LAO Whitewashes Gov. Brown’s Rosy Budget

LAO Whitewashes Gov. Brown’s Rosy Budget

Jan. 15, 2013

By Katy Grimes

SACRAMENTO — “Everything’s Coming Up Roses,” from the Broadway musical Gypsy, should be Gov. Jerry Brown’s new theme song. His 2013-14 budget proposal, released last Thursday, was full of happy news, good times a projected balanced budget and an upcoming surplus.

220px-TOR_New_Orleans_float

Clear the decks! Clear the tracks!
You’ve got nothing to do but relax.
Blow a kiss. Take a bow.
Honey, everything’s coming up roses!

Even more amazing than the governor’s rosy budget is that Legislative Analyst Mac Taylor appears to agree. Mostly.

Overview

I attended the LAO’s meeting yesterday at their Sacramento office where they presented their overview of the governor’s budget proposal. But a roomful of journalists didn’t completely buy the “everything’s coming up roses” message.

“The governor’s proposed budget reflects the significant improvement in the state’s finances that our office identified in November,” the LAO announced. “The budget roughly is in balance,” Taylor said today at the meeting.

Taylor explained that, in the LAO’s November budget projections, they recommended that “fiscal restraint” was necessary. “I think the governor’s proposal reflects that kind of discipline. He should be commended,” Taylor said.

Taylor admitted that, even with fiscal discipline, the governor did not address the state’s retirement obligation — a $500 billion unfunded pension liability. Taylor mentioned concern with the growing state teacher retirement fund.

He acknowledged that many of the reporters present had written stories questioning the gaping difference in the LAO’s projection of a $1.9 billion deficit, and Brown’s projected balanced budget  and surplus. Taylor explained that, while Brown’s administration and the LAO were still far apart in budget projections, the Department of Finance did a better job this time around bringing their lofty projections back down to earth.

Last year, Brown’s budget numbers were so far off of the LAO’s that, by the May Revise of the Budget, Brown and the Department of Finance had to drastically reduce their happy projections, and at least address the fiscal mess the state was in.

This year, Brown has erased the deficit from his budget proposal, and is projecting that, by 2015, California will enjoy a $1 billion surplus. Everything’s coming up roses.

Math is hard

According to Teen Talk Barbie, “math class is tough.”  220px-Barbie_Fashion_Model

And the governor’s numbers don’t add up — particularly with the more than $500 billion unfunded pension debt, as tallied by a Stanford University study; and the $10 billion owed to the federal government for California’s Unemployment Insurance borrowing.

Brown’s budget proposal lists only $181.2 billing in unfunded retirement liabilities. However, State Budget Solutions‘ third annual State Debt Report demonstrated an unfunded California pension liability of $617 billion — larger even than the number in the Stanford study.

Wall of debt

According to the governor’s budget proposal, California’s “wall of debt” totaled only $34.7 billion last May, and is now down to $27.8 billion. It includes:

* Deferred payments to schools and community colleges;

* Economic Recovery Bonds;

* Loans from Special Funds;

* Unpaid costs to local governments, schools and community colleges for state mandates;

* Underfunding of Proposition 98;

* Borrowing from local government (Proposition 1A);

* Deferred Medi-Cal Costs;

* Deferral of state payroll costs from June to July;

* Deferred payments to CalPERS;

* Borrowing from transportation funds (Proposition 42).

Taylor said that the choice is paying down the debt, versus adding new revenues, but not both.

Taylor noted that the wall of debt was not included  because “we know what the numbers are.”

But any way you slice it, California owes a great deal of money and its budget cannot be balanced, or honestly look at a surplus, anytime soon.

Health and education funding

California is facing a dramatic change in health care funding in the very near future because of  Obamacare. The state will be shifting the entire Healthy Families program into Medi-Cal.

Healthy Families is low-cost insurance for children and teens. Medi-Cal is California’s health care aid for anyone receiving welfare assistance. This is not apples-to-apples by any stretch of the imagination.

Taylor acknowledged that he didn’t want to discuss this, and shifted right into education spending.

