Thread: California Dreaming: Bankruptcy, Pensions and Taxes

California Dreaming: Bankruptcy, Pensions and Taxes

The California Public Employees' Retirement System lives in the rarified air where financial magic somehow materializes to pay for their irrational exuberant pensions. When the drug high is over, the real world requires a harsh penalty for ebullient irresponsibility. The Chicago Tribune reports:

"San Bernardino, a city of 210,000 about 60 miles east of Los Angeles, filed for bankruptcy protection on August 1. Since then, it has halted its bi-weekly, $1.2 million payment to Calpers, saying it wants to defer any payments to the fund until fiscal year 2013-2014. Calpers says the city is already $6.9 million in arrears since August 1.

The San Bernardino bankruptcy is fast emerging as a precedent-setting case over how creditors, especially Wall Street bondholders and insurers, are treated in a municipal bankruptcy, because never before has a city seeking bankruptcy halted payments to Calpers or threatened its historical primacy as a creditor.

Under Californian state law, the contract between Calpers and debtor cities is viewed as inviolate and has been treated as such by state courts. Unlike Calpers, other creditors have historically been forced to renegotiate or forgive debt to debtor cities."

The concept of an inviolate obligation tied to public employee retirement payouts is a sacred cow that needs purging from law and, more importantly from populace endorsement.

Notwithstanding, expressing such supportive government orthodoxy, that bastion of objective news as reported by the Sacramento Bee, writes on the pro taxation argument of Jerry Brown: California tax vote start of national tax hike sweep.

"Revenue means taxes, and certainly those who have been blessed the most, who have disproportionately extracted, by whatever skill, more and more from the national wealth, they're going to have to share more of that."

The rush to leave the state has Californians perplexed for solutions as long as the Sacramento progressive ‘pols’ refuse to challenge the public union mafia. Those who remain will bear an even higher tax burden to feather the nests of the most unproductive elements in society, namely government.

Governor Brown preaches. "And everyone is going to have to realize that building roads is important, investing in schools is important, paying for the national defense is important, biomedical research is important, the space program is an indicator of the world leader - all that takes money". Just maybe a bankrupt state and municipalities needs to reduce the size and scope of government itself.

James Hall – December 5, 2012


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California Dreaming: Bankruptcy, Pensions and Taxes