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Three reasons why public debt continues to burden California's economy
Jan 14, 2015, 7:33am PST
Allen Young
Sacramento Business Journal
Gov. Jerry Brown has made paying down state debt the cornerstone of his budgetary…
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Gov.
Jerry Brown has made paying down state debt the cornerstone of his
budgetary philosophy. But California's credit card balance continues to grow — meaning continuing pressure for new taxes and more cuts to public services.
Here are three key facts about the
state of California's debt problem.
1. California's current revenue surplus pales in comparison to its overall debt burden
California's tax revenue is running about $4 billion ahead of earlier estimates. But the state faces approximately $227 billion in long-term debts, costs and liabilities, the vast majority of them related to public pensions.
When it comes to infrastructure, the state faces $87 billion in outstanding bonds, and billions more are needed for deferred maintenance, according to the
California Department of Finance.
2. Recent changes in teacher pensions could add pressure to extend the Proposition 30 tax hike
Under teacher pension changes approved last year, school districts are expected to pay an additional $1.2 billion in employer contributions in 2016. Teachers hired after 2013 would contribute an additional $864 million from their salaries, according to the
California State Teachers' Retirement System. State contributions also will rise.
Those additional pension costs steadily increase until 2046. That year, districts are expected to spend an additional $9.3 billion over what they would have under the prior structure. The state would contribute an additional $2.2 billion that year, and teachers would chip in $1 billion.
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