Debt at the national, state and local levels has mushroomed in recent decades. Three California cities have sought bankruptcy protection and there are constant rumors that more may soon follow.
Among the problems impacting California cities are the huge debt obligations owed to CalPERS, the state’s public employees’ retirement system. For example, Stockton, one of the bankrupt cities, is paying CalPERS roughly $29 million a year, in addition to payments being made to other creditors.
Despite passage of a so-called “balanced” budget last June, a report by the California Taxpayers Association placed state and local debt at an astounding $443 billion, which amounts to $11,600 for every man, woman and child in the state.
Mac Taylor, the legislature’s budget analyst, recently reported that California’s structural budget deficit has disappeared. While this is good news, the report is based on a shaky economic recovery and temporary taxes. It also ignores California’s huge future debt obligations.
As we enter 2014, we should remember that all state programs are based on tax revenues generated by private-sector economic activity. Future state and local spending must be reined in so that the debt burden we have accumulated over the last decades can be addressed along with massive unfunded mandates and liabilities that threaten future prosperity. Only then can we truly begin to celebrate California’s return from the brink of fiscal insolvency.
By Calif. State Assemblymember Marie Waldron (R-75th District)