CA Budget: 9% increase considered “frugal” by Democrats

California Gov. Jerry Brown points to a chart showing the growth of the state's Rainy Day fund as as he discusses his proposed 2018-19 state budget at a news conference Wednesday, Jan. 10, 2018, in Sacramento, Calif. Brown proposed a $131.7 billion state spending plan, dedicating $5 billion toward the fund. (AP Photo/Rich Pedroncelli)

When the annual California budget debate began inearnest with Gov. Jerry Brown’s release of a proposed 2018-19 fiscal plan in January, progressives were ready to go with a long list of new spending proposals. Many hoped to both expand the social safety net and to make existing state welfare programs more generous.

But nearly six months later, as final work on the budget wraps up, Brown’s dominance of state finances has gone all but unchallenged. Any assumption that a lame-duck governor in his final year would have less clout has long since been disproved.

For the fiscal year which begins Sunday, the state will have a $138.6 billion general fund. Spending on special funds dedicated to specific programs and on bond debt will bring the total overall budget to $199.6 billion.

Brown made some concessions during the budget process. The state will spend an additional $600 million on programs to help local governments deal with homelessness; give an additional $344 million to the CSU and UC systems; and provide $90 million more for monthly CALworks welfare payments.

But new spending is dwarfed by the billions of dollars the state continues to set aside in reserves. Nearly $14 billion is expected to be in the state’s “rainy day” fund and $2 billion more in other funds by the end of fiscal 2018-19 – so much so that the state may soon have to cut the sales tax to prevent reserves from exceeding constitutional limits.

The governor has emphasized building up reserves because of his frequently voiced belief that the state is overdue for a recession. Because by far the state’s biggest source of money is income and capital-gains taxes paid by the very wealthy, revenue can plunge rapidly when Silicon Valley stumbles. A decade ago, in the first fiscal year after the Great Recession, revenue fell $20 billion – leading to cuts in spending on public education and welfare programs under Brown’s predecessor, Arnold Schwarzenegger.

The freshness of this budget pain in the memories of dozens of long-serving state lawmakers has made even some ardent liberals open to the governor’s relative frugality.

No expansion of Medi-Cal to undocumented adults

This was evident in the resolution of the fight over access to Medi-Cal, the state program providing health care to the poor. Some Bay Area and Los Angeles County Democrats pushed hard for giving regular, full access to the subsidized care to older unauthorized immigrants, not just to children, as is now the case.

But the governor never budged. All progressives got out of Brown was an agreement to form a commission that will “broadly study California’s health care needs” – a concession that was dismissed as meaningless by some groups which had hoped for much more, according to a Los Angeles Times report. Cynthia Buiza, executive director of the California Immigrant Policy Center, told the Times that the “budget deal is devastating for the health of all that call California home. … We are specifically disappointed that our low-income immigrant neighbors, friends, colleagues and communities will continue to suffer from [Medi-Cal] exclusion.”

Republican lawmakers were largely on the sidelines in shaping the budget. While some praise Brown for restraining his fellow Democrats, others challenge the narrative that he is frugal. A recent budget op-ed in the Los Angeles Times offered some support for this skepticism. It noted that total spending will go up by 9 percent from the current fiscal year to the next one – more than four times the rate of inflation.

California’s Budget Process Should Worry Every Taxpayer

California Gov. Jerry Brown points to a chart showing the growth of the state's Rainy Day fund as as he discusses his proposed 2018-19 state budget at a news conference Wednesday, Jan. 10, 2018, in Sacramento, Calif. Brown proposed a $131.7 billion state spending plan, dedicating $5 billion toward the fund. (AP Photo/Rich Pedroncelli)

Let’s face it, when it comes to the state budget of California, most citizens suffer from MEGO (My Eyes Glaze Over).  Because even public finance experts are confused by the thousands of pages of budget documents, it’s no wonder that citizen taxpayers don’t stand a chance. Besides, normal people are too busy working hard to pay for all the spending increases reflected in the budget.

Nonetheless, passage of the state budget remains one of the most important functions of the Legislature because it reflects the state’s spending priorities for years in the future.  Here are some key takeaways that should concern every California taxpayer.

