Calif. Wall of Debt Comes Tumbling Down

Published on March 28th, 2016

Reality Check: California is drowning in debt.

As critics have long suspected, California’s rosy surplus budget reports were wishful thinking. Because they never reflected California’s massive wall of debt, previous budgets reflected significant surpluses, and Gov. Jerry Brown basked in the glory of the state’s apparent financial health. In 2013, Bloomberg Businessweek called Brown’s presumed fiscal prudence an example of “unsentimental, grown up leadership.” Too bad for Brown that the black ink was a deception created by excluding unfunded pension liabilities.

Because new rules established by the Governmental Accounting Standards Board mandated that pension liabilities be included with traditional debt, California ended fiscal year 2014-2015 in the red by $175.1 billion. Next year, according to Controller Betty Yee, California’s 2016-2017 deficit will be $70 billion deeper because GASB requires that retired state employee health care benefits be included in the budget calculations. Gov. Brown pegged the retiree unfunded health care tab at $78.1 billion.

A year ago, CAPS predicted that California’s unsustainable population growth would be a leading factor in the state’s inability to reduce debt. As the population grew from 20 million in 1960 to 39 million in 2016, California had to build more schools, hire more teachers and law enforcement officers, and repair more roads.

California’s population growth is immigration-driven and adds to Sacramento’s budget for K-12 education. Of the 6.2 million students enrolled in K-12 system, about 1.4 million are English Language Learners. California also funds other illegal immigrant entitlements like Medi-Cal for alien minors, and driver’s licenses.

The state’s massive deficit should serve as a warning to Brown that California cannot continue to encourage illegal immigration and still adequately provide for its citizens. In 2014, Brown infamously invited all Mexicans, even those without “permission” as he put it, to come to California. Brown also scorned what he referred to as California’s “affluent families” for having too few children, ill-advised positions not only because of the budget crisis, but also because of the sustained drought.

If California is to survive fiscally, the state immediately needs dramatic immigration reductions and sensible family planning.

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