Here are just a few headlines from the last few years in The Los Angeles Times, the newspaper of record for California, regarding Governor Jerry Brown’s (D-CA) fiscal record:
- “With prudent budget crafting, Brown shows again that he’s the adult in the Capitol” (January 12, 2017)
- “Gov. Jerry Brown’s budget helps schools and the poor – and saves a lot for a rainy day” (January 7, 2016)
- “Brown’s budget proposal lauded, but pressure builds for more spending” (January 9, 2015)
These headlines are the tip of the iceberg. They were also fake news. Brown’s supposed fiscal responsibility amounted to a seventy percent increase in the state budget over Arnold Schwarzenegger’s final 2008-2009 budget. It also amounted to increasing the state long-term debt with regard to pension payments, since Democrats in California are entirely in the pocket of public sector unions.
On Monday, Brown announced that his new budget would include a shockingly large $8.1 billion payment to the various public sector unions California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS). The budget includes a $524 million increase in annual payments to CalPERS – a mandatory change, given that the state of California has routinely overestimated investment returns on pension funds for years. According to the Times, “the difference between what all California government agencies have set aside for pensions and what they will eventually owe amounts to $241 billion, according to the state controller.”
California’s not alone.
Unfunded pension liabilities are about to cripple a series of major states across the country. Illinois has an unfunded pension liability of nearly $130 billion; New Jersey’s in serious trouble, too. According to Citi Global Perspectives & Solutions, as of 2015, “In the United States, current unfunded corporate defined benefit commitments total approximately $425 billion. State and local government employee defined benefit pension plans have from $1 trillion to $3 trillion in unfunded commitments.”
So much for the fiscally sound strategy of raising spending and taxes for years on end. It turns out that promising the moon to current government employees in order to win their votes means bankrupting the states in which they reside.