First, government spending is out of control. While projected revenues are up eight percent – a good thing – from a year ago, expenditures continue to accelerate at a faster clip, up by nearly eleven percent to a record $138 billion budget. When other state funds, including special funds, are added to the total, nearly $200 billion in state funds will be spent in this budget. Legislators will argue that some of these expenditures are going to bolster a rainy day fund to protect against an economic downturn. While this fund is also at a record $14 billion, this will hardly protect state programs even in the event of even a moderate recession.  Second, we doubt that the spending priorities of politicians reflect what taxpayers think are important.  For example, this year’s budget includes a billion-dollar plan to completely remodel the State Capitol, while the state continues to lose ground on nearly a trillion dollars of unfunded pension obligations.

Finally, as in prior years, the 2018-19 budget is a vehicle for numerous abuses. It is now common to enact politically motivated legislation as so-called budget “trailer bills” as a means to avoid any meaningful analysis and public hearings.  This column previously alerted readers to one such sneak attack, a precedent-setting tax on water that thankfully was beaten back – at least for now.  But two other proposed bills represent the worst of Sacramento special-interest politics.

Two years ago, the Howard Jarvis Taxpayers Association sponsored Assembly Bill 195 (Obernolte), a bill that increased transparency for local bonds and special taxes by requiring disclosure of the rate, duration and amount of revenue to be raised. AB 195 mandates that these important facts be included in the actual ballot label, typically the last thing voters read before deciding.

Now, education lobbyists and building trades groups are attempting to delay the implementation of AB 195 for local bonds by two years, to keep this important information from being presented to voters. In other words, our legislators are using a corrupt, non-transparent process to deprive local voters of transparency regarding the cost of bonds at the local level.  This is a double insult to taxpayers. …

Click here to read the full article from the San Bernardino Sun

State gets an “F” for claiming surplus instead of $270 billion deficit

California Gov. Jerry Brown points to a chart showing the growth of the state's Rainy Day fund as as he discusses his proposed 2018-19 state budget at a news conference Wednesday, Jan. 10, 2018, in Sacramento, Calif. Brown proposed a $131.7 billion state spending plan, dedicating $5 billion toward the fund. (AP Photo/Rich Pedroncelli)

The non-partisan “Truth in Accounting” project, which analyzes government financial reports, has awarded California an “F” grade for claiming surpluses instead of a $269.9 billion deficit.

The Chicago-based organization has been providing in-depth accounting reviews of the audited financial statements for America’s fifty states, as well as most major counties and major cities, in the United States since 2002.

The group’s mission is to educate and empower citizens with understandable, reliable, and transparent government financial information.

California received the lowest score of “F” on Truth in Accounting’s grading scale because despite Gov. Jerry Brown touting several years of surpluses, California actually faces a $269.9 billion shortfall in terms of its overall obligations, which equates to $22,000 burden for each of the 12.3 million taxpayers in the state.

California’s financial burden is primarily associated with the rapidly deteriorating condition of the state’s current $461.3 billion in promised public employee retirement benefits –which are $102.5 billion under-funded by the pension plan — and $107 billion for unfunded retiree health care benefits.

The State of California faced a near financial death experience in Great Recession, when the average taxpayer burden jumped from $15,000 to $23,500. Newly elected Gov. Brown, facing a $25 billion deficit in 2011, passed an array of income and sales tax hikes, including a 29 percent increase for Californians with taxable income over $1 million.

Gov. Brown has touted the “California Comeback.” But the data demonstrate that despite the gusher of tax revenue the flooded into Sacramento from the economic recovery and the substantially higher tax rates Gov. Brown passed, the state’s taxpayer burden only fell modestly to $20,900 by 2015. The taxpayer burden rose to $21,600 in 2016 and hit $22,000 in 2017, the second-highest in the history of the state.

Truth in Accounting Founder Sheila Weinberg warns that California is a giant “Sinkhole Sate.” Ms. Weinberg is especially critical of Gov. Brown  claiming an $8.8 billion surplus this year, while avoiding the fact that California has only $100.1 billion in available assets to pay $369.9 billion worth of bills.

Weinberg emphasized to Breitbart News that California’s rising “taxpayer burden” is only for net state liabilities. Her organization intends to begin publishing consolidated reports this summer for all the states that will also capture the liabilities of counties and cities. Ms. Weinberg expects that the combined taxpayer burden for California to be a much higher number.

