More budget cuts coming

[usctrojancpa]

As a native Californian (there really aren't that many of us) I have seen our state do some loony things but voting for higher taxes on ourselves at this point in the cycle may just be a bridge too far.  I hope that Brown is using this referendum as political cover to finally cut this budget to the bone.  He ran on a pledge of "no new taxes unless the people vote it in".  I think this referendum will lose and Moonbeam probably does too.  At his age he knows he is a one termer and maybe...just maybe, he'll do the right thing.

Polls show that there is support for the propositions.  I don't mind paying some more taxes.

So let's keep increasing taxes to pay for these underfunded pensions?  How high are you willing to let the gov't raise your taxes.  I'm European and sure don't want the US to become another socialist european state....we see how well that is working over in Europe.  Either the folks who are getting all those fat pensions take some cuts now or it'll get a lot worse later.  Contractual obligations are one thing but what happens when there's no money to meet those obligations?  Then what?

 

[usctrojancpa]

1)  those are contractual obligations.  You just can't change them because you like to cut the budget.

2)  Not that I think it's morally good or bad, but why should an individual who is entitled to both state and federal pension not receive both. 

3)  The pension is a way to attract talent from the private sector where the pay is generally higher or there is really no equivalent in the private sector.  It does need to be reformed but it's not the evil people make it out to be.  It's no different than bonuses that companies give out to high-demand employees.  Also, the reason why private companies stopped pensions is because there is social security.  State employees don't get social security.

Contractual obligatations get changed all the time through bankruptcy. if the state has no money, should taxes be raised in perpetuity to pay for pensions? that is probably not the smartest thing to do. something has to give at some point and it probably makes sense to modify the pensions some how. 

im not sure if i buy the private sector pays more argument.  the problem with the govt is that pensions are gifts that keep on giving regardless of the the economy is doing. private companies can scale back or not give out bonuses. if govt wages are in fact lower, then i would prefer that they increase wages to match the private sector, and then make all employees responsible for their own retirement, the same way i am.  this will give governments much more financial flexibility, if revenue gets low, they can just lay people off and it will make it easier to balance budgets and not raise taxes. the economy has been in the shitters and yet govt are on the hook for these outrageous pensions.

States cannot declare bankruptcy (only local governments).  You also won't want to do that cause it would destroy the state's credit rating.  It has be a negotiation.

But that's the point of pensions, it's there in the good times and the bad times.  The real issues with pensions is that it was severely underfunded during the good times.  Instead of putting money in the pension funds during the good times, the state spent that money.  It's not the state workers' fault that happened.  Private companies did this a lot in the 1990s and simply declared BK and screwed a bunch of their former workers out of pensions they both agreed to and funded.

BINGO, underfunded pensions are the issue.  Here's an idea...how about having the workers kick in more of their money into the pensions.  Yeah, it's not the state workers' fault....it's the idiot policitians who wanted to cater to their supporters...errrr gravytrain.  If the state and loca govt were as effecient as private companies, we wouldn't be in this state budget mess that we are in now.

Private companies are often very inefficient.  That's why so many business fail or go BK.  State governments don't have that option.

Also, governments are generally involved in businesses/professions that are not profitable.  It's like the postal service v. UPS/FedEx.   

You just proved my point...the postal service is one of those ineffecient government organizations out there.  Postal workers get some very cushy benefits and pensions.  It's the pension obligations from the federal to the state to the local gov'ts that are being us down to our knees.  Sooner or later, something will have to give.

 

[Irvinecommuter]

As a native Californian (there really aren't that many of us) I have seen our state do some loony things but voting for higher taxes on ourselves at this point in the cycle may just be a bridge too far.  I hope that Brown is using this referendum as political cover to finally cut this budget to the bone.  He ran on a pledge of "no new taxes unless the people vote it in".  I think this referendum will lose and Moonbeam probably does too.  At his age he knows he is a one termer and maybe...just maybe, he'll do the right thing.

Polls show that there is support for the propositions.  I don't mind paying some more taxes.

