Skelton Needs Remedial Math

John Seiler:

Sometimes I just shake my head. L.A. Times California columnist George Skelton writes today:

Let’s be clear: State employee pensions are not to blame for Sacramento’s budget deficit. Not by any math.

Down the road, the current state pension system probably is not fiscally sustainable, as some studies have reported. It could burn a hole in the state vault — some time in the future. But not now or any time soon….

Here are the dollar data on the state’s pension costs: For the next fiscal year, pension payments out of the $85-billion general fund are slated to total $3.7 billion.

Amazing. To him, $3.7 billion is a paltry sum, and “not to blame for Sacramento’s budget deficit.” But — it’s $3,700,000,000.00. A lot of our tax money.

And $3.7 billion comes to 31 percent of the $12 billion in tax increases Gov. Jerry Brown is demanding, and Skelton is cheerleading. That’s not chump change.

Not only that, but the $500 billion in unfunded pension liabilities, per a Stanford University study, also hurt the state budget today. That’s because Gov. Brown’s budget proposal (page 175) includes $5.6 billion in debt service — and California has the worst bond rating of the 50 states. A good reason for that low rating is high pension liability. Without that high liability, the state’s bond rating would be much higher — meaning debt costs would be lower, probably (this is a guess) by several hundred million dollars.

The decades of fiscal idiocy in this state have stirred up a brewing crisis that Skelton’s government math can’t hide.

The pension crisis is real. It’s serious. And it’s hitting now.