This article was originally published by Breitbart.com/California

Jerry Brown to Leave Office With $13.5 Billion Rainy Day Fund

California Gov. Jerry Brown has submitted his May revised 2018-2019 budget, which indicates he will leave office in January with the maximum $13.5 billion rainy-day fund.

Brown, a liberal Democrat, has complained that no politician should face the type of catastrophic financial crisis he inherited when he returned at age 72 on January 3, 2011 for his third term as the state’s chief executive officer.

At the time, outgoing Republican Gov. Arnold Schwarzenegger’s finance department was forecasting a $28.5 billion deficit over the next 18 months and California had been already been downgraded by to the lowest credit rating of any state in the nation.

Most political observers thought Brown might be the worst possible California governor for the crisis, given that after being termed out of office after eight years in 1983, he left newly elected Republican Gov. George Deukmejian with what was considered at the time a hellacious budget deficit of $1.5 billion. …

Click here to read the full article from Breitbart.com/California

Gov. Jerry Brown’s last budget grows to $199 billion

Gov. Jerry Brown is using a surging, $8.8 billion surplus in his 16th and final year leading the state to stash billions of dollars in reserves.

He wants to put almost all of the additional money — $7.6 billion of it — into two reserve funds that combined would hold $17 billion a year from now if trends hold.

He warned at a press conference Friday where he unveiled his final budget for the 2018-19 financial year that a recession could be just around the corner and the state should avoid long-term commitments that it might not be able to afford in a downturn.

“This is a time to save for our future, not to make pricey promises we can’t keep. I said it before and I’ll say it again: Let’s not blow it now,” Brown said.

His plans calls for $137.6 billion in general fund spending and $199.3 billion in total spending. Those sums reflect the dramatic turnaround in the state’s fortunes since Brown took office in the throes of a recession eight years ago. …

Click here to read the full article from the Modesto Bee

Gov. Brown warns of recession, but his budget sets spending records

California Gov. Jerry Brown points to a chart showing the growth of the state's Rainy Day fund as as he discusses his proposed 2018-19 state budget at a news conference Wednesday, Jan. 10, 2018, in Sacramento, Calif. Brown proposed a $131.7 billion state spending plan, dedicating $5 billion toward the fund. (AP Photo/Rich Pedroncelli)

SACRAMENTO – Gov. Jerry Brown’s annual budgets have become familiar affairs. During his last two terms in office, Brown routinely offered a budget plan that broke spending records, but also was designed to limit the creation of new programs while girding against the possibility of another recession. The governor’s budget release from last Thursday was true to form.

Brown’s 2018-2019 budget plan would spend a record $132 billion in the general fund – which is 4 percent higher than last year and 44 percent higher than the first budget he released in his modern gubernatorial terms (2011-2012). The total budget – including spending from bonds and special funds – tops $190 billion. As columnist Dan Walters points out, Brown’s first-ever budget from the 1970s spent only $11.5 billion in the general fund.

But Brown touted his infamous chart showing that balanced budgets often have been followed by deficits.  “California has faced 10 recessions since World War II and we must prepare for the eleventh. Yes, we have had some very good years and program spending has steadily increased. Let’s not blow it now,” he said in his budget statement.

The governor also warned about the ramifications of the recent federal tax plan, signed by President Trump, which increases the tax bite on high-income Californians by limiting their ability to write off state and local taxes. Unless the state Legislature passes a workaround (such as a proposed plan that allows Californians to designate their state tax payments as a “charitable contribution”), the new rules are expected to reduce revenues in high-tax states.

There are other steps that followed in a more fiscally conservative manner. Following the recent increase in the gas tax and vehicle-license fees, the new budget showed a healthy surplus. Instead of spending it on new programs, Brown has earmarked $5 billion to the state’s rainy day fund. That’s $3.5 billion more this year than he is obligated to set aside in case of a coming downturn. It brings the total fund to $13.5 billion.

These efforts drew praise from across the political spectrum for their prudency. As the San Francisco Chronicle opined, Brown’s “proposed budget, drenched in a $7 billion surplus, spends money sparingly, dumps dollars into a record rainy-day fund, and dodges big-ticket programs favored by his would-be successors.” Democratic legislators and statewide elected officials likewise praised the governor for spending more without breaking the bank.

