Pity the poor California taxpayers. They are seen as the backstop for various government schemes that are supposed to be self-funding.
The Wall Street Journal’s lead editorial yesterday, critical of California’s plan to establish state managed retirement accounts for private employees, argued that while the law says the state shall not be liable for any retirement cost, “nothing prohibits the legislature from bailing out the plans in the future.”
The editorial went on to ask: “Have you ever heard of a public fund that didn’t have an implicit taxpayer guarantee?”
A similar argument has surfaced in the debate over Proposition 53 that would require a vote of the people for any revenue bonds exceeding $2 billion. As I noted previously, one argument that swayed the state Republican convention initiative panel to support Proposition 53 was the argument that that government agencies would not allow the bonds to default thus potentially making the taxpayers the backstop for any financial failure of any revenue bond.
Are the concerns raised about the private retirement accounts and Proposition 53 nothing more than scare tactics?
We know that taxpayers are on the verge of bailing out public retirement accounts that supposedly would be made full by good stock market performance — with no risk to the taxpayer — despite future and retroactive increases provided by SB 400 in 1999, which caused the pension debt to explode.
Then there is the bullet train. First it was supposed to be funded by private and federal money, no California tax dollars required after the initial bond. When private money was not forthcoming and the feds revenue was limited, the legislature and governor joined in cahoots to funnel cap-and-trade money to fund the train.
Now, cap-and-trade is seriously ill—some say on its deathbed. If the bullet train is to survive, where do you think authorities will turn?
The old backstop!