Stockton, CA has made news this week for being the largest US city to declare bankruptcy, but could the state of California itself also be bankrupt? According to a new state auditor’s report, if the state were a business it would be operating deep in the red and may be insolvent. If it were an individual and given the spending ethics the state has operated under, California would be scheming to fake its own death for the insurance money.
Were California’s state government a business, it would be a candidate for insolvency with a negative net worth of $127.2 billion, according to an annual financial report issued by State Auditor Elaine Howle and the Bureau of State Audits.
The report, which covers the fiscal year ending June 30, 2012, says that the state’s negative status — all of its assets minus all of its liabilities — increased that year, largely because it spent more than it received in revenue.
About half of the $127.2 billion in accumulated red ink came from the state’s issuing general obligation bonds and then giving the money to local governments and school districts for public works projects, the auditor pointed out. The assets built with the bonds remain on local balance sheets while the bonded debt accrues to the state.
The remainder, however, is all on the state’s ticket. “Expenses that exceeded revenues and increased long-term obligations resulted in an 81.4 percent decrease in the total net assets for governmental and business-type activities from the 20-10-11 fiscal year,” said the report.
California has gotten into the death spiral that it’s in because it keeps enacting tax and spend liberal policies. Rather than learn anything from this, Democrats nationally want to turn every state into California.
A Republican Party with its head in the game would use California’s pathetic record under Democrats to warn voters elsewhere against following California’s lead. But we don’t have a national GOP with its head in the game.