The State Budget Crisis Task Force, an independent group that includes such prestigious gents as Paul A. Volcker and George P. Shultz, has issued a report that California debt is much larger than what we have been told. Instead of the $28 billion “wall of debt” that Governor Jerry Brown spoke of when he took office, the real figures are at least $167 billion, and perhaps as large as $335 billion. It turns out that much of California’s debt is off-budget and as such was not included in the $28 billion estimate. What that means is that even if California voters approve the governor’s proposed tax increase (that would raise $50 billion over the next seven years), the “wall of debt” would still be there and would have to be dealt with one way or another. See Mary Williams Walsh, California Debt Higher Than Earlier Estimates, a Task Force Reports, N.Y. Times, Sep. 21, 2012, at p. – click here
The task force assures us, however, that California general obligation bonds, low-rated as they are, are safe because our constitution provides that state funds must be used to service state debt before any funds are spent on anything else.
Interesting observation: Perhaps we are not as attentive a reader as we would like to believe, but we find no trace of that story in the Los Angeles Times.