A recent article in the New York Times about election results in California included the following sentence (italics added by me): “A measure that would have raised taxes on commercial landlords to raise billions for a state that sorely needs revenue also seemed on track for defeat.” The reporters did not provide support for their assertion — which they expressed as a fact — that California “sorely needs revenue.” They should do so. Meanwhile, here are six potentially relevant facts (sources in parentheses):
- 40 percent of the revenues from the proposed tax increase to which the NYT article refers would go to schools, which were the recipients of fast funding growth over the last decade (LAO analysis of Proposition 15; Governor’s Budget):
- 60 percent of revenues from the proposed tax increase would go to local governments like San Francisco, which increased cash spending on pensions and other post-employment benefits (OPEB) 146 percent from 2010 to 2019 (LAO analysis of Proposition 15; SFERS Annual Reports; SF CAFRs):
- Unfunded liabilities grew even more (243 percent) to $8.3 billion, portending even greater retirement spending down the road (SFERS Annual Reports; SF CAFRs):
- Absent reform, growth in school and local government pension and OPEB spending will continue to exceed growth in tax revenue, just as it has at the state government:
- Even during the pandemic, the state’s General Fund revenues in the current fiscal year are running 43 percent ($8.7 billion) ahead of forecast revenues (October Department of Finance Bulletin).
What California sorely needs is pension and OPEB reform.
Govern For California supports lawmakers who serve the general interest.