Prop. 39 and education funding

An area in which Taylor appeared to be in disagreement with Brown was over Proposition 39, the ballot initiative which passed in November, taxing out-of-state businesses with a physical presence in California.

Projected Prop. 39 revenue will go right into the General Fund as well as into spending for renewable energy. It also factors into the mandatory education spending calculation of Proposition 98. Prop. 39 is estimated to bring in $1 billion in tax revenues, but many warn that this is also a volatile revenue prediction.

Taylor said that the Prop. 39 ballot pamphlet specifically said that revenue from Prop. 39 would be spent on energy-related projects for the first five years, and then into education.

Taylor argued that the Prop. 39 revenues should not be counted toward education funding for the first five years. “But, it has short-term consequences — only five years,” he said.

Differing ‘assumptions’

Taylor said that Brown’s budget proposal “assumes a different set of assumptions.” But isn’t accounting usually done one way in this country? A different set of assumptions may work in marketing, but not in the real world where real people have to face real budget crises.

While Brown’s budget proposal is even more rosy than the LAO’s projections, the economic assumptions in the budget summary claim that there is an economic recovery, many sectors of the economy are improving, real estate conditions are better, the housing market is improving and unemployment is dropping. On Thursday, Brown never mentioned how the millions of unemployed Californians will find work, or how the economy will improve with this increase in government spending and taxing.

I don’t believe for a minute that Taylor buys into Brown’s budgets. What Taylor says publicly and what his reports say also have differing assumptions.

45 comments

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  1. Kris Hunt
    Kris Hunt 15 January, 2013, 10:34

    It is unconscionable that so many reporters have fallen for this Governor’s form of budget smoke and mirrors. Mac Tayor seems to be so much more political than is appropriate for an LAO.

    The failure to deal with the pension costs and retiree health is going to mean service cuts in the future or worse for this economy, tax increases.

    Reply this comment
  2. us citizen
    us citizen 15 January, 2013, 12:28

    Lets see here………I owe on my water, gas, electricity, tv, internet, phone and property taxes. I also owe on my mortgage, 3 credit cards, car insurance, life insurance, health insurance, car loan, and house insurance.

    Im going to pay on *most* of these bills but not all of them.

    Yep…….I have a balanced budget now and will have excess money in 2 years!!! Whipeeeeeeee

    Reply this comment
  3. Sean Morham
    Sean Morham 15 January, 2013, 12:57

    7 million uninsured on Supremeleader care. Certainly, the state economy will absorb that without missing a beat when the feds pass that over to Cal. One way to cut health care cost is to too make it illegal for a doctor to treat aanyone over a certain age, say 65. This would also help the trust fund for Social Security, and the state pension system. What is not to like? An enhanced state estate tax for Cal. would be great, since more would be joining the ranks of the “uninsured, but don t need it category”. Demand for services declines rapidly on death. This is a good thing, paging YOur honor, the governor, paging Mr Speaker.

    Reply this comment
  4. jimmydeeoc
    jimmydeeoc 15 January, 2013, 14:40

    “Deferred…Loans…. Unpaid costs…. Underfunding…. Borrowing…. Deferred…. Deferral…. Deferred…. Borrowing”

    Let’s see…I have it at three deferreds, two borrowings and a deferral.

    Do I hear another deferred? Going once…..

    To coin one of future governor Villaraigosa’s favorite adjectives: “….Fabulous…..”.

    Reply this comment
  5. The Modified Ted Steele Methodologies (tm)
    The Modified Ted Steele Methodologies (tm) 15 January, 2013, 19:47

    LOL you doomers! The budget rocks— and whats wrong with VillaRagossa??? This place is a sad sack broken tea b record….zzzzzzzzzz lol

    Reply this comment
  6. SeeSaw
    SeeSaw 15 January, 2013, 23:10

    And, full of those who refuse to accept the fact that the majority of CA voters preferred Brown for Governor, over a billionaire who was on a personal quest for power; and they also refuse to accept the fact that the majority of America’s voters chose Obama to be POTUS. Its time to face reality and move on. Try to be decent toward those who have differing opinions–sarcasm and snarkiness, especially toward senior citizens, does not help.

