Politics & Government
California earns ‘F' grade for its fiscal health
A new analysis of California's finances found each state taxpayer would have to pay -$22,000 to erase the state's debt."
A new analysis of California’s financial statements has found the state is facing a $269.9 billion shortfall, according to Truth in Accounting. That burden equates to -$22,000 for every state taxpayer.
As California’s fiscal health deteriorates, elected officials continue to mislead the public by failing to disclose significant amounts of retirement debt on the state's balance sheet, despite new rules to increase financial transparency. This skewed data gives California residents and taxpayers a false impression of the state's overall fiscal health.
Truth in Accounting is a Chicago-based nonprofit think tank that analyzes the latest federal, state and municipal comprehensive annual financial reports. According to its report for 2017, California had $369.9 billion in bills and roughly $100 billion in available assets to pay those bills after capital and restricted assets were excluded. This results in a $269.9 billion shortfall and a -$22,000 Taxpayer Burden™, which is each taxpayer's share of state bills after its available assets have been tapped. TIA's Taxpayer Burden indicator incorporates both assets and liabilities, not just pension debt. California’s Taxpayer Burden has increased by $6,900 since 2009, when taxpayers were on the hook for -$15,100.
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A key reason for the huge jump in California’s Taxpayer Burden is because of an accounting rule implemented two years ago that requires state and local governments to report all of their pension debt on the balance sheet. At the end of the 2017 fiscal year, the state's reported pension debt was $102.5 billion. And while it reported all of its pension debt, California continues to hide the majority of its retiree health care debt, also known as other post-employment benefits, which stood at $107 billion. Of that amount, $58.4 billion was not disclosed. However, a new accounting standard taking effect next fiscal year will require government entities to report this debt on the balance sheet.
The bottom line is that California would need $22,000 from each of its taxpayers to pay all of its bills, which is why it received an "F" grade for its fiscal health.
You can read the full report here.
