California Now Has the Largest Unfunded Liabilities

[Bande]

California's deficit has gone crazy..

Video breaks it down..

[Danno]

Unfunded Liabilities and budget deficits are 2 different things. So this video is only an opinion like it says.
this nothing new for CA.

[CigarMan]

But Danno, we have BOTH Deficits AND unfunded liabilities.  And all the tools in Sacto want to do is kick the can down the road without even considering real reform to fix the problems.

[Romanticlover]

The legislature and Newsom are scrambling to cut $17 billion in order to make up the deficit but they need to cut $38 billion. I'm sure the Democrats will come up with more taxes.


https://www.latimes.com/california/story/2024-03-21/newsom-and-lawmakers-announce-plan-to-cut-at-least-12-billion-off-deficit-with-no-details

[CigarMan]

While he keeps saying 38 as I understand it the number is closer to $75

[Danno]

unfunded liabilities, and what would those be? and don't say cal pers. they are only under funded if everyone working at a pers job quit or retired and what a lump some of the their retirement, which is never going to happen

[CigarMan]

Pension and OPEB are the two biggest.  Agreed that all of the state employees are not going to up and quite today.  BUT the amount that is calculated at the current discount rate is far lees than the amount that is requested if they ask to be removed form the PERS system.  I had a client ask to withdraw from CalPERS who had a liability of $485,000 Cal PERS said they were on the hook for $3.25 million dollars.  These unfunded liability will impact the  state for a long time into the future and if there is a significant economic downturn the impact will be catastrophic.  Since the public employee retirement is guaranteed by the California constitution, the sate will have NO choice but to but to seek funding somewhere.  I have heard several in high places suggest that would come from private retirement funds that have not yet been taxed, i.e. 401(k) and IRAs.  The state needs to figure its finances out and make them less volatile.

[HighStepper]

Based on funded ratio, Tennessee, Washington, Utah, South Dakota, and Washington, D.C. have the best funded public pension plans in the United States, as of June 30th, 2023. The worst funded plans are in Illinois, Kentucky, New Jersey, and Connecticut. However, some states carry a larger share of pension unfunded liabilities (or pension debt) than others. California, Illinois, Texas, and New Jersey have the highest levels of unfunded liabilities in the United States by dollar value. Link

[Fathernature69]

Let's face it, if the State of California was a private business it would of gone with names of KMart and Sears.

The only difference is government never goes away, the credit rating may make the entity pay a higher interest rate, but it's always there and you don't have another choice.

[dogwalker]

The way I read it is it's a line in the budget that I've seen a "million times" in the financial statements of many entities and corporations.  It's there because it has to be.  What it means depends on the rest of the balance sheet.  However as fathernature suggests, it is highly advisable, for companies for example, that debt does not exceed liquid or liquidatable assets for obvious reasons.  If that is not the case and too many debtors want their money all at once (rare, but that's what happened to Silicon Valley Bank) then a company (or a small number of US cities) usually has to declare bankruptcy.  Most companies have more assets than debt but a few like those that must put out a lot of capital up front (get loans) to operate have way more debt than liquid assets. Companies that have to purchase real estate are often in that situation. They, umm like our US government, just pay interest on the debt and hope not too many debtors call in the debt early.

[DoctorTaco]

1) The problem is not just with the state of CA, but almost every county and city.

2) It seems like yesterday that Gavin was giving money back to taxpayers. F'n idiot.

From June 2022:  https://www.gov.ca.gov/2022/06/30/governor-newsom-signs-budget-putting-money-back-in-californians-pockets-and-investing-in-states-future/#:~:text=SACRAMENTO%20%E2%80%93%20Governor%20Gavin%20Newsom%20today,and%20invests%20in%20California's%20future.

[bats]

Let's face it, if the State of California was a private business it would of gone with names of KMart and Sears.

Government entities and private businesses exist for different reasons and have different purposes. Their incentives, risk tolerances, and operating constraints are all fundamentally different.

I know I'm stating the obvious, but it's nearly always an apples-to-oranges comparison.

[Danno]

With a $3.87 Trillion economy.
California will be just fine.