6 ms·

California Has a Staggering Amount of Pension Debt

17 points by HillaryBriss 10y ago

nugget 10y ago
I spent many years as a passionate and vocal fiscal conservative. I stayed up many late nights arguing for relatively balanced budgets and smart (generationally fair) budgets. Over time I realized it was likely hopeless, since words (even the truth) can't compete with the tangible materialism of bread and circuses; so now I embrace ''Accelerationism''. We will eventually hit the top of the Laffer Curve, the max debt-to-GDP debt load, and all related fiscal ceilings and cliffs. Let's just hurry up (and try to spend the remaining debt space in the best ways possible) and get it over with so we can have more meaningful debates about how to structure society. https://en.wikipedia.org/wiki/Accelerationism https://en.wikipedia.org/wiki/Accelerationism
- cylinder 10y ago
  You're overly US-centric I think. The US can run unaccountable deficits due to reserve currency status, huge capital availability etc. There are still advanced countries which are fiscally conservative.
  - nshelly 10y ago
    It's also difficult to compare US states -- which can't print money, with the U.S. debt level (relatively acceptable in the developed world). Perhaps a better comparison is Illinois and California (the highest poverty rate in the nation, when taking into account cost of living) with eurozone countries like Italy and Greece, which cannot devalue their currency to remain competitive. Yet, unlike the Eurozone, there will be more significant federal distributions to these states which racked up debt and receiving more federal aid including Medicaid / ACA grants, educational assistance, and food stamps. But we will continue to experience what is happening in parts of Michigan and Illinois, where states and cities have to make material sacrifices to pay down the debt.
    - HillaryBriss 10y ago
      California also makes material sacrifices to pay down the pension debt. Consider the condition of the roads (especially in Los Angeles) and the budget problems facing the UC and Cal State University systems.
  - nugget 10y ago
    Which advanced countries do you consider to be fiscally conservative?
    - nshelly 10y ago
      Switzerland and Norway would come to mind. Norway has a large sovereign wealth fund created just for the purpose of keeping up an income stream once North Sea oil runs out. Germany and Japan are possibly the only ones close to the US's size and scale in population (3-4x smaller).
      - nugget 10y ago
        Wouldn't the EU as a whole (led by Britain, Germany, and France) be similar to the US? EU + US + Japan = the vast majority of the first world. Norway has done well for themselves but it's a tiny country with massive natural resources and a stable, homogeneous population; it's hard to draw conclusions from their experience that are applicable to the rest of the world.
        nshelly 10y ago
        Yes, but I wouldn't consider France and the UK necessarily fiscally conservative overall. Moreso than the US - think QE2 and QE3 vs the UK's "age of austerity" under David Cameron through 2015, well after the start of the Great Recession.
- deleted 10y ago
  [deleted]
jakozaur 10y ago
Tons of countries has hidden debt as they retirement is pay as you go system and at the same time the population is aging.
zlynx 10y ago
Should add to the California state constitution that whenever there is a budget shortfall directly related to a thing they voted for, they or their estate including portions already inherited has to pay for it, up to the entire value of the estate. Because the problem is these politicians know that a problem 20 years out is not their problem and they will never be called to account for their short sighted decisions. Unions are equally culpable. Their negotiators and leadership should be under the same penalties as the politicians. They ask for concessions that can never be financially stable, essentially guaranteeing that the entire future budget will have to go to pay for the current union's retirement, screwing their future members.
johnwheeler 10y ago
When you have CHP officers getting paid $110,000 a year, it's no wonder. http://transparentcalifornia.com/salaries/search/?q=highway+patrol&page=15 http://transparentcalifornia.com/salaries/search/?q=highway+...
- gjolund 10y ago
  If I can make $150k writing JS in Los Angeles then CHP deserves at least $110k a year.
  - johnwheeler 10y ago
    You're equating risk and skill. I don't disagree with it, but the problem is the societal forces that compensate the CHP don't compensate the soldiers in Afghanistan who take similar, if not greater, risks. Why is that?
    - gjolund 10y ago
      Why is it the opposite on Wall Street? Higher risk equates to a bigger return. Because we value money more than lives. My ability to build an app that generates revenue is more valuable than CHPatrolman ability to save a life.
- mywittyname 10y ago
  It's actually a quarter million a year in total benefits.
  - zaccus 10y ago
    Can they elect to receive a quarter million cash dollars in lieu of benefits? If not, such benefits are not really part of their compensation any more than their uniforms or cars.
    - mywittyname 10y ago
      I guess it depends on what constitutes "other pay." There's an officer with $70,000 worth of Other Pay. But overtime pay is definitely paid in cash. But if you want to quibble about $70,000 in pension and healthcare payments, that still leaves $160-180k a year in direct compensation.
mywittyname 10y ago
Is $77,000 a lot though? It's much less than Alaska's $113,000 and less than the average of the top 5 states on the list. Accounting for the net-present value drops the obligation quite a bit, most of these costs will not bear out for several decades. I think it's more important to look at the growth of this obligation over time. Is it going down as more people move to the state? And how is it doing relative to tax revenues?