So let's keep increasing taxes to pay for these underfunded pensions?  How high are you willing to let the gov't raise your taxes.  I'm European and sure don't want the US to become another socialist european state....we see how well that is working over in Europe.  Either the folks who are getting all those fat pensions take some cuts now or it'll get a lot worse later.  Contractual obligations are one thing but what happens when there's no money to meet those obligations?  Then what?

First of all, the amount of taxes being paid in the US is nowhere near than what it is in Europe.  Also, polls show that Europeans have no problems with the high taxes since it pays for a lot of social services they don't have to worry about.  I would pay a lot more taxes if it meant that my kid gets to go to college for free, I have good health care coverage, and I have a reasonable retirement. 

Americans like control and think that they would do more and better with their money by themselves.  But that is just not true for many people and most people do a lot worse with their money than they think.  What happens to those people who have worked their entire lives for a pension and only to see a company wipe that out with a bankruptcy.  Guess who foots the bill for that ...taxpayers in having to fund for unemployment benefits and social security.

Also, why do you think that that people have "fat pensions".  The average CalPERS pension annual payout is $25,000.

 

[Irvinecommuter]

1)  those are contractual obligations.  You just can't change them because you like to cut the budget.

2)  Not that I think it's morally good or bad, but why should an individual who is entitled to both state and federal pension not receive both. 

3)  The pension is a way to attract talent from the private sector where the pay is generally higher or there is really no equivalent in the private sector.  It does need to be reformed but it's not the evil people make it out to be.  It's no different than bonuses that companies give out to high-demand employees.  Also, the reason why private companies stopped pensions is because there is social security.  State employees don't get social security.

Contractual obligatations get changed all the time through bankruptcy. if the state has no money, should taxes be raised in perpetuity to pay for pensions? that is probably not the smartest thing to do. something has to give at some point and it probably makes sense to modify the pensions some how. 

im not sure if i buy the private sector pays more argument.  the problem with the govt is that pensions are gifts that keep on giving regardless of the the economy is doing. private companies can scale back or not give out bonuses. if govt wages are in fact lower, then i would prefer that they increase wages to match the private sector, and then make all employees responsible for their own retirement, the same way i am.  this will give governments much more financial flexibility, if revenue gets low, they can just lay people off and it will make it easier to balance budgets and not raise taxes. the economy has been in the shitters and yet govt are on the hook for these outrageous pensions.

States cannot declare bankruptcy (only local governments).  You also won't want to do that cause it would destroy the state's credit rating.  It has be a negotiation.

But that's the point of pensions, it's there in the good times and the bad times.  The real issues with pensions is that it was severely underfunded during the good times.  Instead of putting money in the pension funds during the good times, the state spent that money.  It's not the state workers' fault that happened.  Private companies did this a lot in the 1990s and simply declared BK and screwed a bunch of their former workers out of pensions they both agreed to and funded.

BINGO, underfunded pensions are the issue.  Here's an idea...how about having the workers kick in more of their money into the pensions.  Yeah, it's not the state workers' fault....it's the idiot policitians who wanted to cater to their supporters...errrr gravytrain.  If the state and loca govt were as effecient as private companies, we wouldn't be in this state budget mess that we are in now.

Private companies are often very inefficient.  That's why so many business fail or go BK.  State governments don't have that option.

Also, governments are generally involved in businesses/professions that are not profitable.  It's like the postal service v. UPS/FedEx.   

You just proved my point...the postal service is one of those ineffecient government organizations out there.  Postal workers get some very cushy benefits and pensions.  It's the pension obligations from the federal to the state to the local gov'ts that are being us down to our knees.  Sooner or later, something will have to give.

That is absolutely no true.  The USPS is hurting because they 1) cannot raise stamp prices without Congressional approval beyond an inflationary rate and 2) they are obligated to deliver to individuals/areas that are not profitable.  Compare the postal rate in the US versus the rest of the world and you will see that the USPS is extremely cheap.  The USPS cannot adjust its prices when fuel cost goes up and cannot choose who they do or do not deliver to. 

