California drowning in sea of red ink: $127.2 billion deficit
Reason simple; Golden State spent more than it took in
According to State Auditor Elaine Howle and the Bureau of State Audits, if the state of California were a business, it would be a candidate for insolvency with a negative net worth of $127.2 billion. This disastrous economic picture is courtesy of an annual financial report.
About half of the $127.2 billion of dent came from the state's issuing general obligation bonds and then giving the money to local governments and school districts for public works projects.
During the 2011-12 fiscal years, the state's general fund spent $1.7 billion more than it received in revenues and wound up with an accumulated deficit of just under $23 billion from several years of red ink. Governor Jerry Brown has referred to that and other budget gaps, mostly money owed to schools, as a "wall of debt" totaling more than $30 billion.
Voters passed an increase in sales and income taxes last November. Brown says the measure will balance the state's operating budget and allow the debt wall to be gradually dismantled.
About half of the $127.2 billion of dent came from the state's issuing general obligation bonds and then giving the money to local governments and school districts for public works projects. The auditor also pointed out that the assets built with the bonds remain on local balance sheets while the bonded debt accrues to the state.
The remainder, however, is all on the state's ticket. "Expenses that exceeded revenues and increased long-term obligations resulted in an 81.4 percent decrease in the total net assets for governmental and business-type activities from the 20-10-11 fiscal year," according to the report.
The report listed the state's long-term obligations at $167.9 billion, nearly half of which ($79.9 billion) were in general obligation bonds, with another $30.8 billion in revenue bonds, many of which were issued to build state prisons, whose "revenue" is lease payments from the state general fund.
This list didn't include the much-disputed unfunded liabilities for state employees' future pensions, nor the $60-plus billion in unfunded liabilities for retiree health care.
The Governmental Accounting Standards Board and Moody's, a major bond credit rating house, have been pushing states and localities to include unfunded retiree obligations in their balance sheets and were they to be added to California's, it could push its negative net worth down by several hundred billion dollars.
© 2013, Distributed by NEWS CONSORTIUM.
Pope Francis Prayer Intentions for December 2013
General Intention: Victimized Children. That children who are victims of abandonment or violence may find the love and protection they need.
Missionary Intention: Prepare the Savior's Coming. That Christians, enlightened by the Word incarnate, may prepare humanity for the Savior's coming.
Rate This Article
Leave a Comment
More Business & Economics News
- China banks ban Bitcoins - virtual currency hits slump
- Black gold, Texas tea! How a major discovery in a tiny Australian mining town is about to change your world
- Unregulated? Bitcoin goes mainstream and why that's a good thing
- Casino mogul vows all-out war on online gambling
- Prepaid debit card, without fees offered by Google
- Digital killing the dinosaurs, Tribune Co. to cut 700
- Merit found in employees' complaints against Wal-Mart
- Same old tactic: Treasury to issue $1trillion in new debt at beginning of 2014
- PlayStation 4 sells one million units in U.S., Canada in first 24 hours
- Fr. Paul Schenck: Finding Living Faith on Catechetical Sunday
- The Movie Yellow: Incest as 'Normal' and Cassavates's Slides Into the World of Woes
- The Chicago School Teachers Strike Reveals the Need For School Choice
- The Sexual Barbarians and the Dissolution of Culture
- The Happy Priest Challenges Us to Ask: Who is Jesus to Me?
- Michael Coren on Canadian Public Schools: Teachers, leave those kids alone
- We Cannot Ignore Our Consciences: Cardinal Dolan On Religious Liberty
- In the Face of Danger, Successor of Peter Travels to Lebanon as a Messenger of Peace
- Reflections on the Dignity and Vocation of Women: Who or What?
Disclaimer: The columns, articles, advertisers claims and any other features provided on Catholic Online Business & Economics are provided for personal finance and investment information and are not to be construed as investment advice. Under no circumstances does the information in this content represent a recommendation to buy, sell or hold any security. The views and opinions expressed in an article or column are the author's own and not necessarily those of Catholic Online and there is no implied endorsement by Catholic Online of any advice or trading strategy.