In what is not shocking to me but is apparently shocking to Democrats in Sacramento, Moody’s announced it will be performing a comprehensive review of California municipal finances. So far this year three California cities have declared bankruptcy: Stockton, Mammoth Lakes, and San Bernardino. Many other cities appear to me to have financial difficulties.
The AP story notes that both the California League of Cities and the state treasurer’s office think the story is overblown. I don’t think it is. The underlying problems facing California are two: ridiculously large pensions and spending that has continued to increase while revenue to the state (and local jurisdictions within the state) have not. Unlike the federal government, states and cities can’t print money.
To me, the idea of California spending as much as $100 billion on a train to nowhere is symptomatic of the culture in Sacramento and locally. A story I’ve noted before is on the rather prosaic business of rubbish. When I lived in Irvine, it cost me about $36 a quarter for trash pickup. I had three trash bins: waste, recycling, and green (lawn) waste. My mother resides within the city of Los Angeles; she pays about $36 a month for the same three bins. We both received weekly trash pickup. The one difference? Irvine outsources trash collection; Los Angeles’ trash collection is done by unionized city employees.
Victor Davis Hanson’s piece on California should be read for a better understanding of the Bronze Golden State. He notes an estimated 2,000 upper income Californians are leaving the state each week. California needs to look inward to fix its problems. Unfortunately, I think California will need to hit bottom before doing so.