He even earned the faint praise of some Republicans legislators, who fear that the next Democratic governor will be far more eager to spend beyond Californians’ means. “As usual, the governor gave a good speech this morning,” said Sen. Jeff Stone, R-Temecula. “But as has been the case far too often, the initial budget is the floor and I’m sure the Democrat leadership in Sacramento will now begin the spending spree we all know is coming.” Other Republicans argued that the surplus proved that the gas-tax hike was unnecessary – and urged the governor to return the surplus to taxpayers.

There are a number of other noteworthy spending proposals. For instance, the governor plans to quickly start spending $4.6 billion in road improvements, which some observers believe could blunt the momentum of a proposed statewide initiative, which is now in the signature-gathering stage, that would repeal the unpopular tax. The governor also proposes spending nearly 3 percent more on California State University and the University of California systems – a proposal that drew criticism as being insufficient from some education officials. Total K-12 spending would be up by 2.5 percent.

Of particular note, the governor proposes the creation of a new fully online state community college to serve the “2.5 million Californians in the prime working ages between 25 and 34 who have only a high school diploma or some college but no degree.” Brown says these Californians – mostly Latino and women – are most vulnerable to recession and to automation in the workplace. The proposed cost to get started is approximately $100 million and then $20 million a year.

Social services spending remained stable. The budget boosts health care spending but contains some uncertainty, pending a coming decision from Congress regarding whether it will continue to split the costs of the Children’s Health Insurance Program with the states. The governor continues to boost funding for programs to combat climate change. He continues to pay down the so-called “Wall of Debt,” which hit $35 billion in 2011 and is down to $6 billion in this budget year.

One big fiscal issue, that doesn’t directly affect the current, proposed budget, involves the state’s growing payments to cover its unfunded pension liabilities. “When the next recession comes around, the governor will have the option of considering pension cutbacks for the first time in a long time,” the governor said at a press conference. They will, he said, be on the “chopping block.”

Brown was referring to a series of cases that the California Supreme Court has agreed to review this year involving something known as the “California Rule.” That refers to a series of decisions dating to 1955, which forbid government from cutting pension benefits for current employees even going forward (i.e., you accrue the promised benefit through today, but start earning a lower amount starting tomorrow).

Unions have challenged some changes in the governor’s 2013 pension-reform law. Brown’s legal team submitted a brief to the court that defends not only the reform law, but which seems to back broader changes to the rule. Clearly, the governor expects the court to side with him, which would not only give the state more latitude in reining in spending, but local governments, too.

That’s a longer-term picture, but in the short term the budget proposal is pure Jerry Brown. He wants to spend more on government programs, but wants to be certain that the state isn’t committing itself to huge new spending obligations if the economy goes soft.

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

This article was originally published by CalWatchdog.com

What taxpayers should know about the California budget

BudgetCalifornia voters are pretty good at figuring out what is going in the state capital when it hits them directly. For example, recent polling shows that citizen awareness of the $5.2 billion annual gas and car tax is very high and, incidentally, very negative.

But the same can’t be said when it comes to the more complicated and arcane actions of our state politicians such as the annual California state budget process. While Californians are painfully aware that taxes are very high (they’ve been watching their friends and neighbors moving out of state at record pace) they typically have little comprehension of where their tax dollars go. That’s not surprising since California ranks dead last in budget transparency according to a recent study by U.S. News & World Report.

Nonetheless, here are the main takeaways that every California taxpayer should know.

First, the budget is huge – over $125 billion in general fund spending – by far the largest budget in California history. Since the recovery began after the great recession, taxpayers have infused California’s General Fund with $41 billion and special funds by $28 billion. That translates into a 63 percent increase since 2010. And property owners have done their part as well. With real estate values fully recovered (and then some) property tax revenues are up 72 percent. This is where our schools get the lion’s share of their money.

Second, the budget is only balanced if you ignore debt. The majority party is practically breaking their arms trying to pat themselves on the back for a “balanced budget.” This is like a family celebrating the fact that they paid all their bills this month but ignoring the fact that they have a mortgage that is way beyond their means over the long term. California’s pension debt is, by some measurements, close to a trillion dollars.