    Reply this comment
  7. Hondo
    Hondo 16 January, 2013, 00:17

    See Saw:
    You guys own the economy now. If you can’t fix it you can’t possibly blame the republicans. You also own the crime problem and everything else and the republicans have no power to stop or slow down the dems.
    The real wall of debt is 500 billion. Fix it.
    Good luck.
    Hondo….

    Reply this comment
  8. Rex the Wonder Dog!
    Rex the Wonder Dog! 16 January, 2013, 00:58

    SeeSaw says:
    Try to be decent toward those who have differing opinions–sarcasm and snarkiness, especially toward senior citizens, does not help.

    Sesaw, you truly need help, as you are delusional……..

    Reply this comment
  9. sean morham
    sean morham 16 January, 2013, 05:05

    Agreed the citizens voted for our leaders. Accept it. Tighten up, don t spend…..save, eliminate debt, buy from garage sales……it is fun and a game…do this Sunday instead of football. Starve the beast…

    Reply this comment
  10. CalWatchdog
    CalWatchdog 16 January, 2013, 07:31

    “Try to be decent toward those who have differing opinions–sarcasm and snarkiness, especially toward senior citizens, does not help.”

    Is SeeSaw a retired public employee?

    Katy

    Reply this comment
  11. Sean Morham
    Sean Morham 16 January, 2013, 08:33

    Katy, Believe he noted he retired from a water dept job.

    Reply this comment
  12. Rex the Wonder Dog!
    Rex the Wonder Dog! 16 January, 2013, 08:50

    Is SeeSaw a retired public employee?

    Please tell me you’re being FUNNY!

    Of course Seesaw IS a trough feeding retiree from the gov., and she spins out their propaganda better than Clown himself 😉

    Reply this comment
  13. SeeSaw
    SeeSaw 16 January, 2013, 09:11

    I have stated on these forums umpteen times that I am a retired government employee. It is nothing to be ashamed about. In fact, I am very happy and proud that I worked in the public sector. I did some good for someone else every day. And FYI, Sean I am female! I’m just a member of the same society you are Hondo. I am under no more responsbility than you are, except to live a proper life–and I don’t go around hating on others who had it richer than I.

    Reply this comment
  14. SeeSaw
    SeeSaw 16 January, 2013, 09:23

    You guys are the ones who are delusional if you think all public sector employees and retirees are Democrats. My Dept. head and most of my colleagues were Republicans. Most all safety personnel are Republicans. I come from a red state where all my former classmates are Republicans–we even have reunions. All my family and friends and relatives are in the private sector. And I am among them all. Imagine that! Sorry about you Libertarians though. The majority of the population, thankfully understands that each of us are not on an island unto ourselves–we need the government and each other. Sorry people–you are outnumbered–make your therapy appointments now.

    Reply this comment
  15. Sean Morham
    Sean Morham 16 January, 2013, 10:28

    I am in San Francisco quite a bit. Nothing surprises me.

    Reply this comment
  16. Ted Steele, Navigator
    Ted Steele, Navigator 16 January, 2013, 13:51

    Right on the money SeeSaw—– I did 10 years in the public sector— I was a lone Democrat in my area ….

    Reply this comment
  17. Ted Steele, Navigator
    Ted Steele, Navigator 16 January, 2013, 13:52

    Rex– Can’t you be a bit more CIVIL to the other posters? Seriously man…

    Reply this comment
  18. CalWatchdog
    CalWatchdog 16 January, 2013, 15:58

    Republican or Democrat working in government doesn’t change the fact public employees receive substantial public pensions, for which most have not contributed equitably. California’s public pension debt is $617 billion and growing, and completely unsustainable. That’s what I’d be worried about if I was a public employee.

