If they don’t come up with a budget today, no paycheck, but if it’s a wasteful fraud, S&P downgrades CA’s credit rating. Up Against the Wall!

Standard & Poor’s is threatening to downgrade California’s outlook if lawmakers don’t balance the budget without gimmicks. “We are  being disciplined by our lenders who will downgrade us for fudging,” said Assemblywoman Diane Harkey, R-Dana Point.

Bad old  Wall Street bankers are forcing California to clean up its financial mess in order to prevent a catastrophic economic tsunami.

California’s economy is nearly one-eighth of the entire country’s gross domestic product. It totals 30 percent of the debt carried by all 50 states, according to Gabriel Petek, an S&P analyst. Petek, interviewed by FOX Business, said that California is overly reliant  on personal income taxes, and that the state’s tax structure is behind the deficit because of this reliance.

In 2009, the Legislature voted to allow the state to pay … (click here to go to S&P forces Democrats to balance budget | CalWatchDog

From the LAT Comments Blog: California, other states face problem of swelling pension liabilities

February 18, 2010 | 7:15 pm
California isn’t alone when it comes to not being able to pay its mounting public pension costs, a Washington think tank says in a report released Thursday.

In all, state governments face a $1-trillion shortfall, the difference between what they owe current and future retirees and what they expect to have available to pay promised benefits. California’s two big systems accounted for $122 billion of the deficit as of June 30, 2008. The state’s unfunded pension costs totaled $59.5 billion while unfunded healthcare costs were $62.5 billion.
Coming up with the money to cover future obligations is expected to burden state and local governments and school districts and could mean higher taxes and fewer basic services for the next generation of taxpayers.

And pensions are only part of the problem: California’s two retirement funds have set aside less than 1% of the $62 billion they need to cover lifetime health insurance benefits for retirees.

Calls for similar changes are growing louder in California. Three proposed initiatives are gathering signatures for the November ballot. The ballot measures, among other things, would limit the amount of pension a retiree could draw. They also would raise the minimum retirement age and reduce benefits for newly hired state and local government workers.

Our readers chimed in about the dilemma. Here is some of what they had to say:

SeniorActuary wrote: The pension funds look really good when the stock market is overpriced with optimism, but then politicians attack the private sector with penalties, taxes, over-regulation, etc. This causes the stock prices to drop and suddenly the pension plans look bad. Lib’s: you can’t have it both ways. If you don’t want profits, then you don’t get to cheat on the price of your pension benefits. Pay up out of the govt budget what the pension really costs, and quit lying to taxpayers that pensions are not a problem when they are.Click here to read more…

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