OT: (Drumroll ) California projects budget surplus

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Submitted by enron_by_the_sea on January 10, 2013 - 5:02pm

Quote:

Jerry Brown predicts California budget surplus by end of next year

After years of red ink, Gov. Jerry Brown said on Thursday that California’s $96.7-billion general fund is now poised to end next year with a surplus, thanks to years of deep budget cuts and billions in new taxes approved by voters last year.

"We achieved the position we're in because of tough cuts ... and then the people voted for taxes," he said. "We broke the logjam by going to the people."

http://latimesblogs.latimes.com/californ...

It is OK to spend now :)

Submitted by Coronita on January 10, 2013 - 5:53pm.

don't worry. they will

Submitted by The-Shoveler on January 10, 2013 - 6:02pm.

I am wondering if this takes into account making CalPers Whole?

The City of L.A. is claiming a balanced budget as well At least they made the future hires retire a SS retirement age (67) instead of 55 and eliminated Pension spiking.

I wonder if the pension no-spiking rule can be retroactive.

Anyway it's a start, I just have my doubts, sounds too good to be true.

Submitted by enron_by_the_sea on January 10, 2013 - 6:51pm.

flu wrote:
don't worry. they will

California is like a 50+ lb overweight person who thinks he lost 25lbs, but the others around him think that his weighing scale is broken.

Now his left brain is urging him to continue with the program and right brain is urging him that it is enough...

Submitted by paramount on January 10, 2013 - 10:52pm.

I wonder if there is a correlation between Brown's statement and the fact that my paycheck today was about $180 less than it was 2 weeks ago?

Submitted by CA renter on January 10, 2013 - 11:29pm.

flu wrote:
don't worry. they will

Not under Brown, IMHO. I think he's one of the most intelligent, capable, and honest politicians out there, and I truly believe that he is really trying to do the right thing on a daily basis. He's pretty tight when it comes to money, and he deserves a ton of credit for what he's done over the past couple of years.

Submitted by poorgradstudent on January 11, 2013 - 10:52am.

Although once all is said and done, if they're projecting a small surplus they'll probably only break even.

I do hope "surplus" = paying down debt and saving for a rainy day. The biggest mistake GW Bush made was giving away money rather than paying down the debt when we had a surplus during his years.

Submitted by all on January 11, 2013 - 11:59am.

Prop 30 is projected to yield $6B/year, yet the money allocated to K-12 schools and community colleges is up $2.7B. What happens when the temporary tax increase expires?

In addition, the new weighted formula will increase funding for district with a large number of English learners and economically disadvantaged. So, those who are paying more will also be those who are getting less.

Submitted by livinincali on January 11, 2013 - 12:19pm.

poorgradstudent wrote:
Although once all is said and done, if they're projecting a small surplus they'll probably only break even.

I do hope "surplus" = paying down debt and saving for a rainy day. The biggest mistake GW Bush made was giving away money rather than paying down the debt when we had a surplus during his years.

Bush didn't have a surplus although he might have if they didn't lower the tax rate. Clinton had a few years of surplus if you include social security but that's really an accounting gimmick. Federal spending ex social security vs revenues ex social security have been negative for decades.

Submitted by no_such_reality on January 11, 2013 - 12:22pm.

enron_by_the_sea wrote:
flu wrote:
don't worry. they will

California is like a 50+ lb overweight person who thinks he lost 25lbs, but the others around him think that his weighing scale is broken.

Now his left brain is urging him to continue with the program and right brain is urging him that it is enough...

Nope, Cali put on 20 lbs but bought bigger pants.

Seriously, look at the historical general fund and just mulitply by 2 and round off to billion and equate to weight.

Peaked at a pudgy 206 lbs in 2008, then forced diet, dropped to 181 lbs, then lost a few more the next year to a lean 174 lbs. then we yo-yo'd for two years going 183 and back to 174. And now we've gone back to pudgy city at 193 lbs.

Or if you think government is bloated, multiple by 3 and round to billions:

We had a problem in 2008 when we tipped in at over 300 lbs, we then 'crash' dieted to 272 lbs, and then wasted away to a skin and bones 261 lbs, then yo-yo and now back to pudgy city tilting in at 290 lbs...

Submitted by The-Shoveler on January 11, 2013 - 1:52pm.

