Task Force: Accounting Tricks Mean Impending California Budget Doom
SACRAMENTO (KCBS) – California and other states need to start being honest about their budgets and future liabilities, or face a terrible reckoning a generation from now, that according to the State Budget Crisis Task Force.
Former Federal Reserve Chairman Paul Volcker led the Task Force, which found that under Governor Jerry Brown, California is doing some things better than other states, but that the state is also making the same critical mistakes as the rest, including not counting money owed in the future, as part of the current budget.
“Instead it ends up as debt and that debt grows invisibly and then that debt becomes due and hits innocent generations down the road,” said David Crane with the Stanford Institute for Economic Policy Research.
Crane is also a member of the State Budget Crisis Task Force and served as a budget advisor for former California Governor Arnold Schwarzenegger.
The report found that governors fudge the numbers and report surpluses, that would really be deficits, if states counted money promised, for pensions and health care, as money already spent.
It recommends switching accounting methods now, or else. “In fewer than 30 years, people will be deciding whether or not they will pay pension payments to retired people, who really deserve them and expect them, or fund public education for children and provide public safety for families,” Crane said. “It will be that bad.”
The State Budget Crisis Task Force is an independent, non-partisan group made up of experienced participants in government. While the group has not set out positions with respect to particular public policies and programs, it has recommended several specific approaches for financial planning and reporting.
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