower costs by $1.76 billion. Conversely, demographic shifts added more than a quarter billion dollars to the liability.
These costs have increased dramatically over the past 15 years. In 2001, retiree health care costs accounted for 0.6 percent of the state General Fund budget. This year, they will total $1.90 billion, or about 1.6 percent of the budget. If no changes are made to the state’s method of funding retiree health care costs, the current $74.10 billion unfunded liability will grow to more than $100 billion by the 2020-21 fiscal year, and $300 billion by 2047-48.
In isolated pockets around the state, government salaries, with their accompanying benefits, continue to go up.
Up and down California, public schools are enjoying a rapid rise in state funding. With the state’s economic gains and a temporary tax increase approved by voters in 2012, Gov. Jerry Brown’s proposed $71.6 billion education budget for the next fiscal year is up more than 50 percent since 2011. Spending per student has increased more than $3,800 to a projected $14,550 this year.
As it illustrates, California education funding is finally booming. The $71.6 billion budget that Gov. Jerry Brown proposed in January would be the fifth consecutive year of growth since the Great Recession. If approved by the Legislature in June, the budget will be up 50 percent from 2011. Most of the increased funds have gone to teacher and staff salaries, which account for more than 85 percent of school budgets.
Even before the current marathon drought, turf replacement subsidies have long been touted by the state government as a powerful way to get California homeowners to stop having water-guzzling lawns. But the federal government sees these subsidies as taxable income.
A small group of electric vehicle companies fall under the provisions of Senate Bill 680 – primarily Tesla, which is in Wieckowski’s district and sponsored the legislation.
The ratings agency says California may have less money to work with than it appears, as the stock market slows and the state’s retirement costs rise.
In a short speech with a long view of California, Gov. Jerry Brown used his State of the State address to challenge lawmakers to better balance the cyclical nature of success and setback that has dominated state government for the better part of two decades.
We must also be realistic about our current tax system. California has a very progressive but volatile income tax that provides 70 percent of General Fund revenues. If we are to minimize the zigzag of spend-cut-spend that this tax system inevitably produces, we must build a very large reserve.