    Katy

    Reply this comment
  19. BobA
    BobA 16 January, 2013, 16:40

    SeeSaw:

    You’re good! I graduate from college the year Ronald Reagan was elected president and I’ve been a conservative every since. I know many public sector employees who are also republicans so you’re right in that regard.

    The public sector employees who I’ve run into that are rabid doctrinaire liberals and dyed in the wool democrats were/are without exception, federal government employees.

    From what I can tell, they’re all a bunch of lowbrow LIFERs (Lazy Inefficient F**kups Expecting Retirement).

    Reply this comment
  20. Ted Steele, Navigator
    Ted Steele, Navigator 16 January, 2013, 16:40

    Public employees should remain sanquin that what they earned will be paid.There will be the odd exception. Those “substantial” pensions were created by you amiga. In a representative democracy 2 parties negotiate and your representatives did just that. Pensions were a part of the compensation package.Adjustments and new tiers have come time and again. The only thing certain about the future is change. For all of us. But please keep the drone of doom churning…it’s what you do. It’s what you “create”, I guess.

    Teddy

    Reply this comment
  21. Ftheunions
    Ftheunions 16 January, 2013, 19:39

    Seesaw has noted her long career in the public sector and firmly believes that the public sector breeds innovation and efficiency! Unlike most people, Seesaw fails to recognize the public sector as a protected class whose retirement, healthcare, and often, jobs, are protected despite the economics.

    Reply this comment
  22. The Modified Ted Steele Methodologies (tm)
    The Modified Ted Steele Methodologies (tm) 16 January, 2013, 20:24

    ftheunions—you sound like a typical sour grapes guy—- did you make some bad choices in your life or what? I don’t begrudge anyones hard work!

    Reply this comment
  23. SeeSaw
    SeeSaw 16 January, 2013, 20:49

    Wow, you certainly read a lot into my words that I didn’t know I was talking about Fthunions! I didn’t say anything about innovation. I do know a lot about efficiency–it was required of me in my job. The job of the public sector is to provide services that the citizens need and want–simple as that. I don’t know what it is that you do in your job, but I bet you don’t smile much–you wouldn’t make it in the public sector, with that persimmon pucker!

    Reply this comment
  24. SeeSaw
    SeeSaw 16 January, 2013, 21:01

    Its up to the pension plan’s actuaries to set the contribution amounts, Katy. We are not actuaries–we do what we are told to do to follow the rules. If it wasn’t enough–that’s not our fault. Anyway, a pension plan member is not expected to pay all the costs–the investment earnings are for that. They are going to charge the participants enough that they do not go broke.

    Reply this comment
  25. Rex the Wonder Dog!
    Rex the Wonder Dog! 16 January, 2013, 21:03

    Ted Steele, Navigator says:

    Public employees should remain sanquin that what they earned will be paid.
    They never “earned” multi million dollar pensions at age 50 bird brain 🙂

    Reply this comment
  26. SeeSaw
    SeeSaw 16 January, 2013, 21:06

    Fthunions, I send my former employer $1341 per month to cover the out-of-pocket cost for the ABC medical-insurance premiums, that cover me and my spouse, secondary to Medicare. Does that look like protected healthcare to you!

    Reply this comment
  27. SeeSaw
    SeeSaw 16 January, 2013, 21:08

    Bring forth those people who have multi-million dollar pensions at age 50 Rex. After working, in the public sector for 40 years, I don’t know anybody in that category.

    Reply this comment
  28. SeeSaw
    SeeSaw 16 January, 2013, 21:11

    The part of the country one grows up in and resides in is a big factor in one’s political ideology, BobA. My two cousins who are both Republicans and federal retirees are from Virginia.

    Reply this comment
  29. Rex the Wonder Dog!
    Rex the Wonder Dog! 16 January, 2013, 21:59

    The Modified Ted Steele Methodologies ™ says:
    ftheunions—you sound like a typical sour grapes guy—- did you make some bad choices in your life or what? I don’t begrudge anyones hard work!