 

[morekaos]

As a native Californian (there really aren't that many of us) I have seen our state do some loony things but voting for higher taxes on ourselves at this point in the cycle may just be a bridge too far.  I hope that Brown is using this referendum as political cover to finally cut this budget to the bone.  He ran on a pledge of "no new taxes unless the people vote it in".  I think this referendum will lose and Moonbeam probably does too.  At his age he knows he is a one termer and maybe...just maybe, he'll do the right thing.

Polls show that there is support for the propositions.  I don't mind paying some more taxes.

So let's keep increasing taxes to pay for these underfunded pensions?  How high are you willing to let the gov't raise your taxes.  I'm European and sure don't want the US to become another socialist european state....we see how well that is working over in Europe.  Either the folks who are getting all those fat pensions take some cuts now or it'll get a lot worse later.  Contractual obligations are one thing but what happens when there's no money to meet those obligations?  Then what?

Brown himself used Greece as a comparative situation yesterday in his press conference.  In reality California is bigger than Greece but it finds itself in a similar situation.  Without the ability to de-value its currency to get out of its hole Greece could not use a trick it has utilized MANY times before to jilt the leverage and re balance.  Interestingly, we in California find ourselves with the same dilemma.  In the end Greece could not raise taxes so Austerity and cutting was it's only way out.  I think we will come to the same conclusion.

 

[Irvinecommuter]

As a native Californian (there really aren't that many of us) I have seen our state do some loony things but voting for higher taxes on ourselves at this point in the cycle may just be a bridge too far.  I hope that Brown is using this referendum as political cover to finally cut this budget to the bone.  He ran on a pledge of "no new taxes unless the people vote it in".  I think this referendum will lose and Moonbeam probably does too.  At his age he knows he is a one termer and maybe...just maybe, he'll do the right thing.

Polls show that there is support for the propositions.  I don't mind paying some more taxes.

So let's keep increasing taxes to pay for these underfunded pensions?  How high are you willing to let the gov't raise your taxes.  I'm European and sure don't want the US to become another socialist european state....we see how well that is working over in Europe.  Either the folks who are getting all those fat pensions take some cuts now or it'll get a lot worse later.  Contractual obligations are one thing but what happens when there's no money to meet those obligations?  Then what?

Brown himself used Greece as a comparative situation yesterday in his press conference.  In reality California is bigger than Greece but it finds itself in a similar situation.  Without the ability to de-value its currency to get out of its hole Greece could not use a trick it has utilized MANY times before to jilt the leverage and re balance.  Interestingly, we in California find ourselves with the same dilemma.  In the end Greece could not raise taxes so Austerity and cutting was it's only way out.  I think we will come to the same conclusion.

We can raise taxes.  A one percent increase in state taxes for a person making over $250,000 and a 0.5% increase in sales tax is not going to hurt anyone. 

Also, Prop 13 completely changed the tax structure in California and the state has to rely on more volatile incomes such as sales taxes and income taxes. 

 

[morekaos]

You can argue about the latter effects of prop 13 but the truth is the states coffers currently get filled by income and sales taxes.  We already pay one of the highest state income taxes and sales taxes in the country.  With the economy in the shape it is in I don't think Californians are in any mood to pay more. I know I'm not.  This budget actually proposes spending MORE and arrogantly "assumes"  the higher tax rates will pass.  If it does not,  massive automatic cuts are inevitable, and IMHO... necessary.

 

[usctrojancpa]

As a native Californian (there really aren't that many of us) I have seen our state do some loony things but voting for higher taxes on ourselves at this point in the cycle may just be a bridge too far.  I hope that Brown is using this referendum as political cover to finally cut this budget to the bone.  He ran on a pledge of "no new taxes unless the people vote it in".  I think this referendum will lose and Moonbeam probably does too.  At his age he knows he is a one termer and maybe...just maybe, he'll do the right thing.

Polls show that there is support for the propositions.  I don't mind paying some more taxes.

So let's keep increasing taxes to pay for these underfunded pensions?  How high are you willing to let the gov't raise your taxes.  I'm European and sure don't want the US to become another socialist european state....we see how well that is working over in Europe.  Either the folks who are getting all those fat pensions take some cuts now or it'll get a lot worse later.  Contractual obligations are one thing but what happens when there's no money to meet those obligations?  Then what?

