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Newsom Should Pay Down California’s Huge Pension Debt Jerry Brown will leave successor with a staggering $257 billion Rate Topic: -----

#1 User is offline   Liz 

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  Posted 26 November 2018 - 01:44 AM

Newsom Should Pay Down California’s Huge Pension Debt

Jerry Brown will leave successor with a staggering $257 billion shortfall for workers?retirement benefits

By Mercury News & East Bay Times Editorial Boards
UPDATED: November 25, 2018 at 5:08 pm

Excerpt:

If credit card payments were squeezing our budget and our wealthy aunt suddenly left us money, most of us would use the windfall to pay down our debt. That would certainly be the responsible thing to do.

California government should be no different.

That’s why Gov.-elect Gavin Newsom should resist the temptation to spend a supposed state budget surplus on new programs and instead trim the escalating debt for public employee retirement costs.

Newsom will inherit a staggering $257 billion shortfall in state and school workers?pension and retiree health care funds. It’s money the state should invest now so that there are enough future funds to pay the benefits workers have already earned. The longer the state waits to repay that debt, the greater the cost to taxpayers.

Despite Gov. Jerry Brown’s claim to be a pension reformer, the state’s retirement debt increased during his eight-year tenure. To be fair, he set up repayment schedules for the debt, but those schedules spread the cost over 30 years, leaving future generations to pay for the sins of their elders.

To put the size of the debt in perspective, it’s nearly double the state’s annual general fund tax revenues. Or, for scale using one of Brown’s other legacy goals, the retirement debt is about three times the current cost estimate for building a high-speed rail system from Anaheim to San Francisco.

So when state Legislative Analyst Mac Taylor gushed earlier this month about the annual state budget being in “remarkably good shape?with a forecast $15 billion surplus for the upcoming 2019-20 fiscal year, we had to question that characterization.

The only reason there is a surplus is because Brown kept payments on retirement debt low by irresponsibly stretching them out for decades.

*snip*

Full Editorial
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#2 User is offline   Rock N' Roll Right Winger 

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Posted 26 November 2018 - 08:33 AM

The dumbascraps here in my state of Kentucky are trying their best to emulate Kommiefornia's pensions.

Leave them flat broke because they've stolen from them for the last 20 years to pay for the "general fund" shortcomings because they just cannot and will not reign in their wasteful spending/boondoggling.
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#3 User is offline   Natural Selection 

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Posted 26 November 2018 - 08:49 AM

Any private sector business that tried to copy the state's pension model would find themselves bankrupt and out of business.

That's the problem with government run ANYTHING. Zero accountability and zero incentive to be financially responsible.

This will not end well.
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#4 User is offline   Martin 

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Posted 26 November 2018 - 11:40 AM

View PostNatural Selection, on 26 November 2018 - 08:49 AM, said:

Any private sector business that tried to copy the state's pension model would find themselves bankrupt and out of business. This will not end well.


What you said is literally true on both counts. Gummint pension plans are exempt from ERISA. And, no, it will not end well. To pay for its unfunded pension obligations, a state like California must either cut those pensions, or cut spending on other purposes, or raise taxes. California is especially vulnerable to economic recession, since it is disproportionately dependent on the 1% of taxpayers who pay half of the state income tax which represents 70% of state revenue. If those high incomes decline, which will be the effect of the next bear market, California is headed for a severe budget crunch.



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