The $64,000 question. Which will bury CA first. Pension or Bond Obligations?

I am both amazed and angry. No, I’m not speaking of the presidential race. Arnold has recently acknowledged that our revenue stream is a bit short to cover expenses.  No, no longer $3 billion dollars. How about a new number closer to $10 billion. Mind you we just signed the state budget after being late by 85 days and somehow exaggerated our income.

So while many of us do take the time to keep up with “stuff” like this the highly informed California electorate has just voted approval of Prop 1A by a vote of 5,072,778 YES votes and 4,661,366 fiscal responsible people who said NO.

Don’t they get it? Where do they think we will get the funds to pay off this latest Bonded indebtedness? Another test will be to see if any lender is willing to trust us to make the payments unless we are receptive to a premium interest rate due to our “superb” state bond rating.
The $9.95 billion price tag of Prop 1A is just the down payment for a 800 mile high speed rail system that might eventually cost us around $81 billion.

The following text, that mentions our PERS program is from the NJ Housing Bubble web site:
“The $240 billion California Public Employees’ Retirement System, the largest U.S. pension plan, agreed at a Feb. 19 board meeting to hold between 0.5 percent and 3 percent of its assets in commodities, spokesman Clark McKinley said. CalPERS, facing pressure from state and local governments to boost returns, would reduce its bond holdings to 19 percent from 26 percent.

$731 Billion Short

U.S. states owe an estimated $2.73 trillion in pension and benefit payments to retirees over the next 30 years, according to a December report from the Pew Center on the States. They are short almost 27 percent, or $731 billion, of that amount. The Government Accountability Office said last week that 58 percent of 65 large state and local pension plans were adequately funded in 2006, down from 90 percent in 2000.”

With a fixed payout for every PERS participant, and a shaky Wall Street, these mandatory pension obligations put us at great risk.  Check out Bridgeport, CT or Vallejo, Ca as to their financial woes.  If we are not careful our entire state will go “belly up.”
So while we face massive retirement and health care obligations we continue to spend our grandkids into the poor house that will eventually result in cutbacks on basic services such as police and fire protection and K-14 education. But, there is a positive side. We can take the highly subsidized bullet train from LA to Sacramento to visit our elected officials in 2030 if the project is ever completed.

Question of Juice readers. IF, and I do say IF, the proposed “bullet” train was in service today, how often would your travels take you from southern CA to northern CA or vice versa?  Once to five times a year? More frequent than that?
Where do you see our biggest transportation needs? Local short distance commutes or 800 hundred mile excursions?

About Larry Gilbert