The first online ad for California Governor Jerry Brown’s Proposition 30 tax increase initiative
What happened within minutes Monday may just be coincidence, but if so, it’s a cosmically foreboding one.
In Sacramento, Gov. Jerry Brown released the first online ad of his campaign to persuade California voters to endorse his sales and income tax increase measure. One snippet declared that under Brown, “California’s bond rating is now positive.”
It was, to put it charitably, misleading. In fact, California has the lowest bond rating of any state now and, according to a recent survey by Pew’s Center on the States, the worst credit rating record over the past 11 years.
In Pennsylvania, state officials were told by Moody’s, a major bond rating agency, that the state is being downgraded because of “large and growing pension fund liabilities.”
In Petaluma, the $234 billion California Public Employees’ Retirement System revealed that it earned just 1 percent on its investments during the 2011-12 fiscal year that ended June 30.
That’s a fraction of the 7.5 percent earnings assumption on which it bases its ability to pay pensions to hundreds of thousands of state and local government retirees, meaning its already large unfinanced obligations are continuing to grow.
Really the answer is obvious.
California is on a financial cliff and even passage of Jerry Brown’s tax increase in November will not solve the structural deficit problems of the California state budget.
Real reform is required, but it won’t be coming anytime soon from Brown or his public employee union supported Democrat Legislators who have massive majorities in California Legislature.