Third, the budget is, as usual, full of tricks and questionable accounting. One of the more dubious ploys involves borrowing from special funds. This year, there’s a proposal to borrow $6 billion (with a “b”) from the state’s Surplus Money Investment Fund to reduce the unfunded liability of the state’s pension fund, PERS. While there is agreement that appropriating more money to PERS now helps to reduce unfunded liability in the future, that payment should come from current revenue, not a special account designed to cover ongoing operating expenses.  Let’s call this for what it is: Paying your Visa bill with your MasterCard.

The budget is being praised for adding a couple billion more to the state’s rainy day fund (technically called the Budget Stabilization Account) bringing it to over $8.4 billion. But recall during the last recession, the budget shortfall was many times that amount. Thus, while it seems like a lot of money, the state’s reserve funds remain woefully inadequate. You can’t save a penny a day for a couple of years and think it will be enough to fix the roof when it collapses.

Other trickery includes several dozen so-called “trailer bills.” These are supposed to be budget related bills – many are not – that can pass with a simple majority vote and are not subject to citizen referendum. Because they can be jammed through on short notice without citizen recourse, they are a favorite tool of the majority party to effectuate big policy changes. Two examples of this are the gutting of the California Board of Equalization – one of the few state tax agencies in America actually accountable to voters – and a blatantly political power grab by changing the law as it relates to recall elections designed solely to throw a lifeline to a tax-and-spend democrat who cast the deciding vote on the gas and car tax hike.

Bottom line? The majority party has adopted laws and policies which will unquestionably push state spending permanently higher by expanding programs, increasing welfare costs and giving their political funders – labor unions – higher compensation via costly collective bargaining agreements. Our elected leadership is driving California right off the cliff.  Thelma & Louise would be proud.

Jon Coupal is president of the Howard Jarvis Taxpayers Association.

This piece was originally published by the Orange County Register 

California Budget: Balanced and progressive or out of control?

Jerry Brown Budget 2017SACRAMENTO – The California Assembly and Senate have until Thursday to approve the budget deal announced by Gov. Jerry Brown last week, but there’s little uncertainty about the outcome. The general-fund budget is a record-setting $125 billion – something Brown describes as “balanced and progressive,” given that it spends more on social programs, but doesn’t bust the bank.

In fact, the budget plan conforms almost exactly to the governor’s longtime fiscal approach. He wants to fund social programs as much as possible, but not create new, permanent spending programs that cannot be curtailed when fiscal times are bad. He talks repeatedly about frugality, yet his budgets continue to ramp up state spending to record levels. He did set aside $8.5 billion for the rainy-day fund to prepare for any downturn.

Even the governor’s approach to the state’s unfunded pension liabilities is prototypical Brown. The governor speaks regularly about the size of the state debt to pay for pensions and retiree medical programs, but he typically addresses the problem with small-scale solutions that trim debt levels without antagonizing state workers and the unions that represent them.

This particular deal would borrow money from a state fund that pays a low interest rate, and pay down some of the state’s pension debt by investing it with the California Public Employees’ Retirement System, which predicts a fairly high rate of return (7 percent). Brown says this plan will save the state $11 billion over the next two decades simply because of the difference in interest rates.

In terms of spending, the budget uses $1.2 billion in new revenues from the state’s recently passed tax increase on tobacco to help pay for growing costs to Medi-Cal, the state health program for low-income residents. But about half of those new revenues will be earmarked to health care providers and to family-planning entities like Planned Parenthood. It expands spending on the state’s K-14 educational system.

The budget also expands spending for both of the state’s university systems (the University of California and California State University), but the nearly $300 million combined in increased higher education spending comes with some conditions. The plan withholds $50 million from the University of California until the Office of the President fulfills the recommendations made earlier this year by a state auditor. It also requires California State University officials to “find space for students denied entry to their preferred campus or program,” according to the Sacramento Bee.

The budget increases spending on subsidized affordable-housing programs by $400 million. The budget also will allow more people to take advantage of the state-level Earned Income Tax Credit. Under new criteria, low-income people earning up to $22,000 a year will qualify for state EITC payments, up nearly $8,000 from previous standards. The new eligibility standards also apply to people who work for ridesharing companies or are involved in other forms of self-employment, according to various news sources. The budget doesn’t include an extension of the cap-and-trade system, although the system is likely to be extended in separate legislation.

