Once again, we have seen the Legislature engage in what can only be called its particularly unique form of California gamesmanship – a word defined as “the use of methods that are dubious or seemingly improper but not strictly illegal.”
Last week the Senate narrowly passed, and the Governor is expected to approve, the bonds that will underwrite California’s High Speed Rail. This on the heels of a May’s warning by Standard and Poor that two developments – a $17 billion deficit and a judge’s ruling that the state controller does not have the authority to withhold lawmakers’ pay for failing to pass a balanced budget on time – “could weaken the state’s prospects for further improvement in its fiscal structure.” Add to this the fiscal time-bomb of unresolved pension reform and a burgeoning California “wall of debt.”
The HSR is destined to go down in U.S. History as probably a bigger boondoggle and abject waste of taxpayer money than even Boston’s “Big Dig.” To burnish its fiscal credentials, the California Legislature should next overturn child labor laws, and allow some of our youngsters to start earning their keep, since they already “owe” hundreds of millions to the state for this, and other taxpayer-funded fantasies. I say this facetiously of course, but it is our kids who will really inherit California’s mountain of debt.
How much do our kids owe the state? That depends upon how you define “debt.” The most complete definition of debt would be: any obligations that government has spent and expects taxpayers to cover. This definition would include any bonds, pension liabilities and repayment of special funds that the state has borrowed from.
By this reckoning, an estimate of what the state of California owes is over easily over $500 billion.
This is no secret. Politicians in Sacramento are simply willfully, stubbornly opposed to taking concrete steps to rectify the situation. How else do you explain passing the $5.8 billion in bonds for the HSR? This is just a down payment on a project that is estimated to cost a minimum of $68.4 billion dollars. And that is just an estimate.
As if taxpayers, business owners and families needed any further confirmation that California’s fiscal and economic climate is shaky, they should look no further than this vote, and the trajectory in portends. The Legislature has either deferred on questions of impending policy decision with vast fiscal and economic consequences – witness the accumulating $3.4 million a day costs of delayed pension reform – or, denied the problem exists in the first place, as it does with our perpetual mountain of debt.
At what point does the Legislature face stark reality? Unfortunately, they really don’t have to. Because they are playing with other people’s money, and can change or rig the rules as they see fit. California gamesmanship at its finest.