Posted by Bill Leonard at 12:00 am on Mar 01, 2010 1 Comment
To conclude that the state is bankrupt is to suggest that the
state is unable to pay its debtors even after selling all its
assets and giving up all its income. That is simply not
true. The reality is that the state is choosing to spend more
than it takes in, which is a policy choice that needs to change,
but those who believe bankruptcy would make Sacramento face reality
would not like the result.
In the past I have been loose with the word ‘bankrupt,’ but even
if some court could have bankruptcy jurisdiction the state would
still not be insolvent to file for relief. To be insolvent is
to have debts greater than assets. Our debts are roughly $131
billion in General Obligation Bonds (issued and eligible) and
leasing arrangements, plus around $500 billion in present and
future pension and health liabilities, for a total of around $630
billion. On the asset side, the PERS account (underfunded but
still substantial), plus all state property – the buildings, state
parks, beaches, oil leases etc and other investments – is greater
than $635 billion. As far as debt service, according to the
Treasurer’s 2009 report, our annual total debt service is
around… Read More