Libertarian editor of Reason magazine Matt Welch sprays bracing ice water on the recent optimistic articles on California’s fiscal mess.
(…) For a reality check against premature it’s-back-ulation, I recommend the relentlessly grim website Pension Tsunami, where you can see the daily nitty-gritty of blue-state interest groups (read: governments and public sector unions) fighting like wolverines over the ever-shrinking pie of available government revenue. For instance, here’s a recent article from the Riverside Press-Enterprise:
The city of San Bernardino won an important victory in its request for bankruptcy protection Friday, Dec. 21, when a judge denied CalPERS’ attempt to force payment of unpaid pension obligations through state court.
CalPERS, the state retirement system, is the city’s largest creditor. CalPERS had filed a motion for relief from the automatic protection from creditors under bankruptcy law that came with San Bernardino’s Aug. 1 Chapter 9 petition.
In order to make payroll and keep basic operations going, the city has stopped paying many of its debts, including the employer share of biweekly payments to CalPERS.
The city now owes $8.3 million and is accruing a debt of $1.7 million a month even as the agency continues to pay $3.75 million in benefits to city retirees a month, said Michael Gearin, an attorney for CalPERS, during an almost five-hour hearing in U.S. Bankruptcy Court in Riverside on Friday.
The agency depends on timely payments from its members, he said.
“Without that, the system falters, and it will ultimately fail if enough employers don’t participate,” Gearin said.
Matt ends with this:
I’ll be happier than Huell Howser tripping on acid when the Golden State makes its long-delayed comeback, but the structural problems of converting tax dollars into a guaranteed pension machine are vast and ongoing, and it’s going to take more than one month of sub-10% unemployment since January 2009 to get me busting out the Phantom Planet catalogue.