The-Shoveler wrote:
I am wondering if this takes into account making CalPers Whole?

The City of L.A. is claiming a balanced budget as well At least they made the future hires retire a SS retirement age (67) instead of 55 and eliminated Pension spiking.

I wonder if the pension no-spiking rule can be retroactive.

Anyway it's a start, I just have my doubts, sounds too good to be true.

What shows up in the headlines and what does not,

I Imagine it is much the same for the state finances, well at least we are not going further in the hole right !

http://www.calwatchdog.com/2012/04/30/lo...

Stanford’s study also estimated that each of the city’s three independent pension funds is unfunded by billions of dollars: the city of Los Angeles Fire and Police Pension System is $9.25 billion unfunded; the Los Angeles City Employees’ Retirement System is $11.32 billion unfunded; and the city of Los Angeles Water and Power Employees’ Retirement System is $6.59 billion unfunded.

“In 1999, Los Angeles City’s aggregate annual required contributions for its three systems totaled $291 million, rising to $923 million in 2011, an annual average growth rate of 11.1 percent,” according to the Stanford report.

But here is the kicker: The growth in pension spending by the city “outpaced that of spending on public protection, which grew at 5.2 percent, on health and sanitation (3.6 percent), and on recreation and cultural services (5.8 percent), and it occurred while spending on public assistance programs fell by an average of 3.0 percent per year.”

If the trend continues, the city will be little more than a professional retirement payment and processing service.

Submitted by CA renter on January 11, 2013 - 5:15pm.

The-Shoveler wrote:
The-Shoveler wrote:
I am wondering if this takes into account making CalPers Whole?

The City of L.A. is claiming a balanced budget as well At least they made the future hires retire a SS retirement age (67) instead of 55 and eliminated Pension spiking.

I wonder if the pension no-spiking rule can be retroactive.

Anyway it's a start, I just have my doubts, sounds too good to be true.

What shows up in the headlines and what does not,

I Imagine it is much the same for the state finances, well at least we are not going further in the hole right !

http://www.calwatchdog.com/2012/04/30/lo...

Stanford’s study also estimated that each of the city’s three independent pension funds is unfunded by billions of dollars: the city of Los Angeles Fire and Police Pension System is $9.25 billion unfunded; the Los Angeles City Employees’ Retirement System is $11.32 billion unfunded; and the city of Los Angeles Water and Power Employees’ Retirement System is $6.59 billion unfunded.

“In 1999, Los Angeles City’s aggregate annual required contributions for its three systems totaled $291 million, rising to $923 million in 2011, an annual average growth rate of 11.1 percent,” according to the Stanford report.

But here is the kicker: The growth in pension spending by the city “outpaced that of spending on public protection, which grew at 5.2 percent, on health and sanitation (3.6 percent), and on recreation and cultural services (5.8 percent), and it occurred while spending on public assistance programs fell by an average of 3.0 percent per year.”

If the trend continues, the city will be little more than a professional retirement payment and processing service.

You're ignoring the fact that many public employers enacted "pension holidays" during the stock market boom because the pension funds were over-funded. This is why pension critics like to use the peak years of the stock market bubble as a starting point. Many employers (and employees) were paying NOTHING toward pension contributions during those years. The few who were making contributions were doing so at a historically low rate. Contribution rates are not linear, and are tied more to investment returns than to population trends.

Look at pages 21 and 22 to get a better idea of what's been going on with pension contributions:

https://docs.google.com/viewer?a=v&q=cac...

Submitted by The-Shoveler on January 11, 2013 - 6:05pm.

CA renter wrote:
The-Shoveler wrote:
The-Shoveler wrote:
I am wondering if this takes into account making CalPers Whole?

The City of L.A. is claiming a balanced budget as well At least they made the future hires retire a SS retirement age (67) instead of 55 and eliminated Pension spiking.

I wonder if the pension no-spiking rule can be retroactive.

Anyway it's a start, I just have my doubts, sounds too good to be true.

What shows up in the headlines and what does not,

I Imagine it is much the same for the state finances, well at least we are not going further in the hole right !

http://www.calwatchdog.com/2012/04/30/lo...

Stanford’s study also estimated that each of the city’s three independent pension funds is unfunded by billions of dollars: the city of Los Angeles Fire and Police Pension System is $9.25 billion unfunded; the Los Angeles City Employees’ Retirement System is $11.32 billion unfunded; and the city of Los Angeles Water and Power Employees’ Retirement System is $6.59 billion unfunded.

