...The story goes that because California’s economy is growing and the state does not have a budget deficit at present, the state is a case study debunking conservative assertions that high taxes and harmful regulations depress growth and make states less competitive. In a recent episode of HBO’s Real Time with Bill Maher, the host, a Los Angeles resident, summed up the tale of the California comeback when he boasted how the state “did all the stuff conservatives warned us would make things even worse. But the sky didn’t fall.”
“The sky didn’t fall” isn’t exactly a ringing endorsement for the results of progressive governance, yet the story that all is well in the Golden State is fiction. In fact, it takes just a few clicks of the mouse to find proof that tales of the California comeback are a myth.
After eight years of numerous budget crises that had California facing budget deficits as high as $20 billion, state finances are no longer in the red. This development is held up by Brown, Maher, and others as proof that California is on the right track and that the massive income tax increases signed into law by Gov. Brown and his predecessor Arnold Schwarzenegger worked. However, California’s finances are only in order if one ignores the trillion-dollar gorilla in the room, which is the state’s gigantic unfunded pension liability for which taxpayers are on the hook.
According to figures released in 2014 by then-California controller, now State Treasurer, John Chiang, California’s unfunded public pension liabilities rose from $6.3 billion in 2003 to $241 billion in 2014. Yet that $241 billion figure, which represents 3,000% increase over a decade, doesn’t tell the whole story, as it assumes an optimistic nearly 8% return on pension investments....