First of all, the amount of taxes being paid in the US is nowhere near than what it is in Europe.  Also, polls show that Europeans have no problems with the high taxes since it pays for a lot of social services they don't have to worry about.  I would pay a lot more taxes if it meant that my kid gets to go to college for free, I have good health care coverage, and I have a reasonable retirement. 

Americans like control and think that they would do more and better with their money by themselves.  But that is just not true for many people and most people do a lot worse with their money than they think.  What happens to those people who have worked their entire lives for a pension and only to see a company wipe that out with a bankruptcy.  Guess who foots the bill for that ...taxpayers in having to fund for unemployment benefits and social security.

Also, why do you think that that people have "fat pensions".  The average CalPERS pension annual payout is $25,000.

I think we all agree that Communism doesn't work, right?  Well, let's take that a bit further.  Socialism (which is what most countries in Europe are run by) is basically Communism is slow motion.  What I mean by that is that it will also not work.  How do I know this?  Well, go look at what is going on over in Europe right now.  The issue with the pensions that were set up years ago is that the assumptions never got updated into the models.  The back breaker for the pensions is the significant rise in life expectancy in the past 30-40 years.  These folks who are collecting or soon to be collecting pensions are going to be collecting it for a long, long time.

 

[Irvinecommuter]

As a native Californian (there really aren't that many of us) I have seen our state do some loony things but voting for higher taxes on ourselves at this point in the cycle may just be a bridge too far.  I hope that Brown is using this referendum as political cover to finally cut this budget to the bone.  He ran on a pledge of "no new taxes unless the people vote it in".  I think this referendum will lose and Moonbeam probably does too.  At his age he knows he is a one termer and maybe...just maybe, he'll do the right thing.

Polls show that there is support for the propositions.  I don't mind paying some more taxes.

So let's keep increasing taxes to pay for these underfunded pensions?  How high are you willing to let the gov't raise your taxes.  I'm European and sure don't want the US to become another socialist european state....we see how well that is working over in Europe.  Either the folks who are getting all those fat pensions take some cuts now or it'll get a lot worse later.  Contractual obligations are one thing but what happens when there's no money to meet those obligations?  Then what?

First of all, the amount of taxes being paid in the US is nowhere near than what it is in Europe.  Also, polls show that Europeans have no problems with the high taxes since it pays for a lot of social services they don't have to worry about.  I would pay a lot more taxes if it meant that my kid gets to go to college for free, I have good health care coverage, and I have a reasonable retirement. 

Americans like control and think that they would do more and better with their money by themselves.  But that is just not true for many people and most people do a lot worse with their money than they think.  What happens to those people who have worked their entire lives for a pension and only to see a company wipe that out with a bankruptcy.  Guess who foots the bill for that ...taxpayers in having to fund for unemployment benefits and social security.

Also, why do you think that that people have "fat pensions".  The average CalPERS pension annual payout is $25,000.

I think we all agree that Communism doesn't work, right?  Well, let's take that a bit further.  Socialism (which is what most countries in Europe are run by) is basically Communism is slow motion.  What I mean by that is that it will also not work.  How do I know this?  Well, go look at what is going on over in Europe right now.  The issue with the pensions that were set up years ago is that the assumptions never got updated into the models.  The back breaker for the pensions is the significant rise in life expectancy in the past 30-40 years.  These folks who are collecting or soon to be collecting pensions are going to be collecting it for a long, long time.

I am sorry but that is such logical fallacy.  We all agree that mob rule doesn't work right...democracy is basically mob rule in slow motion.  Also, Europe does not have socialism.  It just has a less cut throat version of capitalism. 

Europe is screwed up because they are now lumped together.  Spain, Italy, and Greece are screwed up, Germany, England, France, and the Scandavian countries are just fine. 

Again, I think the pension play should be adjusted (higher retirement age/more contribution) but to say that the model is wrong is patently unfair. 

 

[morekaos]

1)  those are contractual obligations.  You just can't change them because you like to cut the budget.

2)  Not that I think it's morally good or bad, but why should an individual who is entitled to both state and federal pension not receive both. 