“In 1999, Los Angeles City’s aggregate annual required contributions for its three systems totaled $291 million, rising to $923 million in 2011, an annual average growth rate of 11.1 percent,” according to the Stanford report.

But here is the kicker: The growth in pension spending by the city “outpaced that of spending on public protection, which grew at 5.2 percent, on health and sanitation (3.6 percent), and on recreation and cultural services (5.8 percent), and it occurred while spending on public assistance programs fell by an average of 3.0 percent per year.”

If the trend continues, the city will be little more than a professional retirement payment and processing service.

You're ignoring the fact that many public employers enacted "pension holidays" during the stock market boom because the pension funds were over-funded. This is why pension critics like to use the peak years of the stock market bubble as a starting point. Many employers (and employees) were paying NOTHING toward pension contributions during those years. The few who were making contributions were doing so at a historically low rate. Contribution rates are not linear, and are tied more to investment returns than to population trends.

Look at pages 21 and 22 to get a better idea of what's been going on with pension contributions:

https://docs.google.com/viewer?a=v&q=cache:Tt2hd1QJEjoJ:www.calpersresponds.com/downloads/California-Retirement%2520Dialog-PPT-Milligan-v4.ppt+&hl=en&gl=us&pid=bl&srcid=ADGEESjcmD07sH4IWy1r2ZwUqksUedY03rMHyPnecHKE3qmCguYPyNO2FrkhhvQBIN6YFuEFfarUwnpT2pDc0NQVzOlKgjEedbuYzy-V8JpZn-K4VgLlXLhLJ6WsvdTKUsgPfPErspXu&sig=AHIEtbTi01lxN8QEsrCBiEl-01EmyTrBtg

Yea that was not the brightest Idea, but I guess they looked at the stock bubble returns and thought, Hey that looks like it will go on forever !!, kind of like the housing bubble as well.
But anyway there are probably a lot better examples of responsibility than the city of L.A. (Pension spiking was epidemic in L.A.) but it just happens to be the biggest in the state (although I will have to admit they did take some drastic measures to balance the budget this year, it's just kind of futile at this point without some major inflation IMO).
But for L.A. anyway, it’s going to take an economic miracle for a 7-billion in revenue to make up for a 26 or so billion and growing short fall.

Submitted by CA renter on January 11, 2013 - 6:09pm.

It should also be noted that the unions were fighting the "pension holidays" all the way, precisely because they knew that they (unions and workers) would be the ones to take the blame when it all came crashing down. But, politicians being politicians and all...they were able to expand spending on other things because of the "savings" on pension contributions, and could brag (temporarily) that pensions were "free" and all of the new programs and goodies handed out to special interest groups could go on forever, too.

Yes, it was stupid, and many of us were saying so back then. :(

Submitted by CA renter on January 11, 2013 - 6:16pm.

FWIW, the link I've posted above is a very good read for anyone who wants understand more about the pension issue and the causes of the "pension crisis."

Submitted by bearishgurl on January 11, 2013 - 10:53pm.

CA renter wrote:
It should also be noted that the unions were fighting the "pension holidays" all the way, precisely because they knew that they (unions and workers) would be the ones to take the blame when it all came crashing down. But, politicians being politicians and all...they were able to expand spending on other things because of the "savings" on pension contributions, and could brag (temporarily) that pensions were "free" and all of the new programs and goodies handed out to special interest groups could go on forever, too.

Yes, it was stupid, and many of us were saying so back then. :(

Yes, I vividly remember those years, what with our exalted (elected AND appointed) "leaders" constantly patting each other on the back (mostly when the TV cameras were pointed in their direction) :=0

Submitted by UCGal on January 13, 2013 - 2:52pm.

paramount wrote:
I wonder if there is a correlation between Brown's statement and the fact that my paycheck today was about $180 less than it was 2 weeks ago?

I suspect the sun setting of the payroll tax holiday is the main reason. You're now paying 2% more in ss than you did for the past two years... Bug this was always supposed to be temporary. You're not paying more in fed taxes unless you make over 450k as a household. The CA taxes also effect high income earners more...except the sales tax... which doesn't effect your paycheck.

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