This story was reported for the San Diego News Network on April 8, 2010.
What do pensions, tax breaks and my former 90210 crush Brian Austin Green (Yah, former. But I’ll save the controversy for another time.) have in common? Not much except that they are all included in this edition of California Budget Crisis Diaries.
Read on…
Pension gap: The issue of rising pension costs has just gotten hotter.
According to The New York Times, a recent report shows a “hidden shortfall” in California’s pension system totals $500 billion.
“An independent analysis of California’s three big pension funds has found a hidden shortfall of more than half a trillion dollars, several times the amount reported by the funds and more than six times the value of the state’s outstanding bonds.”
The report, commissioned by Gov. Arnold Schwarzenegger and completed by Standford University graduate students, possibly answers some questions for lawmakers.
“The Stanford group’s finding does not suggest that California has to come up with half a trillion dollars all at once; pensions are paid slowly over time. But the possibility that the state’s public pension funds are much deeper in the hole than reported could help explain why the required contributions to the funds have been rising every year, contributing to California’s annual budget drama.
The finding also raises vexing legal issues, because public debts in California are supposed to be approved by the voters. The voters have, in fact, duly authorized all of the state’s general obligation bonds, but the much larger pension debt is appearing out of nowhere.”
Not-solvable: California’s staggering $20 billion-plus deficit may not be solved this year.
At least, that is what a couple of politicos are saying, according to The Los Angeles Times.
“Which begs the question, as Assemblywoman Joan Buchanan (D-Alamo) put it at an afternoon budget hearing Tuesday: ‘How do we bridge this fiscal abyss we’re in?’
The answer, according to several budget experts testifying before the fiscal panel, is that you don’t.
‘You’re obviously not going to solve it in one year,’ Loren Kaye, president of the business-backed California Foundation for Commerce and Education, told the lawmakers. ‘I hope no one thinks that’s possible.’
Mac Taylor, the respected nonpartisan Legislative Analyst, piled on. ‘It’s not going to get taken care of this year,’ he said, ‘probably not even next year.'”
Oh, Hollywood: Megan Fox and her sometime boyfriend, actor Brian Austin Green, are protesting California school budget cuts in a new video online.
In a video posted Wednesday on the comic Web site FunnyorDie.com, Fox urges viewers to “call, write and annoy the governor until he cries for his mommy.”
She says more than $17 billion has been cut from state educational programs over the past two years, and Green says the “terminators in Sacramento” plan to cut another $2.5 billion.
State Superintendent of Public Instruction Jack O’Connell said last month that budget cuts have caused a 17 percent jump in the number of school districts facing financial uncertainty.
Fox and Green’s 3 1/2-minute video had been viewed more than 66,500 times by Wednesday afternoon.
Taxing corporations: A Sara Flocks from the California Labor Federation is calling out corporations amid the 2010 tax season.
According to her opinion piece published by the California Progress Report, corporations are offered a hefty amount in tax breaks. But first, she points out that Bank of America did not pay $4.4 billion in income tax (as originally reported by Forbes Magazine).
“In California, state legislators and Governor Schwarzenegger have made it even easier for corporations to use state resources, yet not pay a penny for them. Every year, California gives away $14.5 billion in tax breaks to corporations. Since 2007, Governor Schwarzenegger has signed into law numerous corporate tax breaks, exemptions and credits that will cost the state an estimated $3 billion a year.”
Flocks goes on to write that it isn’t feasible to track all the tax breaks given to corporations.
“Under existing law, it is nearly impossible to track how much of California’s budget is lost to corporate tax subsidies, what companies are getting the subsidies, and if those subsidies are creating jobs. Many of these tax expenditures are permanent and never reviewed. Companies are permitted to take taxpayer money and run – relocating jobs in other states or countries.
And guess who has to make up what corporations squirm out of paying? You, me and every other working person out there. When corporations don’t pay their fair share, the burden of funding schools, public safety, parks, libraries and infrastructure like roads and bridges falls on the rest of us.”
Latest cash report: California’s cash balance rose above the Governor’s 2010-11 budget estimates by $356 million.
According to State Controller John Chiang, total state disbursements were $450 million lower than expected and year-to-date revenues are ahead of budget estimates by $2.3 billion.
“March numbers were strong on both sides of the ledger. Receipts came in above projections and expenditures came in below,” Chiang said. “But the State’s nagging unemployment rate, combined with the fact that personal income tax revenues are trailing last year’s by nearly $1 billion, tells us the road to recovery will be long and arduous.”
The State started the fiscal year with an $11.9 billion cash deficit in the General Fund, which grew to $22.6 billion by March 31.
Associated Press contributed to this report. Hoa Quach is the political editor for the San Diego News Network.