17 points by HillaryBriss 10y ago

I spent many years as a passionate and vocal fiscal conservative. I stayed up many late nights arguing for relatively balanced budgets and smart (generationally fair) budgets. Over time I realized it was likely hopeless, since words (even the truth) can't compete with the tangible materialism of bread and circuses; so now I embrace ''Accelerationism''. We will eventually hit the top of the Laffer Curve, the max debt-to-GDP debt load, and all related fiscal ceilings and cliffs. Let's just hurry up (and try to spend the remaining debt space in the best ways possible) and get it over with so we can have more meaningful debates about how to structure society. https://en.wikipedia.org/wiki/Accelerationism https://en.wikipedia.org/wiki/Accelerationism

cylinder 10y ago
You're overly US-centric I think. The US can run unaccountable deficits due to reserve currency status, huge capital availability etc. There are still advanced countries which are fiscally conservative.
- nshelly 10y ago
  It's also difficult to compare US states -- which can't print money, with the U.S. debt level (relatively acceptable in the developed world). Perhaps a better comparison is Illinois and California (the highest poverty rate in the nation, when taking into account cost of living) with eurozone countries like Italy and Greece, which cannot devalue their currency to remain competitive. Yet, unlike the Eurozone, there will be more significant federal distributions to these states which racked up debt and receiving more federal aid including Medicaid / ACA grants, educational assistance, and food stamps. But we will continue to experience what is happening in parts of Michigan and Illinois, where states and cities have to make material sacrifices to pay down the debt.
  - HillaryBriss 10y ago
    California also makes material sacrifices to pay down the pension debt. Consider the condition of the roads (especially in Los Angeles) and the budget problems facing the UC and Cal State University systems.
- nugget 10y ago
  Which advanced countries do you consider to be fiscally conservative?
  - nshelly 10y ago
    Switzerland and Norway would come to mind. Norway has a large sovereign wealth fund created just for the purpose of keeping up an income stream once North Sea oil runs out. Germany and Japan are possibly the only ones close to the US's size and scale in population (3-4x smaller).
    - nugget 10y ago
      Wouldn't the EU as a whole (led by Britain, Germany, and France) be similar to the US? EU + US + Japan = the vast majority of the first world. Norway has done well for themselves but it's a tiny country with massive natural resources and a stable, homogeneous population; it's hard to draw conclusions from their experience that are applicable to the rest of the world.
      - nshelly 10y ago
        Yes, but I wouldn't consider France and the UK necessarily fiscally conservative overall. Moreso than the US - think QE2 and QE3 vs the UK's "age of austerity" under David Cameron through 2015, well after the start of the Great Recession.
deleted 10y ago
[deleted]

jakozaur 10y ago

Tons of countries has hidden debt as they retirement is pay as you go system and at the same time the population is aging.

zlynx 10y ago

Should add to the California state constitution that whenever there is a budget shortfall directly related to a thing they voted for, they or their estate including portions already inherited has to pay for it, up to the entire value of the estate. Because the problem is these politicians know that a problem 20 years out is not their problem and they will never be called to account for their short sighted decisions. Unions are equally culpable. Their negotiators and leadership should be under the same penalties as the politicians. They ask for concessions that can never be financially stable, essentially guaranteeing that the entire future budget will have to go to pay for the current union's retirement, screwing their future members.

johnwheeler 10y ago

When you have CHP officers getting paid $110,000 a year, it's no wonder. http://transparentcalifornia.com/salaries/search/?q=highway+patrol&page=15 http://transparentcalifornia.com/salaries/search/?q=highway+...

gjolund 10y ago
If I can make $150k writing JS in Los Angeles then CHP deserves at least $110k a year.
- johnwheeler 10y ago
  You're equating risk and skill. I don't disagree with it, but the problem is the societal forces that compensate the CHP don't compensate the soldiers in Afghanistan who take similar, if not greater, risks. Why is that?
  - gjolund 10y ago
    Why is it the opposite on Wall Street? Higher risk equates to a bigger return. Because we value money more than lives. My ability to build an app that generates revenue is more valuable than CHPatrolman ability to save a life.
mywittyname 10y ago
It's actually a quarter million a year in total benefits.
- zaccus 10y ago
  Can they elect to receive a quarter million cash dollars in lieu of benefits? If not, such benefits are not really part of their compensation any more than their uniforms or cars.
  - mywittyname 10y ago
    I guess it depends on what constitutes "other pay." There's an officer with $70,000 worth of Other Pay. But overtime pay is definitely paid in cash. But if you want to quibble about $70,000 in pension and healthcare payments, that still leaves $160-180k a year in direct compensation.

mywittyname 10y ago

Is $77,000 a lot though? It's much less than Alaska's $113,000 and less than the average of the top 5 states on the list. Accounting for the net-present value drops the obligation quite a bit, most of these costs will not bear out for several decades. I think it's more important to look at the growth of this obligation over time. Is it going down as more people move to the state? And how is it doing relative to tax revenues?