3)  The pension is a way to attract talent from the private sector where the pay is generally higher or there is really no equivalent in the private sector.  It does need to be reformed but it's not the evil people make it out to be.  It's no different than bonuses that companies give out to high-demand employees.  Also, the reason why private companies stopped pensions is because there is social security.  State employees don't get social security.

Contractual obligatations get changed all the time through bankruptcy. if the state has no money, should taxes be raised in perpetuity to pay for pensions? that is probably not the smartest thing to do. something has to give at some point and it probably makes sense to modify the pensions some how. 

im not sure if i buy the private sector pays more argument.  the problem with the govt is that pensions are gifts that keep on giving regardless of the the economy is doing. private companies can scale back or not give out bonuses. if govt wages are in fact lower, then i would prefer that they increase wages to match the private sector, and then make all employees responsible for their own retirement, the same way i am.  this will give governments much more financial flexibility, if revenue gets low, they can just lay people off and it will make it easier to balance budgets and not raise taxes. the economy has been in the shitters and yet govt are on the hook for these outrageous pensions.

States cannot declare bankruptcy (only local governments).  You also won't want to do that cause it would destroy the state's credit rating.  It has be a negotiation.

But that's the point of pensions, it's there in the good times and the bad times.  The real issues with pensions is that it was severely underfunded during the good times.  Instead of putting money in the pension funds during the good times, the state spent that money.  It's not the state workers' fault that happened.  Private companies did this a lot in the 1990s and simply declared BK and screwed a bunch of their former workers out of pensions they both agreed to and funded.

The point about state bankruptsies is true...for now.  The edges are being pushed all over the country.  5 years ago I would never have thought we would see large Counties declaring bankruptsy but here we are...could a state be next?

http://www.times.com/2011/12/24/business/in-alabama-a-test-of-the-full-faith-and-credit-pledge-to-repay-bonds.html?_r=1&pagewanted=all

Bankruptcy Filing Raises Doubts About a Bond Repayment Pledge

People who own what is considered the safest type of municipal bond may be in for a surprise.
This safe debt, called a general-obligation bond, is said to be the next strongest thing to Treasuries because it is backed by a ?full faith and credit? pledge. That means the government that issued it will pay it on time, no matter what.

But now Jefferson County, Ala., has stopped paying such debt, breaking with convention and setting up a fundamental test of what full faith and credit truly means.

?We all want to know, ?What?s the truth here?? ? said Richard A. Ciccarone, chief research officer at McDonnell Investment Management. ?The way I learned it, full faith and credit was considered all the taxing power of a community, and that means there?s an infinite pledge. When you get into bankruptcy court, truth is something that can be revealed in a new way.?

 

[Irvinecommuter]

1)  those are contractual obligations.  You just can't change them because you like to cut the budget.

2)  Not that I think it's morally good or bad, but why should an individual who is entitled to both state and federal pension not receive both. 

3)  The pension is a way to attract talent from the private sector where the pay is generally higher or there is really no equivalent in the private sector.  It does need to be reformed but it's not the evil people make it out to be.  It's no different than bonuses that companies give out to high-demand employees.  Also, the reason why private companies stopped pensions is because there is social security.  State employees don't get social security.

Contractual obligatations get changed all the time through bankruptcy. if the state has no money, should taxes be raised in perpetuity to pay for pensions? that is probably not the smartest thing to do. something has to give at some point and it probably makes sense to modify the pensions some how. 

im not sure if i buy the private sector pays more argument.  the problem with the govt is that pensions are gifts that keep on giving regardless of the the economy is doing. private companies can scale back or not give out bonuses. if govt wages are in fact lower, then i would prefer that they increase wages to match the private sector, and then make all employees responsible for their own retirement, the same way i am.  this will give governments much more financial flexibility, if revenue gets low, they can just lay people off and it will make it easier to balance budgets and not raise taxes. the economy has been in the shitters and yet govt are on the hook for these outrageous pensions.

States cannot declare bankruptcy (only local governments).  You also won't want to do that cause it would destroy the state's credit rating.  It has be a negotiation.

