California’s pension shortfall is admitted by everyone.
“The California State Teachers Retirement Fund (CalSTRS) released a report earlier this week revealing a $64 billion dollar pension deficit, while the California Public Employees Retirement System (CalPERS) puts its unfunded pension liability at $49 billion dollars, plus billions more in state retiree health care benefits. The non-partisan Legislative Analyst’s Office has stated that the Governor’s budget does not adequately address California’s pension liabilities.”
Of course, when shortfalls are calculated, there are growth assumptions that must be used–you have to guess how fast you will be able to grow the money before it is used to pay a retiree. I’d love to see what assumptions CalSTRS and other groups are making about what returns they expect on their money. If they are being wildly optimistic, then they are underestimating their shortfall.
Where is all this heading? Quite obviously, it is heading toward a point when California requests that the Federal Government bail out the state. They will be legally obligated to support people with pensions when there is no money in those pensions. They will want the Federal Government to “inject capital” into their pensions. People in Texas and other states who have never voted for a California legislator in their life will be taxed to underwrite a history of decisions by the California state government.
You know what taxation without representation is, right? Taxation without representation is tyranny.
One woman is trying to stop this from happening:
“Assemblywoman Shannon Grove (R-Bakersfield) has introduced Assembly Joint Resolution (AJR) 10, to oppose any attempt by the state of California to receive a federal bailout for our state debt. ‘I am proposing this preemptive measure because I firmly believe that each state is responsible for their own fiscal decisions. California taxpayers should not be held accountable for the failed fiscal policies of other states, just as others should not be on the hook for ours,’ said Grove. ‘The “balanced” budget Governor Brown unveiled last month conveniently ignored billions of dollars in unfunded pension liability, and the changes made to public pensions in recent years will only save the state a fraction of what it spends on these obligations. We can’t just ignore these numbers, and we should not expect a federal bailout. I want to bring more attention to the fact that the California legislature alone needs to seriously and significantly address our billions in state debt.’”
Reason magazine’s blog was somewhat dismissive of Grove’s proposal, writing,
“It’s cruel to point out that California Assemblywoman Shannon Grove (R-Bakersfield) has pretty much no chance of getting anywhere with her efforts, but let’s at least praise her for trying.”
But we should also remember that proposing legislation is not just about getting a law passed. It can also serve education and communication purposes. Is the governor planning on a future bailout from the Federal government? Are the majority of California politicians thinking that their pensions can be funded by Federal taxation, borrowing, or just plain money printing? If they claim to have no such plans, then why not pass the law? If they won’t pass the law, their refusal would be an indication that they are thinking that they really don’t have to assume the responsibility of dealing with their own problems. They are depending on a bailout, whether they admit it or not.
The time is coming when these pension obligations will come due and there is no state money to use in order to meet those obligations. At that point, the American people have to make it clear to the Federal Government that the sound states cannot be sacrificed for the sake of the profligate states. By proposing this law, Grove will provide us with more evidence of state malfeasance that should not be rewarded.