California's Brown Raises Prospect of Pension Cuts in Downturn
“California Governor Jerry Brown said legal rulings may clear the way for making cuts to public pension benefits, which would go against long-standing assumptions and potentially provide financial relief to the state and its local governments.
Brown said he has a "hunch" the courts would "modify" the so-called California rule, which holds that benefits promised to public employees can’t be rolled back. The state’s Supreme Court is set to hear a case in which lower courts ruled that reductions to pensions are permissible if the payments remain “reasonable” for workers.“--https://www.bloomberg.com/news/articles/2018-01-10/california-s-brown-raises-prospect-of-pension-cuts-in-downturn
“On the basis of its fiscal solvency in five separate categories, California ranks 43rd among the US states for its fiscal health. ... On a long-run basis, California's net asset ratio of −0.62 indicates the state is reliant on debt to finance its operations. Long-term liabilities are 93 percent of total assets.
Jul 11, 2017 #43 | Ranking the States by Fiscal Condition: California | Mercatus ...https://www.mercatus.org/statefiscalrankings/California
Abstract: Government inefficiency is the major source of debt in most nations, states and other entities. The comparison is made between the corporate structure and its balance sheets and states. It is clear that the wise management of tax revenues is essential to maintaining a government that can avoid deficits and massive debt and avoid financial crises and defaults. Many states appear to be deliberately driving toward a financial collapse [NY, IL, MA, CA...]in the hope that they can gain power and wealth if the economy collapses. Many states are dominated by unions who refuse any spending cuts and thus directly contribute to massive deficits and defaults. Much of this process is inefficient and that inefficiency is the root cause by which states fail. Several states will financially collapse in the near future because they cannot effectively spend their current revenues and will not cut spending for a host of reasons. California, Greece, and Portugal are among those on the current list to potentially default. These nations should be contrasted with Brazil, Canada and Australia for comparison. If they refuse to cut spending then default will be inevitable. They will then whine for alms.
States derive and augment revenues primarily with tax or fee increases; corporations enhance revenues with sales of products. These appear to be independent variables until you realize that the state tax increases go directly to the cost [middle] lines of the corporations and private citizens in terms of property taxes and personal income taxes. The net effect is corporate profit decline due to higher costs at constant revenue [top line]. Growth in business can, in many cases, offset this marginal tax cost in time and return the business to some desired profit level. In times of recession when business revenues are decreasing or static this extra tax becomes a burden on profits from higher costs so fewer taxes are paid on corporate profits. Thus, tax increases can actually reduce revenues. If the recession or bad times progress and if employees are laid off then net taxes on salaries fall and the state again obtains fewer revenues. States do not act in this manner. They tend to keep all employees and raise taxes to meet spending desires, but then tend to want to increase taxes whenever revenue falls for any reason. This is highly inefficient. Businesses and well-paid folk stream out of the leftist state.
As a 5th generation 49-er, I am appalled at the plight of the self-inflected fiscal levels produced by left-wing fanatics and other protosimians. California will crash in fiscal terms and will beg for alms from President Trump, an illegal plea. Force them to cut spending and lower salaries and pensions. They are failures and Brown is the leading boob in the pack. Brown will beg for assistance and then spend more and raise salaries and import more illegal aliens to stuff ballot boxes.
Get out of California, fast!