    Public trough feeder is not a choice, it is a crime against humanity 🙂

    Reply this comment
  30. Rex the Wonder Dog!
    Rex the Wonder Dog! 16 January, 2013, 22:02

    SeeSaw says
    Bring forth those people who have multi-million dollar pensions at age 50 Rex. After working, in the public sector for 40 years, I don’t know anybody in that category.

    “For example, Craig Bowen, retired San Ramon Valley Fire District employee, collects an annual pension of $295,428. His estimated lifetime payout is $12,097,777.”

    “Hye Kyung Kim, retired Contra Costa government employee, has an annual pension of $291,168, with an estimated lifetime payout of $13,102,560.”

    “Retired Contra Costa County government teacher, Daniel M. Smith, has a lifetime estimated payout of $8,366,522 based on his actual annual pension of $197,790.”

    http://www.taxpayersunitedofamerica.org/latest/governor-brown-fails-contra-costa

    Oh SNAP!!!!!!!!!!! Seesaw just got her fannie spanked back into the STONE AGES by the ruff-ruff 🙂

    Reply this comment
  31. Rex the Wonder Dog!
    Rex the Wonder Dog! 16 January, 2013, 22:05

    BOOM!!!!!!!!!!!!!!!!!
    Double BOOM BOOM!!!!!!!!!!!!!!!

    Craig Bowen, at age 51 retired chief of the San Ramon Valley Fire District, has retained the number 1 spot since the list’s inception. In fact, firefighters make up 40% of the “Club” (268 out of 645) with Contra Costa Consolidated Fire Protection District (ConFire) firefighters filling 180 of the Club membership slots.

    Ms. Hunt stated “ConFire recently announced it needs a parcel tax and the growing pension cost is clearly one of the factors involved.” David Twa, Contra Costa County Administrator, speaking at last month’s CoCoTAX meeting revealed that ConFire’s benefits cost 103% of salary. By way of comparison, private sector benefit costs average in the 33-35% range.

    For more information, contact Kris Hunt, Executive
    http://www.cocotax.org/100kPensionClub

    Reply this comment
  32. Rex the Wonder Dog!
    Rex the Wonder Dog! 17 January, 2013, 06:06

    Looks like seesaw tucked tail and ran for them thar hills………………………. 🙂

    please take teddy with you seesaw!

    Reply this comment
  33. The Modified Ted Steele Methodologies (tm)
    The Modified Ted Steele Methodologies (tm) 17 January, 2013, 07:03

    Poodle– I think SeeSaw is just trying to catch her breath after laughing at you for sooooooo long little buddy!!!

    0 for 14 ™!

    Reply this comment
  34. The Modified Ted Steele Methodologies (tm)
    The Modified Ted Steele Methodologies (tm) 17 January, 2013, 07:06

    Oh by the way Poodle–more anecdotal junk examples proves zippo! But thanks for playing!!!

    Where do I send my rent check for living in your head???? lol

    Reply this comment
  35. eatingdogfood
    eatingdogfood 17 January, 2013, 08:16

    Democratic Hustler Politicians + Corrupt Greedy Unions = BANKRUPTCY BABY!

    Reply this comment
  36. BobA
    BobA 17 January, 2013, 11:11

    SeeSaw:

    You’re right so let me state my point more subjectively. The closer one is to the New York Boston corridor, the more likely one is to be a flaming liberal. Especially if said person works for the federal government.

    I’m a California native who has traveled extensively and I can tell. And ignoring their northeast accent, I can tell the difference between an eastern conservative and a western conservative.

    Eastern conservatives usually display liberal sensibilities in the way they think which is easy to detect when one understands the differences in the way liberals and conservatives think. It has much to do with being saturated in liberal ideology in their formative years.

    They epitomize the saying: what is a conservative? A liberal who got mugged by reality.

    Reply this comment
  37. Marten purdy
    Marten purdy 17 January, 2013, 11:20

    The truth is, the way they want everything to be run, America will go deep into debt, the rich will practically have their money taken from them and then be repettitively raped and thrown in to jail for being rich, the 99% of America won’t be taxed, college will be free unless you’re from the “one percent”, and the borders will be open with a big sign that says “come on in!”