But that's the point of pensions, it's there in the good times and the bad times.  The real issues with pensions is that it was severely underfunded during the good times.  Instead of putting money in the pension funds during the good times, the state spent that money.  It's not the state workers' fault that happened.  Private companies did this a lot in the 1990s and simply declared BK and screwed a bunch of their former workers out of pensions they both agreed to and funded.

The point about state bankruptsies is true...for now.  The edges are being pushed all over the country.  5 years ago I would never have thought we would see large Counties declaring bankruptsy but here we are...could a state be next?

http://www.times.com/2011/12/24/business/in-alabama-a-test-of-the-full-faith-and-credit-pledge-to-repay-bonds.html?_r=1&pagewanted=all

Bankruptcy Filing Raises Doubts About a Bond Repayment Pledge

People who own what is considered the safest type of municipal bond may be in for a surprise.
This safe debt, called a general-obligation bond, is said to be the next strongest thing to Treasuries because it is backed by a ?full faith and credit? pledge. That means the government that issued it will pay it on time, no matter what.

But now Jefferson County, Ala., has stopped paying such debt, breaking with convention and setting up a fundamental test of what full faith and credit truly means.

?We all want to know, ?What?s the truth here?? ? said Richard A. Ciccarone, chief research officer at McDonnell Investment Management. ?The way I learned it, full faith and credit was considered all the taxing power of a community, and that means there?s an infinite pledge. When you get into bankruptcy court, truth is something that can be revealed in a new way.?

States are not legally allowed to declared bankruptcy because it would subject them to federal control (federal bankruptcy laws).  It would take a constitutional amendment.

 

[morekaos]

True, but the idea has been floated...

http://online.wsj.com/article/SB10001424052748704881304576094091992370356.html

Bankruptcy proponents understandably worry that states such as California and Illinois are so deep in the hole they may end up petitioning Congress for federal relief. To forestall this possibility, the argument goes, even the threat of bankruptcy would give governors and legislators a powerful new weapon for forcing concessions from recalcitrant public employee unions

For constitutional reasons, any federal law enabling state bankruptcy would have to be voluntary, meaning states would have to invite federal judges to play tough with their unions. But if Gov. Jerry Brown and the California legislature are unwilling to rewrite their collective bargaining rules?signed into law by Mr. Brown himself, 33 years ago?why assume they would plead with a federal judge to do it for them?

It's more likely that a state like California would pursue bankruptcy if powerful unions and other budget-dependent interest groups saw this as a way to deflect some of the pain to bondholders. California is one of the states that constitutionally guarantees its general obligation debt, and whose bondholders are now seemingly untouchable. That could change with a bankruptcy option.

 

[iacrenter]

True, but the idea has been floated...

http://online.wsj.com/article/SB10001424052748704881304576094091992370356.html

Bankruptcy proponents understandably worry that states such as California and Illinois are so deep in the hole they may end up petitioning Congress for federal relief. To forestall this possibility, the argument goes, even the threat of bankruptcy would give governors and legislators a powerful new weapon for forcing concessions from recalcitrant public employee unions

For constitutional reasons, any federal law enabling state bankruptcy would have to be voluntary, meaning states would have to invite federal judges to play tough with their unions. But if Gov. Jerry Brown and the California legislature are unwilling to rewrite their collective bargaining rules?signed into law by Mr. Brown himself, 33 years ago?why assume they would plead with a federal judge to do it for them?

It's more likely that a state like California would pursue bankruptcy if powerful unions and other budget-dependent interest groups saw this as a way to deflect some of the pain to bondholders. California is one of the states that constitutionally guarantees its general obligation debt, and whose bondholders are now seemingly untouchable. That could change with a bankruptcy option.

This makes for great American politics--because we in California can't balance our own budget we should ask the rest of the US to pick up the tab. Yet another bailout. So sad. Even letting bondholders take the hit would have significant negative consequences for other states/municipalities.

I am very doubtful Brown's tax hikes will pass (no matter how reasonable some think they are) the electorate. I would be more willing to pay higher taxes if the governor could guarantee in law certain educational funding targets and hold minimum teacher to student ratios.

