On Thursday, the State Budget Crisis Task Force released a report estimating that California’s “debt wall” is at least $167 billion and as much as $335 billion, much more than previously projected by state officials, the New York Times reports.
The task force was created last year and is charged with analyzing the budgets of six states (Walsh, New York Times, 9/20).
State Projections for Debt Wall
Last year, Brown introduced the wall of debt concept to encompass various forms of borrowing by the state over the past few years.
According to a Department of Finance report issued in July, the debt wall is $34.2 billion and would drop to $8.9 billion by the end of fiscal year 2015-2016 if voters pass a compromise tax hike plan in November.
The tax hike measure — listed as Proposition 30 on the ballot — would increase the personal income tax by one percentage point for individuals who earn $250,000 annually or couples who earn $500,000 annually and by two percentage points for individuals who earn $300,000 annually or couples who earn $600,000 annually. It also would increase the sales tax by a quarter of a cent, among other changes (California Healthline, 7/31).
Details of Task Force Report
Task force researchers examined numerous debts that were not included in state projections, such as pledges to provide health care benefits and pensions for retired public workers. They also cited unpaid bills from previous years in the new estimates.
According to the task force, even if voters pass the compromise tax hike plan — which would provide the state with an additional $50 billion over the next seven years — the state’s debt wall still would exist (New York Times, 9/20).
Task Force Recommendations
The task force recommended that the state rethink how it provides health care and pension benefits for retired workers.
It also recommended that California develop a two-year spending plan to replace its annual plan (Quinton, “KXJZ News,” Capital Public Radio, 9/20).
(Originally posted on California Healthline.)