Evaluating our state’s fiscal condition requires checking key vital signs to determine where our focus must be moving forward.
Here are 5 key metrics you need to know about the status of our state’s fiscal house as we anticipate the Governor’s May Revise:
1. California’s Net Financial Position
California has a $170 billion “net” financial position deficit, with an increase of $54 billion since last year, the largest net deficit of all 50 states. Read the updated California Annual Financial Report (CAFR) HERE.
NOTE: This balance sheet net asset account is derived by tallying the state government’s assets (monetary funds, investments, buildings, roadways, bridges, parks, etc.), less liabilities, and adjusted for investments in fixed assets and restricted funds.
2. Estimates of California’s UnfundedPension Liabilities Accruing at 7.25+ Percent
CalPERS: $ 96.7 billion
CalSTRS: 72.7 billion
UC Pensions: 10.6 billion
NOTE: For the 2014/15 fiscal year, CalPERS planned for a 7.5% rate of return, but only managed a 2.4% rate of return. This year, some are hoping to have net earnings of zero. This means the unfunded liability for CalPERS as a whole grew $20 billion last year and will grow another $30 billion this year!
3. Current UnfundedRetiree Medical Liability
California has the nation’s highest unfunded retiree medical liability at $80.3 billion (this figure INCREASED by $6.3 billion since last year’s report).
4. California’s UnaddressedTransportation Infrastructure
The January budget analysis reflected that the Governor’s transportation plan would increase gas taxes on California drivers by $3 billion when California’s gas taxes are already the nation’s 5th highest. When cap and trade taxes are added, California has the nation’s highest taxes.
California spends 3 times the national average on maintenance per mile of roadway, yet California’s roads rate among the nation’s WORST in pavement condition and congestion.
34 percent of California’s roads are in poor condition, costing motorists $703 a year in additional fees.
Combining the proposed gas tax, $10 vehicle licensing fee, and $65 registration fee increases with the Governor’s other proposals will raise costs for a two-car family by at least $250 a year.
5. California’s Business & Economic Competitiveness
California has the highest income taxes and highest sales taxes.
California is the fifth most expensive state to raise a familyand was again rated the WORST state for business by CEOs—for the twelfth year in a row.
California has the highest corporate tax in the Western United States and the 14th highest property tax. According to the Tax Foundation’s 2015 Facts and Figures, that puts California fourth in overall tax burden on a per capita basis.
California recently flunked Moody’s recent fiscal ‘stress test’, which revealed our state is ill-prepared for the inevitable next recession.
Businesses and citizens continue to be one of the state’s largest exports.
SB 3, the Minimum Wage Mandate, will eliminate many lower income jobs in the state and will ultimately make our state’s payroll surge by $3.6 billion per year once it’s fully implemented.