 

[morekaos]

Bailouts are all that has kept us afloat so far.  The vast majority of the "stimulus bill"  went directly to states to fund their deficits.  With no "stimulus 2",  so I can have my street unnecessarily repaved again,  we are cut lose.  Hence, the situation we find ourselves in.

 

[Irvinecommuter]

True, but the idea has been floated...

http://online.wsj.com/article/SB10001424052748704881304576094091992370356.html

Bankruptcy proponents understandably worry that states such as California and Illinois are so deep in the hole they may end up petitioning Congress for federal relief. To forestall this possibility, the argument goes, even the threat of bankruptcy would give governors and legislators a powerful new weapon for forcing concessions from recalcitrant public employee unions

For constitutional reasons, any federal law enabling state bankruptcy would have to be voluntary, meaning states would have to invite federal judges to play tough with their unions. But if Gov. Jerry Brown and the California legislature are unwilling to rewrite their collective bargaining rules?signed into law by Mr. Brown himself, 33 years ago?why assume they would plead with a federal judge to do it for them?

It's more likely that a state like California would pursue bankruptcy if powerful unions and other budget-dependent interest groups saw this as a way to deflect some of the pain to bondholders. California is one of the states that constitutionally guarantees its general obligation debt, and whose bondholders are now seemingly untouchable. That could change with a bankruptcy option.

This makes for great American politics--because we in California can't balance our own budget we should ask the rest of the US to pick up the tab. Yet another bailout. So sad. Even letting bondholders take the hit would have significant negative consequences for other states/municipalities.

I am very doubtful Brown's tax hikes will pass (no matter how reasonable some think they are) the electorate. I would be more willing to pay higher taxes if the governor could guarantee in law certain educational funding targets and hold minimum teacher to student ratios.

You can't guarantee that because education is district based.  There are already rules about those things but the only thing the state can do is to withhold certain funding. 

 

[qwerty]

1)  those are contractual obligations.  You just can't change them because you like to cut the budget.

2)  Not that I think it's morally good or bad, but why should an individual who is entitled to both state and federal pension not receive both. 

3)  The pension is a way to attract talent from the private sector where the pay is generally higher or there is really no equivalent in the private sector.  It does need to be reformed but it's not the evil people make it out to be.  It's no different than bonuses that companies give out to high-demand employees.  Also, the reason why private companies stopped pensions is because there is social security.  State employees don't get social security.

Contractual obligatations get changed all the time through bankruptcy. if the state has no money, should taxes be raised in perpetuity to pay for pensions? that is probably not the smartest thing to do. something has to give at some point and it probably makes sense to modify the pensions some how. 

im not sure if i buy the private sector pays more argument.  the problem with the govt is that pensions are gifts that keep on giving regardless of the the economy is doing. private companies can scale back or not give out bonuses. if govt wages are in fact lower, then i would prefer that they increase wages to match the private sector, and then make all employees responsible for their own retirement, the same way i am.  this will give governments much more financial flexibility, if revenue gets low, they can just lay people off and it will make it easier to balance budgets and not raise taxes. the economy has been in the shitters and yet govt are on the hook for these outrageous pensions.

States cannot declare bankruptcy (only local governments).  You also won't want to do that cause it would destroy the state's credit rating.  It has be a negotiation.

But that's the point of pensions, it's there in the good times and the bad times.  The real issues with pensions is that it was severely underfunded during the good times.  Instead of putting money in the pension funds during the good times, the state spent that money.  It's not the state workers' fault that happened.  Private companies did this a lot in the 1990s and simply declared BK and screwed a bunch of their former workers out of pensions they both agreed to and funded.

the pensions are there in the good time and bad times because the good old taxpayer is always on the hook.  the market tanks and now the pensions are underfunded? not a problem, the taxpayers are on the hook.  and you are dreaming if you think any entity, private or public will contribute to a pension if it is not underfunded (outside of minimum requirements, if applicable).

So it's okay for management to be irresponsible and the employees are bad for asking what they bargained for?

yes unfortunately. it is called real life! shit happens. nothing is ever guaranteed, well except the two well known ones right, excuse the cliche, death and taxes (which apparently you want more of)