Senator Moorlach Responds to May Budget Revision

Thursday, May 14, 2015

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“Even without considering unfunded pension and retiree medical liabilities, California still has an unrestricted net deficit of $117 billion. In accounting language, that means our state is in desperate financial shape.”

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“If your bank account is empty, and your kitchen table is piled high with unpaid bills, you don’t go out and spend your next paycheck for a down payment on a new car.”

(Sacramento, CA) – Newly elected State Senator and nationally recognized government budget and finance expert, John Moorlach released the following statement today in response to California Governor’s release of the state budget’s May Revision.

“I appreciate Governor Brown’s spirit of fiscal restraint, but the fact is, by all accounting standards, our state’s unaddressed run-up of debt continues to threaten our short and long term financial health.

“A review of the state’s most recent Comprehensive Annual Financial Report (CAFR) shows an unrestricted net deficit of $117 billion.  In accounting language, that means we’re broke.  And that’s before fully adding in the estimated $72 billion in retiree medical unfunded liabilities and the more-than $100 billion in unfunded pension liabilities.

“Our state’s unrestricted net assets went from a positive $1.5 billion in fiscal year 1999 to a negative $117 billion today.  Our legislature should be focused on finding ways that rectify this imbalance, but instead, Sacramento is buzzing with talk of $4 to $5 billion in ‘new funds’ to spend. 

“From any reasonable accounting standard, there are no ‘net new funds’ to spend.  If your bank account is empty, and your kitchen table is piled high with unpaid bills, you don’t go out and spend your next paycheck for a down payment on a new car.

“We need an integrated budget, economic, and fiscal reform plan – one that establishes a common set of goals and a framework by which all legislative and executive actions can be measured.  Only then can we truly leverage our state’s resources to solve our short and long term fiscal problems.

State Senator John Moorlach is a nationally recognized budget, finance, and fiscal policy expert, as well as a leading advocate for transparency and greater accountability in government.  Moorlach gained national prominence 20 years ago for first predicting Orange County’s bankruptcy – at that time the largest municipal bankruptcy in history – and then, after being appointed to Treasurer-Tax Collector, enacting swift and prudent fiscal moves that quickly led the County out of bankruptcy.  The historic bankruptcy and Moorlach’s adept financial moves have been chronicled in college level textbooks throughout the nation.

John Moorlach was twice re-elected to Treasurer Tax Collector; then in 2006, voters elected Moorlach to serve in his first of two terms on the Board of Supervisors, where he continued his focus on reforming the County’s budget practices and sounding the alarm on the County’s growing unfunded liabilities.

Moorlach graduated from California State University in Long Beach in 1977, passed the C.P.A. exam in 1978, and completed his studies for the Certified Financial Planner designation in 1987.  He earned a Certificate in Public Finance from the University of Delaware, Division of Continuing Education in 1995, the Certificate of Achievement in Public Plan Policy (CAPPP) in Employee Pensions in 1999 and the Trustees Masters Program in 2003 through the International Foundation of Employee Benefit Plans, and the New Supervisors Training Institute in 2007 from California State University in Sacramento in cooperation with their Center for California Studies.


California’s Net Assets Turn to Net Deficits

The Past 16 Years

California currently has a unrestricted net deficit of $116,948,128, according to the Comprehensive Annual Financial Report (CAFR) for the fiscal year ending June 30, 2014.  (CA CAFR June 30 2014, Page 30.)

Even more bad news, the California CAFR does not included unfunded retiree medical, estimated at around $72 billion.  Nor does it include the more than $100 billion in estimated unfunded pension liabilities.  Below is a summary of the California net assets/deficits since 1999, according to the yearly CAFRs.

Fiscal Year
Ending
Unrestricted
Net Asset/Deficit
Per Capita Governor
6/30/99 $1,533,113 $46 Wilson/Davis
6/30/00 6,531,331 192 Davis
6/30/01 7,001,095 203 Davis
6/30/02 (19,417,429) (553) Davis
6/30/03 (43,927,987) (1,238) Davis
6/30/04 (52,897,395) (1,474) Davis/Schwarzenegger
6/30/05 (52,631,090) (1,457) Schwarzenegger
6/30/06 (54,710,847) (1,514) Schwarzenegger
6/30/07 (56,519,478) (1,546) Schwarzenegger
6/30/08 (69,346,950) (1,887) Schwarzenegger
6/30/09 (86,302,434) (2,335) Schwarzenegger
6/30/10           (103,272,000) (2,772) Schwarzenegger
6/30/11 (123,783,314) (3,285) Schwarzenegger/Brown
6/30/12 (123,897,753) (3,257) Brown
6/30/13 (117,383,903) (3,085) Brown
6/30/14 (116,948,128) (3,014) Brown

State Senator John Moorlach is a nationally recognized budget, finance, and fiscal policy expert.  Moorlach graduated from CA State University in Long Beach in 1977, passed the C.P.A. exam in 1978, and completed his studies for the Certified Financial Planner designation in 1987.  He earned a Certificate in Public Finance from the University of Delaware, Division of Continuing Education in 1995, the Certificate of Achievement in Public Plan Policy (CAPPP) in Employee Pensions in 1999 and the Trustees Masters Program in 2003 through the International Foundation of Employee Benefit Plans, and the New Supervisors Training Institute in 2007 from CA State University in Sacramento in cooperation with their Center for California Studies.

Press Contact: Amanda Smith @ 714-662-6050, amanda.smith@sen.ca.gov

State Senator John Moorlach is a nationally recognized budget, finance, and fiscal policy expert. Moorlach graduated from CA State University in Long Beach in 1977, passed the C.P.A. exam in 1978, and completed his studies for the Certified Financial Planner designation in 1987. He earned a Certificate in Public Finance from the University of Delaware, Division of Continuing Education in 1995, the Certificate of Achievement in Public Plan Policy (CAPPP) in Employee Pensions in 1999 and the Trustees Masters Program in 2003 through the International Foundation of Employee Benefit Plans, and the New Supervisors Training Institute in 2007 from CA State University in Sacramento in cooperation with their Center for California Studies.