Billionaire and Obama campaign financier Tom Steyer talked up the California budget Wednesday, using the state as an example for Washington, but failed to mention the state’s continued debt issues.
“We’ve worked through this over a decade,” Steyer said of California. “As you said, we are starting to come out the other side. We’re starting to see the comeback in a variety of ways, but it has not been easy.”
What Steyer leaves out, however, is the state’s massive debts that remain, as well as a developing pension crisis. Despite Gov. Jerry Brown’s proclamation of a budget surplus for the beleaguered state, California faces enormous obligations to health care providers, local governments, Wall Street, and state workers, as the Los Angeles Times detailed in depth earlier this week:
Sacramento is legally obligated to pay many billions of dollars withheld from schools, local governments and healthcare providers as lawmakers struggled repeatedly to balance the books. It owes Wall Street more per resident than almost every other state. And it has accumulated a crushing load of debt for retiree pensions and healthcare, now totaling more than taxpayers spend each year on all state programs combined.
The budget Brown proposed Thursday addresses only a small portion of the overall debt, which stems from the same types of bills that drove cities like Vallejo, Stockton and San Bernardino into bankruptcy. The state is likely to find its debt consuming an ever larger share of money meant for the basic needs of government. [...]
Payments of $4.2 billion would be made in the budget year that begins in July. Subsequent payments, growing to as much as $7.3 billion a year, would continue into 2017.
At that point, Brown says, $4.3 billion in debt would remain, mostly for delayed payments to healthcare providers and money owed to municipalities and schools for implementing state mandates.
Steyer, whose name has been rumored to be on the short list for secretary of energy in President Obama’s cabinet, said he would be “surprised” to receive such a nomination.