CA Fiscal Insanity: borrowing $21.6 billion to cover cash shortfalls

Insanity is the one word to describe the news that California is planning to borrow $21.6 billion to cover cash shortfalls that might leave the state without enough money to pay its bills. The legislature’s failure to take action on solving the state’s budget deficit is the reason why California is now the leader in fiscal irresponsibility.

But this isn’t just the legislatures fault; the Governor has continued to delay effective budget action and repeatedly kicked this massive problem down the road.  Each day no solution is found increases the amount that needs to be cut or the amount of tax increase.

State Controller John Chiang said that, as of February 28, state spending is running $2.5 billion above budget for eight months of the current fiscal year and revenue is $2.5 billion below forecast. Also in February, the Controller reported a $62.1 billion unfunded liability for retiree health care benefits. That is in addition to the $398 billion unfunded liability for pensions, according to State Budget Solutions.

Meanwhile the Legislature’s budget analyst declared that revenue for the remainder of this fiscal year and all of next is likely to be $6.5 billion short of Governor Jerry Brown’s forecast even with his proposed tax increase and including a $2 billion windfall in taxes from Facebook’s big stock sale.

Gov. Brown in January proposed a budget to close a $9.2 billion deficit, but the nonpartisan Legislative Analyst’s Office has suggested that Brown’s estimates are overly optimistic and that the deficit is likely much higher than that figure.  The Governor’s “balanced budget” relies on a $6 billion tax increase being placed on the fall ballot and approved by voters.

All of this led to the combined current-year cash deficit standing at $21.6 billion.  California ended last fiscal year with a cash deficit of $8.2 billion. Those cash deficits are being covered with $15.2 billion of internal borrowing (temporary loans from special funds) and $6.4 billion of external borrowing.

In January, the California Public Employees Retirement System agreed to allow the state to delay making a $527 million payment until April to cover state employees’ benefits. But this is only a short-term band-aid and come April, money will be owed.

The problems continued when the legislature, rather than adopting a balanced budget, passed legislation in February to let the state borrow $865 million from internal accounts to help the state advert a cash shortfall that might leave the state without enough money to pay its bills.  In addition, the controller has delayed making more than $1 billion in payments to public colleges, counties and health programs for the poor. Meanwhile, state tax collections for this February were $1.2 billion, or 22 percent, below last February’s collections.

The Legislature plans to produce a budget by June 15 that is “balanced” with the assumption that voters approve new taxes, with automatic “triggers” that would slash spending further, particularly school spending, if the tax hikes are not approved by the voters.

The Day of Reckoning is now.  The Governor and lawmakers must stop using gimmicks and take action now to adopt a balanced budget.  State Budget Solutions urges Gov. Brown and all of the legislators to create real budget solutions that are based on outcome and performance-based budget measures.  California can no longer afford to wait for their government to get its head out of the sand and start acting on their behalf.

(Bob Williams, President of State Budget Solutions, is a former state legislator, gubernatorial candidate and auditor with the General Accountability Office. Originally posted on Fox & Hounds.)


  1. I bet J. Brown is borrowing from China….and get this, Obama will continue borrowing from China also and plans to attack Iran so Russia and China kick our butts finally…and then, the USA will never have a drop of oil from the Middle East countries or any other place…why is that? Because we are friendly people with a friendly government who thinks that force is the best tool for success. How about diplomacy?…not in the USA English dictionary.

  2. I don’t think the California has its head stuck in the sand. You have to have a head to do that. California is operating open loop with the accelerator stuck to the floor and with nobody at the wheel.

    The political elite are totally lost in the land of let’s pretend. Either that or they intend to crash the out of control bus called California. In either case, all the promised free lunches will be paid for in full and soon. Even if an adult took charge immediately and restored sanity to government, the end point is going to be very ugly. There is no more road, no can to kick, and no one on earth has the resources to prevent an ugly end. We are heading for a major power down reset and reboot.

  3. Spyder dalton says

    Yea, lets pay more taxes so union people can get paid more money in retirement benefits than we make in our lifetimes. Enough is enough!
    We need politicians that aren’t selling their souls to union thugs and put this country back on track to greatness.

