By Bill Fletcher and Marc Joffe
January 10, 2017
We estimate that California state and local governments owe $1.3 trillion as of June 30, 2015. Our analysis is based on a review of federal, state and local financial disclosures. The total includes bonds, loans and other debt instruments as well as unfunded pension and other post-employment benefits promised to public sector employees. Our estimate of California government debt represents about 52% of California’s Gross State Product of $2.48 trillion. When added to the state’s share of the national debt, we find that California taxpayers are shouldering debt burdens on a par with residents of peripheral Eurozone states.
The bond and OPEB obligations account for a total of $574 billion that we can attribute to governments by category. To this we add statewide unfunded pension obligations reported by 85 single and multi-employer pension plans, estimated at $258 billion. For most systems, we used a database posted by the State Controller, but for the largest systems, we obtained 2015 updated data from actuarial valuation reports.
According to the State Treasurer’s Office Debt Watch website, $72 billion on new debt was issued in the year ending December 2016 as summarized below. This amounts to a debt increase of about $1,800 per citizen or about $4,600 per taxpayer in only one year (but this is partially offset by maturities and early repayments of exiting issues).
The estimated California government debt of $1.3 trillion can be allocated back to all residents or just those that pay taxes. The state’s population is about 39 million. According to the IRS, about 17 million individual tax returns were filed in 2014. These levels imply California government debt burdens of $33,000 per resident and $74,000 per taxpayer – excluding their share of federal debt.