It’s not *just* pensions that threaten to sink California’s cities.
More than 70% of the cities in California do not have **ANY** funds set aside for other post-employment benefits—such as retiree health care—according to State Auditor Elaine Howle.😲
dailybreeze.com/2019/10/24/la-…
More than 70% of the cities in California do not have **ANY** funds set aside for other post-employment benefits—such as retiree health care—according to State Auditor Elaine Howle.😲
dailybreeze.com/2019/10/24/la-…
How did California get here?
Simply put, CA governments can promise retirement benefits—including healthcare—WITHOUT accounting for them
Before Detroit took** California's crown, Stockton was the largest municipal bankruptcy in U.S. history
** borrowed
bloomberg.com/news/articles/…
Simply put, CA governments can promise retirement benefits—including healthcare—WITHOUT accounting for them
Before Detroit took** California's crown, Stockton was the largest municipal bankruptcy in U.S. history
** borrowed
bloomberg.com/news/articles/…
In the 1990s, Stockton officials doled out generous retirement health benefits without ensuring the city could afford the payments over time
A worker employed as little as A MONTH could qualify for city-paid retirement health care for the retiree AND his or her spouse FOR LIFE😲
A worker employed as little as A MONTH could qualify for city-paid retirement health care for the retiree AND his or her spouse FOR LIFE😲
“It was not a Cadillac plan,” Vice Mayor Kathy Miller said
“It’s a Lamborghini plan. No one in the private sector had anything like that.”
“The problem is, nobody asked the question: ‘How do you fund it?’ … It was an unsound decision and it has similarities to a Ponzi scheme”
“It’s a Lamborghini plan. No one in the private sector had anything like that.”
“The problem is, nobody asked the question: ‘How do you fund it?’ … It was an unsound decision and it has similarities to a Ponzi scheme”
By 2016, CA state employee pensions cost taxpayers $5.4 billion—more than 30x what the state paid for retirement benefits in 2000, before the effects of Gov. Gray Davis' pension law, SB 400, had kicked in
Voters got rid of Davis, but not the fiscal cancer
latimes.com/projects/la-me…
Voters got rid of Davis, but not the fiscal cancer
latimes.com/projects/la-me…
Davis was elected in 1998 with more than $5 million in campaign contributions from public employee unions🙄
latimes.com/projects/la-me…
latimes.com/projects/la-me…
And a reminder that *every* single year, the supermassive fiscal black hole of underfunded California public sector pensions + unfunded healthcare obligations slowly sucks more tax dollars into its ineluctable gravitational field
This is happening in a *good* economy—in a boom
This is happening in a *good* economy—in a boom
Context—and a great long read—this is the CA chapter from Michael Lewis' book "Boomerang"
San Jose mayor Reed: The problem was going to grow worse until “you get to a single employee to service the entire city, presumably with a focus on paying pensions"
vanityfair.com/news/2011/11/m…
San Jose mayor Reed: The problem was going to grow worse until “you get to a single employee to service the entire city, presumably with a focus on paying pensions"
vanityfair.com/news/2011/11/m…
And it looks like Oakland is the prime contender to reclaim the crown of "Largest Municipal Bankruptcy in U.S. History"—which Detroit snatched from Stockton
calmatters.org/economy/2019/1…
calmatters.org/economy/2019/1…
Oakland is *already* using gas tax "repair the roads"🙄revenue just to keep the lights on:
Back to San Jose Mayor Reed
"The city would be nothing more than a vehicle to pay the retirement costs of its former workers…It’s a mathematical inevitability”
It reminded me of Madoff’s investment business—anyone could see he was running a Ponzi scheme
vanityfair.com/news/2011/11/m…
"The city would be nothing more than a vehicle to pay the retirement costs of its former workers…It’s a mathematical inevitability”
It reminded me of Madoff’s investment business—anyone could see he was running a Ponzi scheme
vanityfair.com/news/2011/11/m…
And a reminder that pension costs DOUBLED in most California school districts in just the last 4 years
edsource.org/2019/new-data-…
edsource.org/2019/new-data-…
As CA enjoys the tail-end of a historic economic expansion—and a stock market boom fueled by $4 trillion of Fed money inflating asset bubbles—the fiscal abyss looms large
Even a small market downturn—let alone recession—is dark and full of budget terrors
calmatters.org/explainers/the…
Even a small market downturn—let alone recession—is dark and full of budget terrors
calmatters.org/explainers/the…
And a reminder that California State Auditor Elaine Howle is possibly the *most* important state employee right now—she already exposed rampant cronyism and waste at the idiotic HSR boondoggle
