State legislators no sooner congratulated themselves for solving California’s $42 billion budget deficit than state Controller John Chiang insensitively reminded them they are continually adding to an even larger debt for retiree health and dental benefits.
The $42 billion deficit supposedly was wiped away by last week’s narrowly approved $12.5 billion in new taxes, $14.9 billion in spending cuts and $11 billion in new borrowing in adopted budgets for 2008-09 and 2009-10. We’re skeptical considering the state’s typically rosy revenue projections, the continual economic decline that is likely to reduce revenue even more and voters’ unlikely approval of borrowing schemes on the May 19 ballot to bridge the budget gap.
However that pans out, the state already owes another $48.2 billion in unpaid costs for retiree health and dental benefits. This year, 392,000 state employees and retirees whose health coverage is provided by the California Public Employees’ Retirement System cost the state $3.7 billion. The health benefits are separate from CalPERS’ retirement fund, and are financed from employer and member payments.
In effect the state has paid the bare minimum to cover its annual costs, as an overspending consumer might squeak by making the minimum monthly credit card payment. But the debt mounts.