  4. Let me see, maybe I shouldn’t be reading news like this article, keep my blood pressure down….Just bury my head in the sand, and keep re-electing these spend and tax asshloes to the state government.. Hmm…My heart won’t be injured, but, my *ss will, from those idiots bending me over the table, and not even using Obama Care contraceptives.

  5. Wild Bill says

    We have the best of the best “Stupid” politicans in the State. When you brorrow, it means you have to pay it back! These dim witted politicans only see money coming in, then then think all is well. Then they start the process all over again, spend, spend and fund all the useless programs they like.

  6. librtyship says

    So what is new pussycat??? The Demonrats have been doing their very best to destroy what was once the best place in America in in which to live. They have turned California into a busted trash heap in a mere 20 years. Yes people you deserve this fate after voting in these destructive imbeciles year after year after year. Yep! as Einstein stated “the true mark of an idiot is someone who keeps doing the same thing and expects different results each time”! We have been here 23 years but are beginning to feel that the time to move on has arrived! Apparently lots of people and businesses also have come to that same conclusion. MY confidence is so low that we have switched nearly all of our banking out of state! California is totally hopeless, let the miserable liberals and Demonrats have it!

  7. brown is as stupid as obummer. they want to spend money on people who ran the border, the spread of queerdom, trains that go nowhere, creating a gang rule called the EPA, and doing everything in their power to kill business. we are loosing about 200 business a day. because of the CTA and NEA our schools suck. every kid is going to college but none of them know how to read or do math. it is called the golden state because that is what you need to live here. i call it the Peoples Republic of California. look at the socialists we produce Boxer, dumbstine and the biggest 1960s burnout of all pelosi. one good vote and we could turn this mess around. we need a voter id here. i feel so sorry for the poor and children in this state. no jobs and a third rate education.

  8. Truckster1 says

    I was under the impression that California was debt free! All the CA. State Legislature talks about is more spending on high speed rail,(that if started wouldn’t be finished for 40-50 years),at a nominal fee of $100,000,000,000.00 so far … The Sacramento city council just voted to spend $206,000 to plant some trees, doesn’t this sound like we’re rolling in the dough? Spend, Spend, Spend, is all we ever hear.
    The liberals have been in charge for several years and look what we have to show for it! This “INSANITY” must stop! We must make a change ,and soon! If a strong conservative state and a part time legislature doesn’t work it to can be changed, but we must change the way California Government is run. Lower taxes, less regulation, friendlier business climate, etc… will improve the state while putting more people to work ,ergo more revenue and less expenditures equals more prosperity for all. Lets give it a try, what do you say?

  9. Like the Godfather (Obama), like the Son (Dem. Legislators)….
    Its time – no OVER-time to get rid of them all. I guess Brown will doctor his pitch for getting his petition on the ballot like he did Prop 8 Traditional Marriage and other pro-family attempts of a majority of Calif voters.

    This ballot measure he is proposing – to borrow $22 billion more to cover Dem. rears …and arrears , is only a delaying tactic and he knows it ! Calif voters want a balanced budget – not more debt!
    If little Jerry thinks otherwise, he is dumber than dumb!

  10. This is total insanity,done by design. These useful idiots,deserve whatever comes,I do not blame anyone for not wanting to help this pathetic state out. They have done it. We need to clean out all,local,state politicians asap.

  11. We need monitored elections in this State,as it is full of voter fraud and has been for years.

  12. well now Meg Whitman is looking pretty good, arse holes couldn’t get past the whole she may have had an illegal working in her house issue, now look at the sorry state of affairs your sleeping with, still trying to fund the h speed train to nowhere and borrowing on borrowed money to try and keep afloat just long enough to get some federal loans, is California too big to Fail?? I sincerely hope every one is happy with this current administration all the way from the bottom rung to the very top is corrupt or blind.. Everyone needs to start demanding that we turn over the twenty thousand illegals sitting in CA prison system to the feds and save us that 8 billion a year we waste, then close our borders to the illegal drug trade and trespass, then make room in the now opened prison for a few of our royal leaders.. This whole system is making me sick to my stomach, everytime we get promised a balanced budget and more money for schools and services and every time we get duped by the same crapola once the idiots are in office,….. no money for citizens more money for illegals, less services for our senior citizens more money for children of illegals and anchor babies. it has come time for a reckoning and We The People need to BE THAT RECKONING… We can start by annexing northern Calif from southern Calif and saving ourselves and our ecosystem before it is too late..

