Home > Uncategorized > California Debt Higher Than Earlier Estimates – NYTimes.com

California Debt Higher Than Earlier Estimates – NYTimes.com

September 22, 2012 Leave a comment Go to comments

Gov. Jerry Brown of California announced when he came into office last year that he had found an alarming $28 billion “wall of debt” looming over the state, which had to be dismantled.

Since then, he has slowed the issuance of municipal bonds, called for spending cuts and tried to persuade the state’s famously antitax voters to approve a tax increase this fall.

On Thursday, an independent group of fiscal experts said Mr. Brown’s efforts were all well and good, but in fact, the “wall of debt” was several times as big as the governor thought.

Directors of the State Budget Crisis Task Force said their researchers had found a lot of other debts that did not turn up in California’s official tally. Much of it involved irrevocable promises to provide pensions to public workers, health care for retirees, the cost of delayed highway maintenance and an estimated $40 billion bill to bring drinking water up to federal standards.

They also pointed out many of the same unpaid bills from previous years that the governor had brought to light, like $8 billion in delayed payments to schools and community colleges, and $250 million that was raided from a fund dedicated to transportation and treated as revenue.

The task force estimated that the burden of debt totaled at least $167 billion and as much as $335 billion. Its members warned that the off-the-books debts tended to grow over time, so that even if Mr. Brown should succeed in pushing through his tax increase, gaining an additional $50 billion over the next seven years, the wall of debt would still be there, casting its shadow over the state.

“With inadequate information, our legislators and citizens are flying blind,” said David Crane, a board member who issued the task force’s special report on California’s fiscal condition at a news conference in San Francisco on Thursday.

Mr. Crane, a former adviser to Gov. Arnold Schwarzenegger, was joined by the economist George P. Shultz, who served various administrations as secretary of treasury, labor and state.

via California Debt Higher Than Earlier Estimates – NYTimes.com.

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