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?
And the California people all vote down bills to raise taxes 🙂
States cannot file bankruptcy, not allowed to.
But, they also don’t need to, they are a soveriegn entity, and cannot be sued for breaching any of their own contracts per the 11th Amendment, not in state court, not in federal court.
Maybe they can’t be sued for breaching contract, but they’re already seeing there’s a price. When they announced to tax refunds, a lot of people lowered their withholding. For a state that gets most of its money once a year, that’s got to hurt– but they broke their contract with the taxpayers.
Although I’ve “heard” that States cannot declare bankruptcy, I hope it is either NOT SO, or it can be done in another way.
The ridiculous Civil Servant benefits are unsustainable, are GROSSLY unfair to TAXPAYERS, and need to be reduced NOW by at LEAST 50%, and for CURRENT employees, not just new employees.
Once California pulls it off, NY, NJ,and MI will be close on their tail. All of them are bankrupt when these promises are treated as balance sheet liabilities.
Its WAY PAST TIME for a fresh start That fresh start needs to be a 50% reduction in accrued benefits (which is STILL more generous than what the TAXPAYERS who fund their benefits get) followed by freezing of their current plans with replacement with by 403b (401k type) plans.
Sounds draconian…. (can’t you hear the Civil Servants’ wails). BALONY, don’t be fooled. It is STILL more generous than most PRIVATE SECTOR workers get.
And lets NOT FORGET ….. their retiree health care must also end and be replaced with a Health savings account with a VERY MODEST employer contribution.
Great idea! In fact, why stop there. Let’s roll back every gain ever won through the labor movement across the board: no more weekends, health benefits, pensions, overtime, job-site safety….Let’s race to the bottom of the barrel so that we can compete with other third world countries on things like wages!
What’s really sad is that most people will buy into t his nonsense, ignoring the real systemic problems of an economic system that puts profits before human needs. We’ll continue to fight over the crumbs that have fallen off our Masters table while they continue to live off our labor.
Great job. Keep up the good work.
Why is it “wrong” to STOP Civil Servants pensions & benefits from being many times greater than the Private Sector TAXPAYERS who PAY FOR them ? Could it be that YOU (as a Civil Servant feeding at the TAXPAYERS’ pockets) want to keep this gravy train going ?
The diversions will not work. Yes, it is VERY unfair that greedy CEOs take well more than their fair share, but 100 (or a 1000) CEOs taking $10 Million each unfairly will not bankrupt this country, but 10-20 million Civil Servants EACH getting $500,000 – $1,000,000 (in excess career pensions & benefits) WILL.
The real problem is that the state pension system, CalPERS, managed to lose a spectacular amount of money these past few years in the stock market, mainly through, IMO, incompetence, stupidity, and greed. They can no longer fully fund the pensions and by law, the legislature, etc. must make up the difference.
5,100 Pensions x $125,000 = $637.5M
(I’m assuming an average of $125K for those above $100K)
Think about it… 5,100 people are costing the taxpayer $637.5M.
It’s absolutely time for a reset on pensions.
I agree with Tyrone! Our Aircraft Carriers only hold 5,500 people and cost $800 MILLION to the tax payer! OUTRAGEOUS! Down with stuff that costs money!!! Up with…Jesus, or something! YEAH!
“no more weekends, health benefits, pensions, overtime, job-site safety…”
Welcome to the world of the self-employed! I don’t know about you, but I’ll be working today– and my clients WON’T pay me double-time-and-a-half for my efforts.
Still, no way would I go back to the union job I had in 1980-1983. Sure, I got health insurance, but I found no satisfaction in doing every job as slowly as possible (to ensure that the maximum number of union members got work).