No, CA not thriving: Double-whammy from U-T San Diego

June 2, 2013

By Chris Reed

The newly in-vogue theory in the national media and in the particularly stupid wings of the California media is that the Golden State’s recent revenue surge suggests Sacramento has gotten on the right track and surmounted all its vast dysfunction, incoherence and incompetence.

In the Sunday U-T San Diego, this assertion is in for a double-blast of buckshot. Kicking off the newspaper’s ambitious “Fixing California” series, U-T editorial page editor William Osborne and Franklin Center veep/CWD founder-contributor Steven Greenhut tee off on the happy talk with an 1,800-word opinion piece.

Best in the nation? Try worst

A key passage from Osborne and Greenhut:

“• Shockingly, California now has the highest rate of poverty in the nation, measured at 23.5 percent, significantly higher than any of the states of the Deep South. …

“• The state that historically was among the last to fall into recession and among the first to pull out it, has flipped. In the last three national economic recessions, the California job market has fallen farther and taken longer to recover than the U.S. market. Unemployment in California today, though thankfully falling, remains among the highest in the nation. Of California’s 58 counties, 27 are burdened by unemployment at or above 10 percent; four of them have a jobless rate higher than 15 percent. In Imperial County, the jobless rate in April was 24 percent. It was 19.9 percent in the Central Valley’s Colusa County.

“• The educational performance of California students now ranks near the very bottom as measured by the National Assessment of Educational Progress, known as ‘the nation’s report card.’ On the state test for 2011-2012, only 56 percent of students scored at the proficient level or above in English. Even fewer, 51 percent, were proficient in math.

“• The state lost 33 percent of its industrial base from 2001-2012, declining 11 percent more than in the United States as a whole. The state is now increasing manufacturing jobs at an anemic rate that lags far behind that of the nation.

“• Once the national leader in export growth, California has been losing ground for more than a decade and is now a distant second to Texas in total exports.”

Surplus talk loony in sea of unfunded liabilities

Elsewhere in the Sunday U-T, I wrote an editorial taking on the inexplicable claim that we could soon see budget surpluses in Sacramento:

“California is far from being in good fiscal health. When Gov. Jerry Brown talks about reducing the ‘wall of debt’ he inherited upon taking office three years ago, he leaves out huge problems — problems that Sacramento has either not addressed or barely addressed:

“• $87 billion in unfunded liabilities for the California Public Employees’ Retirement System. The $87 billion would be far higher if not for the rosy investment assumptions used by CalPERS.

“• $73 billion in unfunded liabilities for the California State Teachers’ Retirement System, a sum that increases a staggering $6 billion a year. The $73 billion would be far higher if not for the rosy investment assumptions by CalSTRS.

“• $64 billion in unfunded liabilities for health insurance coverage guaranteed to retired employees.

“• $8.2 billion in money borrowed from the federal government to replenish the state’s broke unemployment compensation fund. California only pays the interest on the debt.”

Jerry Brown ‘taking victory laps for a victory that doesn’t exist’

This list could be longer, the editorial notes:

“There are other substantial debts and liabilities. And there are extremely costly future financial obligations, starting with the state bill for Obamacare after initial federal subsidies are phased out and regulatory edicts on water pollution.

“But our point is plain. The state of California is awash in red ink, and even the red ink that is acknowledged is camouflaged with accounting gimmicks.

“This ugly picture is why the governor is right to push back at Democratic lawmakers who want to spend any unexpected revenue instead of putting it in reserve. This ugly picture is why the governor is wrong to offer happy talk and go along with media analyses that depict California as on the right track.

“We won’t be on the right track without much more sweeping pension reform to contain the coming calamities at CalPERS and CalSTRS. We won’t be on the right track until someone offers up a realistic plan to pay for the health coverage of retired public employees. And we won’t be on the right track unless we have a sustained growth in revenue driven by a broadly healthy private-sector economy, not by bubbles in real estate or technology.

“This is what Jerry Brown should be telling the public instead of taking victory laps for a victory that doesn’t exist.”