    Reply this comment
  38. Ted Steele, Navigator
    Ted Steele, Navigator 17 January, 2013, 13:37

    Gee Boba– You’re so brainy…mmmmmmmmmmmmmmmmmmmmmmmmmmm

    lol

    Reply this comment
  39. BobA
    BobA 17 January, 2013, 16:23

    Rex:

    Somehow I don’t see Seesaw (no pun intended!) as the type who runs away. Besides, she’s smarter than Teddy with half her brain tied behind her back!

    Reply this comment
  40. Rex the Wonder Dog!
    Rex the Wonder Dog! 17 January, 2013, 16:49

    BobA says:
    Rex:

    Somehow I don’t see Seesaw (no pun intended!) as the type who runs away. Besides, she’s smarter than Teddy with half her brain tied behind her back!
    LOL….Teddy is a dork. But seesaw wanted examples, I just gave them to her and NOW she is MIA.

    Reply this comment
  41. BobA
    BobA 17 January, 2013, 20:03

    Rex:

    Teddy is a dork? Break out the party hats and ice cream & cake. You’ve just upgrade for him from a lowbrow twit to a dork!!

    Reply this comment
  42. Ftheunions
    Ftheunions 17 January, 2013, 21:24

    Steely Ted,
    No sour grapes here! In fact, I think I lead a pretty good life. And that’s precisely why I have such disdain for the public sector. You see, I recognize that my pretty good life will be much more difficult to achieve for my kids and, really, any kids today. I recognize that with every new government employee, there is a contraction, however small, of our liberties. If you don’t recognize this then you don’t understand or are part of the government waste.

    Reply this comment
  43. Rex the Wonder Dog!
    Rex the Wonder Dog! 18 January, 2013, 02:53

    I recognize that with every new government employee, there is a contraction, however small, of our liberties. If you don’t recognize this then you don’t understand or are part of the government waste.
    ==
    Teddy IS a part of gov waster 😉

    Reply this comment
  44. SeeSaw
    SeeSaw 19 January, 2013, 11:41

    Is my absence the last two days the reason my ears were burning? It might come as a surprise, but my life doesn’t revolve around sitting in front of a computer screen all day. I have things to do and places to go.

    It makes me a little sad to see how you people, rightwingers that you are, view the rest of us, who live in your neighborhoods and partronize your businesses.

    Rex, you are the saddest puppy in this whole litter! The examples you used have been around for over a year. We know that there are exceptions to the norm, always. For all you know, that 51-year old wunderkind might have several college degrees. There aren’t many public safety workers who get hired with GED’s, only, and frankly, I don’t know any. The youngest retiree from my former workplace was 53 with 35 years, service credit–he is one of those exceptions.

    I wonder, Rex–are you using your calculator to figure out how many non-profit, 15 million dollar-income years, are going into Meg Whitman’s billion-dollar kitty, over the remainder of her lifetime. Let’s lay off those billionaires, now, when there are your own demographic cohorts to pick on.

    Poor Rex, you went to college and became a teacher, and instead of using your education to do work that is meaningful to you, you sit around and hate on those who chose a different route.

    And the fact that you have lived a good life, ftheunions, is the reason you hate people who worked in the public sector? Wow! I’m sorry for your children, that they are being indoctrinated with your type of hatrid.

    The disdain that you Rex, and BobA hold for Ted says a lot more about you than it does about him. He is very learned and knowlegable from my standpoint. I imagine that he was either a lawyer, or an undercover PS worker. But, I have never met him–he could be a 21-year old girl, for all I know.

    I’m hoping for better days for all of us, this year.

    Reply this comment
  45. SeeSaw
    SeeSaw 19 January, 2013, 15:32

    I don’t know how to send links. If you type the following subject into your internet browser and watch the video, that is probably runs than a minute, you will at least have close to a minute of joy in your life:

    Rocky Mountain Elk Foundation Video by Scott McKinely. (The title of the video is, “My Beautiful Wyoming”.)

    Reply this comment

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