The California shortfall now stands at $24.3 billion and the state is quickly running out of money. The only way the legislature can make up the difference will be with bludgeon-like budget cuts. It’s going to get real ugly.
Yet as all this happens, public pensions in California must be funded at 100%, something which will soon have the public screaming in anger. Why should those pensions be fully funded when everything else is slashed unmercifully, many will ask.
The solution to that and the other problems here could well be a State of California bankruptcy, because then existing legal agreements can be broken or renegotiated. Some municipalities here, like Vallejo, have used bankruptcy to force new agreements with labor unions. While such tactics can of course be a cover for union-busting, in Vallejo’s case, they really were broke and could no longer meet their financial obligations.
Will the State of California be next?