  13. CutEverything says

    It is just mind boggling that our elected officials can’t figure out that the only way to balancing the budget is to get businesses running again and the ONLY way for that to happen is to remove the regulations and the taxes that are strangling them. This is plain and simple common sense…….oooohhhh wait, we’re in Calif., the place that re-elected Brown. As Dan Ackroyd would say..”Jane, you ignorant slut” referring to the sluts that re-elected Brown.

  14. Brown following in Obama’s footsteps? Why don’t we just close some more schools and build more prisons? Instead “Amend California’s Three Strikes Law” to give life terms to just the “Serious and Violent” offenders. Then we could use that money to hire better teachers, open rehabilitation centers, On the Job Training, Teen Programs, Child Care for young moms….Jobs will be created, and put these people back to work, pay taxes….

  15. These new taxes, plain and simple, are to passify unions. It’s extorsion pay for votes. Democrat votes. Why should anyone in the private sector have to pay for union benefits? VOTE NO ON ANY TAX INCREASE.

  16. Eddie Fernandez says

    No more monkey around , if you want to vote show your identification,
    No more vote by mail , want to vote show your face and your ID at the
    polls , We need to get the correct people in the goverment offices.

  17. And you thought “Hunger Games” was just a book…oh sorry liberals, a movie. We are well on our way to the end of it all. California of all places shouldn’t have to borrow money for anything. Hell, remember the lottery? That was supposed to pay for schools and what not. Right.

  18. NorCal Libertarian says

    “The governors ‘balanced budget’ relies on a $6B tax increase being placed on the fall ballot and approved by the voters”. This, in addition to the now $100B High Speed Fail project…wihich may be placed back on the ballot for voters’ reconsideration. All of this money coming from what…falling property taxes…taxes from MORE businesses the governor may HOPE won”t leave the state or citizens who he HOPE may not leave this state!
    Yep…Montana…North Dakota may start looking pretty good!

  19. J.D.kingma says

    Until this government starts to cut the fat at the top and make a balanced budget,it will continue to be in the hole.They have so many useless unnecessary programs that could be cut that would save the state money.


  21. What if everyone stopped buying anything they had to pay a sales tax
    on? What if everyone shielded as much of their income from taxes as

  22. Tahoe Jer says

    Nothing in this tells where about 25 billion is going. The cost for illegal aliens this yr. Last yr it was 21 billion. Then Brown a few months ago signed a bill to give illegals instate college that is gonna cost another 65 million. The cost for illegals is what is bankrupting this state.

  23. The real problem will begin when we get some “REAL” leaders appointed to take care of this humungous debt we have laid on our kids and grandkids… as soon as they start playing Hardball and Tough Love … Everyone will start crying foul because this cut will HURT!!! But, very necessary!!!

  24. AD-RtR/OS! says

    This sure reads like “check kiting” to me.
    Who’s going to jail for this fraud?

  25. as the article says chiang says ” $62.1 billion” shortfall for union benefits. Ha, they will pay it back in taxes jus like the ret of us. If u want non-productive, obese and stupid, HIRE Union workers.

  26. everyone has good response,,, balance the budget, balance the budget, do your job and balance the budget, or your fired!!! close the borders and deport illegals or your fired!!! Make unions pay their own retirement and health care instead of taxpayers or your fired!!! build schools not prisons or your fired!!! take care of the legal citizens in this state or your fired!!! make college affordable to the children of citizens or your fired!!! Make health care mandates be citizen care mandate or your fired!!! Build your H Speed Rail by budgeting instead of borrowing or your fired!!! make southern CA build desalination plant for development and residential water and obey public trust LAWS in regard to northern CA water for AG or your FIRED!!!!!!!!!!!

  27. We must get rid of the politicians who represent us (Californians)

    With a Crowd from the Democrat party together with a group from the Republican they have really managed to F… U. our great State

    Keep in mind that those who are in office should be voted out – this is the only hope left to the citizenry.

    In God we Trust – Forget about the others.

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