State of California is broke

[LanceyHoward]

But the unfunded pension liability problem, which is not unique to California, will start to be solved by lower salaries for government workers.

Yeah, once the state comes up with the (trillion dollar? $500 billion dollar? you name the figure) unfunded liability for pensions, things will be smooth sailing. That's all.

When you came up with that admittedly hypothetical figure what is the rate of wage growth of government employees assumed in determining the liability? Off the top of my head- don't have time to confirm- California state pension plans are funded at 70% of estimated liabilities. A five percent pay cut will reduce that amount by about 16%. And if the actuary is assuming a three percent growth in wages of state employees for the next 30 years and it is actually only two percent then that liability is knocked down a lot.

I can show you articles from Business Week from the late 70's or very early 80's talking about the coming crisis in private persion funds (back when they still had them, sigh) and how corporations had badly underfunded them due to the bear market at that time. The problem disappeared in the 80's and 90's when the stock market boomed.

I am not trying to dismiss the problem because it is serious but those pension funds are not going broke anytime soon and I think that over time solutions will be reached to solve the problem- like the current proposed five percent pay cuts.

As for your Chris Christie admirers, a question. He cut back on pensions for New Jersey employees. He also refused to fund them in the first year of adminsitration. Now he has cut income taxes 10% and revenues projections are coming up short. Is he using these pension savings to shore up the pension funds or is using them to cut taxes and then punt the pension problem down the road? I don't know.

 

[SoCalScribe]

I remember, just before the real-estate crash, driving I-10 through Palm Springs toward Arizona and seeing the advertisements on billboards, that you would earn $70k starting salary. I looked into it and in Arizona the starting salary was a bit less than half that.

 

[Mizzougrad96]

I remember, just before the real-estate crash, driving I-10 through Palm Springs toward Arizona and seeing the advertisements on billboards, that you would earn $70k starting salary. I looked into it and in Arizona the starting salary was a bit less than half that.

Arizona was probably still the better deal... I desperately wanted to come back to California in the first few years after I got out of college, but the costs were too much, and I think a lot of people deal with that...

 

[doctorquant]

Interesting item in SF Chronicle this morning: California's top officials have gone through another round of pay cuts, which means Jerry Brown is making $165,000 -- or $14,000 less than the parks-and-rec director for the East Bay city of Brentwood (pop. 51,000).

I'm sure there are a lot of sprinkler deployments and softball games to schedule, yet $179,000 does seem a tad excessive.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/06/03/BATD1ORQ46.DTL&tsp=1

Oh, I think that's a pretty tight labor market. Sort of a diamonds-and-water-paradox kind of thing ...

Damn, I didn't even know that was a thing -- I am the accidental metaphorist!

LOL ... I didn't even notice the pun myself until after you pointed it out. The paradox is a common economics topic, often trotted out in response to someone saying that "Pro athletes make too much money and teachers/firemen/policemen/whatever make too little ..."

http://en.wikipedia.org/wiki/Paradox_of_value

 

[TigerVols]

California needs Chris Christie.

To erase the decades-old fitness craze?

California needs someone who will come in, make the tough and unpopular decisions that need to be made to fix what's broken.

You mean, like tell local governments to go fork themselves by shutting down the councilmen-re-election funds known as Community Redevelopment Agencies?

You mean, like tell all California state employees you're getting a 5 percent pay cut immediately?

You mean, like tell all California residents some of your state parks are going to be shut down due to overhead costs?

You mean, like tell the state legislature you're going to expect an on-time, balanced budget, or you're not going to be paid a penny past the deadline?

You mean, a guy like Jerry Brown?

 

[Stitch]

California needs Chris Christie.

To erase the decades-old fitness craze?

California needs someone who will come in, make the tough and unpopular decisions that need to be made to fix what's broken.

You mean, like tell local governments to go fork themselves by shutting down the councilmen-re-election funds known as Community Redevelopment Agencies?

You mean, like tell all California state employees you're getting a 5 percent pay cut immediately?

You mean, like tell all California residents some of your state parks are going to be shut down due to overhead costs?

You mean, like tell the state legislature you're going to expect an on-time, balanced budget, or you're not going to be paid a penny past the deadline?

You mean, a guy like Jerry Brown?

You mean a liberal hippie big-government commie? Or at least what the Tea Party pretenders in government portray him as.

How many of those who complain about big government salaries work for government? It seems at least half of the people I know who work in government are Tea Party sympathizers and FOX News watchers.

 

[Greenhorn]

Cost of invading, destroying and rebuilding foreign countries: Trillions of dollars.
Money GOP wants to spend on infrastructure and public education in this country: Zero dollars.
Having a political party that is only concerned with the 1 percent and demonizing everyone else: Priceless.

 

[Mizzougrad96]

There's an election in San Jose that would take away the cost of living increases for retired government workers. Apparently, you are not allowed to change the initial amount of money that they're getting, but you can take away the increases. It seems like a no-brainer to me, but it will be interesting to see if it passes.

Otherwise, they'll keep having to get rid of young people who are working there in order to pay the pensions of the retired people who no longer work there...

 

[poindexter]

I threw out a range, because there are differing estimates.

http://www.calwatchdog.com/2011/08/23/ca-admits-884-billion-unfunded-pensions/

http://articles.latimes.com/2010/apr/06/opinion/la-oe-crane6-2010apr06

http://online.wSportsJournalists.com/article/SB10001424052702303695604575181983634524348.html

heck, here's $135 billion for two dozen city and county governments unrelated to Calpers
http://www.ocregister.com/articles/county-341445-pension-percent.html

 

[Mizzougrad96]

California needs Chris Christie.

To erase the decades-old fitness craze?

California needs someone who will come in, make the tough and unpopular decisions that need to be made to fix what's broken.

You mean, like tell local governments to go fork themselves by shutting down the councilmen-re-election funds known as Community Redevelopment Agencies?

You mean, like tell all California state employees you're getting a 5 percent pay cut immediately?

You mean, like tell all California residents some of your state parks are going to be shut down due to overhead costs?

You mean, like tell the state legislature you're going to expect an on-time, balanced budget, or you're not going to be paid a penny past the deadline?

You mean, a guy like Jerry Brown?

So everything is fixed? Good to know...

 

[LongTimeListener]

Jerry Brown has done a heck of a lot more than anyone on the other side will give him credit for. Worth noting that in then last race, Jerry was hammering away for pension-cutting, but the pro-business low-tax GOP darling Meg Whitman exempted cops and firefighters -- who are by far the largest share of those pensions -- in order to get their endorsement.

He is still supporting high-speed rail, which I hate and hope he will reconsider, but on mostly everything else he has become the voice of austerity and reason.

 

[Mizzougrad96]

Jerry Brown has done a heck of a lot more than anyone on the other side will give him credit for. Worth noting that in then last race, Jerry was hammering away for pension-cutting, but the pro-business low-tax GOP darling Meg Whitman exempted cops and firefighters -- who are by far the largest share of those pensions -- in order to get their endorsement.

He is still supporting high-speed rail, which I hate and hope he will reconsider, but on mostly everything else he has become the voice of austerity and reason.

If he was a republican, they'd try to recall him.