Gov. Brown Budget Starts Tackling Pension Debts, but High-Speed Train Boondoggle Persists

The
latest revision (PDF) of California’s proposed budget offers
some sunbeams from Gov. Moonbeam for fiscal conservatives. Democrat
Jerry Brown’s latest proposal is to actually start paying down the
state’s massive public employee pension debts and avoid
implementing new spending programs.

The result is a
$156 billion spending plan that shows the state bringing in
$2.4 billion more than expected, but then also having to deal with
a 46 percent increase in
Medi-Cal expenses because of new coverage due to the Affordable
Care Act. Brown predicts these state healthcare costs to rise to
$2.4 billion in the next two years, which is problematic because
the additional revenue is predicted to be a one-time thing.

Probably the most important news in these parts is that Brown
will finally work to address the state’s massive pension
liabilities rather than just talking about how the state needs to
address its massive pension liabilities. He’s focusing on the
teachers and looking to get the pension fund fully funded in 30
years. The current pension liability is $74 billion. He proposes
$450 million for next year to start eliminating the liabilities and
requiring teachers and school districts to pay more into the
pension funds as well. The problem with such a plan is, obviously,
what happens once Brown isn’t around anymore, assuming he is even
able to get this proposal off the ground. Ultimately, the change
could actually be disastrous to some school districts, Chris Reed
at CalWatchdog
notes, as schools already spend so much of their budgets on
compensation, and he predicts a possibility of teachers actually
paying less of their own pensions.

Brown notes that the state can’t afford to take on pet spending
projects, declining to spend $1 billion to launch a universal
preschool program. But his godforsaken pet high-speed rail
boondoggle is still there, waiting to suck down at least $68
billion. The latest fiscal news on the train has the price of just
the first segment of construction already
$1 billion higher than the initial estimate of $6 billion, a 15
percent increase. I really am not sure how I am supposed to feel if
California’s staggering pension obligations ultimately contribute
to the death of the train project.

Regular Reason contributor Steven Greenhut analyzed Brown’s
budget over at the San Diego Union-Tribune. He described
it as being about as fiscally responsible as you can get given the
current power dynamics in California. Talk about damning with faint
praise. Read Greenhut’s analysis
here.