Last week, the California Public Employees’ Retirement System (CALPERS) released its rate of return for the past year. CALPERS budgets based on a 7.5% return per year. In a “Missed it by that much” moment, they came in at 0.61%. Oops.
But for California taxpayers it’s a real issue: California taxpayers will have to make up the shortfall. California State Senator John Moorlach (R-Costa Mesa) has the right idea: “Now we’re in Peter Pan territory. ‘You’ve just got to believe’… the stock market will rise more than 7.5 percent per year. You’ve just got to believe that interest rates will stay at zero indefinitely. You’ve just got to believe that real estate prices will continue to rise.”
Here’s the reality: Taxes must massively increase or state payrolls must massively decrease. Let’s add more taxes to the most heavily taxed state in the country; I’m sure that will go over well…especially just to pay pensions. Might even more of the middle class do what I did? (Hint: The answer is yes.)
Actually, the idea of cutting California government by 30% is wonderful. It also has a 0% chance of happening in California. A repeal of Proposition 13 would require approval by California voters; there’s a chance (albeit small) that could pass; if it did, it would guarantee more middle class departures from the state. On this year’s California ballot is an initiative to extend the “temporary” California tax hikes.
I hope no one wonders why I call California the Bronze State.
Tags: Pensions