By Steven Greenhut | California’s governor and legislators have been almost giddy about the state’s balanced budget and they simply ignore the clear evidence that the state remains awash in debt. Its budget is balanced in the same way a person’s budget is balanced if they meet the bare minimum payments on a host of credit-card debts. Sacramento Bee columnist Dan Walters published a good piece debunking all the Capitol feel-goodism:
“To Brown, et al, the budget is balanced because it provides enough money to pay the obligations that he and the Legislature choose to pay. But when what they choose not to pay is included, the budget is billions, even tens of billions, of dollars out of balance. They choose, for instance, not to include a $70-plus billion shortfall in the trust fund that pays teachers’ pensions. … They also choose not to include a $60-plus billion unfunded liability for the health care of retired state employees and there’s really no way for that debt to be shared. It will be paid, sooner or later, from the state budget – and it, too, is growing by the day.”
And he ticks off many more billions in debt that is piling up. Meanwhile, state Democratic leaders are coming up with new spending programs (i.e., free preschool), which explains why they don’t want to worry too much about paying for the old programs. The Democratic approach has been to just ignore critics and keep saying how great things are.
This is a great illustration about why it was so wrong for voters to approve Prop. 30, which increased taxes. The more money that comes in, the more quickly the state officials will spend it. They only address problems when there is a revenue crunch. More money just lets them avoid making hard choices.