Furthermore, the budget spends $100 million to set up a new agency to deal with the legalization of recreational marijuana sales, including the creation of a tax office along the Redwood Coast in the heart of marijuana-growing country.

The whole budget, which includes all spending (from bonds, etc.) totals $183.2 billion. But the biggest controversies are not around the amount of money the state will spend. The Legislature used the trailer-bill process – normally reserved for technical amendments to budget matters – to pass some controversial, nonbudget-related matters.

For instance, Democrats are fighting a recall measure against state Sen. Josh Newman of Fullerton. Republicans targeted him because of his vote on the recently passed gas-tax increase. One trailer bill in the budget would extend the timelines for the recall, making it more likely that the election would be put on a regularly scheduled ballot timeframe that would be more favorable to the Democratic incumbent. Another trailer bill would reduce the power of elected officials in the state Board of Equalization, a tax board. Yet another creates new dam-safety rules, following problems at the Oroville Dam spillway last winter.

Still, what Democrats described as responsible drew some rebuke from Republicans, who note that general-fund spending is nearly $40 billion higher in this budget than it was six years ago. Balanced and progressive or out of control? It depends on which side of the aisle one sits on. But everyone at least agrees that it’s basically in balance.

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

This article was originally published by CalWatchdog.com

CA Budget & Fiscal Policy is Unsustainable

May Revise 2017While the governor’s leadership has been the key to keeping California in the black and paying down debt, the Legislature continues to grow permanent spending based on an increasingly volatile revenue stream. The Legislature’s highest priority for environmental policy is sustainability. Yet today their highest priority for budget and fiscal policy is unsustainability.

Since the economic recovery began in 2010, taxpayers and the business community have grown the General Fund by $41 billion and special funds by $28 billion, representing an overall revenue increase of $69 billion or 63 percent. In addition, we have also grown local property tax revenues for Prop. 98 more than $10 billion, which is equal to a 72 percent increase.

While California is already the highest taxed state in the nation, the Legislature introduced bills to authorize more than $370 billion in new taxes and fees in 2017 — more than double the state revenues contained in the budget bill.  For example:

  • During this same period in 2017, state funding for K-12 education is set to grow $17 billion, or roughly 50 percent, while state employee pension and health benefit payments are set to nearly double to more than $14 billion.
  • There also is considerable growth in spending for health care and social services expansion.  Since 2009-10, Medi-Cal spending has increased by $9 billion in the General Fund and by $64 billion in state and federal funds.  California is committed, even under existing federal law, to picking up an increasing share of the federal portion.
  • In 2022, the hastily approved minimum wage increase of 2015 will be at full implementation, impacting General Fund costs by $3 billion and all funds by $10 billion.
  • The series of labor agreements approved this year-to-date commit the state to another $4 billion in permanent spending increases.

The passage of these spending priorities required the state to pass $5 billion in new taxes to fund critically needed road and infrastructure repair. Now it is time to prioritize major structural reforms that create long-term economic stability before another recession occurs, the impacts of which could be even more devastating than what we witnessed during the economic downturns in either 2001 or 2008. We must work towards a budget that better protects all Californians and our economy for our long-term future.

resident, California Business Roundtable

This piece was originally published by Fox and Hounds Daily

Why California’s Finances Could Derail Their Energy Plans

Energy power linesAccording to State Senator John Moorlach, R-Costa Mesa, California has real financial problems that need to be immediately addressed. A self-described Truman Democrat, Joel Kotkin, in a recent syndicated article echoes the same sentiments. Some of the problems are California has the highest taxes overall in the nation, worst roads, underperforming schools, and the recent budget has at least a $1.6 billion shortfall.

Moreover, depending on how the numbers are analyzed California has either a $1.3 or a $2.8 trillion outstanding debt. This is before counting the maintenance work needed for infrastructure, particularly roads, bridges and water systems. Yet tax increases aren’t covering these obligations, and even the bullet train project, which held so much promise when it was passed are now billions over budget.

However, the financial strain also has California’s net financial position running a $169 billion deficit according to the Comprehensive Annual Financial Report, which puts California ranked last in the nation. Deferred maintenance on our state roads and highways is roughly $59 billion. Estimates of California’s unfunded pension liabilities – assuming a rate of return – above 5% has CalPERS at $114.5 billion, CalSTRS at $76.2 billion and UC Pension at $12.1 billion.

