California taxpayers are getting an increasingly bad value for their tax dollar, according to data obtained from the California Governor's Office.
Since 2012 total California State spending has increased by 24%, increasing from $131 billion in 2010-11 to $172 billion in 2015-16. But over the same period, the total number of California State employees declined by 6%--dropping from 371,959 full-time equivalent employees in 2010-11 to $350,758 in 2015-16.
The cause is the escalating and unsustainable cost of government in California and the inability of the Democrat Legislature and California Governor to address the issue in a substantive way.
The actual problem is a lot worse if the unfunded public employee liabilities are included, likely double the problem illustrated by the graph above.
These liabilities include retiree health care which as jumped to $74 billion in unfunded liabilities, and climbs by an estimated 7.5% per year in interest costs in addition to the $4 billion or so in additional debt accrued each year.
Pension debt for the California State Public Employees' Retirement Fund (Calpers) has increased by an estimated $60 billion over the last two years--jumping from $93 billion in 2014 to an estimated $150 billion in 2016. Despite the rapid deterioration in the public pension fund, fund managers and the Board deny that there is even the slightest problem. A position directly linked to the state's public employee unions who control the Calpers Board.
If these trends continue California taxpayers will continue to see less and less services, higher costs, and more and more debt, a downward spiral at the end of which is bankruptcy, or tax increases as far as the eye can see.
The recent minimum wage increase will to lead to a further deterioration in the value citizens receive from California government, to the tune of $4-10 billion per year when fully implemented, according to estimates by the Kersten Institute.
Governor Brown has tried to obtain some concessions from pubic employee bargaining units, but these amounts are offset by even larger raises, and wholly insufficient to stem the rise in the cost of government in California.
It is unlikely that the state will be able to address the unsustainable cost of government in the absence of a wholesale revision to the state's collective bargaining statues, which gives the public employee unions way too much power in setting compensation rates and employee benefit cost sharing arrangements, among other bargaining issues.
Similar trends, albeit even more dramatic, are seen at the local level of California government, according to my research.
David Kersten is executive director of the Kersten Institute for Governance and Public Policy (www.kersteninsitute.org). He is an expert on fiscal issues and teaches a masters’ course on public budgeting for the University of San Francisco.