Newsom’s pseudo surplus meant to distract from billions in debt

Gov. Newsom’s declaration about California’s record-breaking $100 billion surplus appears too good to be true because it is, writes local senator John Moorlach in a California Policy Center editorial. Underneath flashy “progress” blather, California’s $208 billion deficit is as clear as daylight. Newsom’s unrestrictive spending on public sector pensions and still-uncompleted projects will only continue accruing state debt.

Last week, Newsom announced the state has produced what the Associated Press dutifully called “a record-smashing surplus of nearly $100 billion.” The governor himself called it “simply without precedent.”

“No other state in American history has ever experienced a surplus as large as this,” Newsom said.

But the facts suggest there is no actual “surplus.” California’s most recent balance sheet shows the state’s unrestricted net deficit is $208 billion. While this is better than the dismal straits in which Illinois and New Jersey find themselves, the governor provides no serious budget proposal to address this upside-down status.

California is upside-down because of massive liabilities resulting from employee pensions and lifetime medical benefits. This debt, costing taxpayers some seven percent (or $11 billion) in interest per year must be addressed with aggressively larger annual payments. But with only one measly gesture, you won’t find those enhanced payments anywhere in Newsom’s budgets.

Gov. Newsom will leave office in four years without having made a material dent in the deficit. Now it’s a little late for him to pursue a disciplined approach that most taxpayers follow for their personal retirement savings efforts.

This article originally appeared in the California Policy Center. Read the whole thing here.

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