California in addition has the highest unfunded retiree medical liability in the nation, second highest gas taxes when cap and trade is added, highest corporate and individual income taxes, and lastly has the worst business competitive environment in the U.S. as well.

Our biggest issue of all could be that our nation’s unfunded pension liabilities have reached upwards of $5.6 trillion with California’s share at $956 billion. These above-mentioned sobering assessments of our state’s financial and societal health are reasons to question why California has become an outlier of progressive policies – particularly when it comes to energy – with renewable energy being at the forefront of our overall energy portfolio.

At one time California was the leader in sensible environmental, education, manufacturing and cultural polices, but those days have seemingly passed. As the country moved to the right during the recent election, California has entrenched itself as the stronghold of the left-leaning, progressive movement. Nowhere has this played itself out than in California’s embrace of global warming with AB 32 and SB 32. Both energy policies are known to restrict economic growth, and make all forms of energy more expensive. Whether you believe or not in global warming and climate change, California’s embrace of the fundamental tool for economic growth – affordable, scalable energy – has now become harder than ever to achieve with the voters, California legislature and Governor’s full embrace of these policies.

At this time California isn’t creating middle or upper middle class jobs, except in the northern California region. With San Francisco leading the way. Apple just announced they are creating 2,000 jobs in Arizona with firms such as Toyota, Tesla and Carl’s Jr., having followed suit the last few years. Recent labor announcements about California creating 21,600 private sector jobs in December turned out to be a false narrative.

According to payroll processing company Automatic Data Processing Inc. working with Moody’s Analytics Inc., put the figure at only 2,400 “goods producing types of jobs.” Meaning that nine out of ten jobs created were service sector, minimum wage paying levels jobs.

With this type of employment opportunities being created how are Californians expected to pay for an energy portfolio that strongly relies on renewable energy? This could be turned around with great paying careers that the oil and gas industry provides. As an example, according to Russell Gold’s book “The Boom,” page 62, the average oil-field worker made $91,400.

Renewable energy at this time doesn’t work on the type of basis that could power neighborhoods, cities, counties, or this state. Additionally, renewable’s technology hasn’t solved a number of key issues for energy security, reliability and scaling at a cost effective measure to reach all California markets.

These main problems are: 1) storage of excess energy, 2) intermittent weather issues when using wind and solar, 3) generous tax credits needed for profits (Tesla as an example), and 4) modernizing the grid needs to take place, because renewable energy causes surges that California’s grid isn’t able to handle from over 38 million Californians.

As California relishes its role fighting the new President, it is hard to imagine his administration doing anything to assist California lowering its energy costs. It’s not hard to imagine that if you live in Los Angeles, San Francisco or other expensive coastal enclaves that a $200,000 a year salary isn’t enough once taxes are paid. Therefore, why is California nudging the new President towards confrontation?

Gun control, immigration, and even snubbing him at his inauguration, members of the California Congressional delegation are playing a dangerous game. Joel Kotkin has many times called California’s energy policy an amalgamation of “green clergy, or a clerisy.” Trump also has control over federal dollars. California is expected to receive $105 billion this year, with $78 billion going to health and human services programs. Likewise Trump has nominated pro-fossil fuel advocates to the Departments of State, Energy, Interior and the EPA. It doesn’t seem wise for California to not want to work with the Trump administration on opening up parts of California to energy exploration to assist with politically disagreeable problems now in the mix.

California has billions of gallons of oil and trillions of cubic feet of natural gas sitting off our coastlines and in the Monterrey shale. Jobs aren’t being created that can sustain working families, infrastructure is lagging and our energy portfolio isn’t functioning correctly to contain costs.  Our high-energy costs are one of the biggest factors why companies and CEOs are leaving California.

Many astute energy observers believe California will need to cut 100,000 jobs and increase energy prices to meet our ambitious climate goals. These goals could be met with moving towards natural gas and nuclear-powered plants.

A desirable goal for the new year would be for voters to begin considering voting for moderate, business-friendly Democrats, and sensible environmental Republicans who believe in an all-of-the-above approach when it comes to energy policy.

This perfect amalgamation of animosity rapidly approaching California could be mitigated with sensible, low-cost energy policies that benefit all of California.

Todd Royal is a geopolitical risk and energy consultant based in Los Angeles.