California's state and local governments are at least $648 billion in debt and the total could surpass $1.1 trillion -- depending on how pension liabilities are calculated -- according to a data compilation by a conservative think tank.
The report was published by the California Public Policy Center, which is based in Southern California and concentrates its work on public employee unions and public pension liabilities. It's also a target of criticism by unions and other liberal groups, which accuse it of being part of a right-wing conspiracy to attack unions and public employees.
Anticipating that criticism, the organization took great pains to base its debt calculations on official data, including pension funds' own estimates of their unfunded liabilities, deviating from that methodology only on speculating about potentially higher pension debts.
The heavily footnoted report says the state's official debt stands at $132.6 billion, with general obligation bonds more than half the total. Other state debts include $27.8 billion in "budgetary borrowings" that Gov. Jerry Brown has described as a "wall of debt," $10.9 billion owed to the federal government for unemployment insurance benefits, and $11.3 billion in lease-revenue bonds.
It calculates school district debt at $49.7 billion, primarily school construction bonds, city government debt at $68.1 billion, county government debt at $22.1 billion, redevelopment agency debt at $110.4 billion, unfunded public retiree health care obligations at $136.9 billion, and official state and local pension unfunded liabilities at $128.3 billion.
The official pension liability numbers are based on assumed trust fund earnings rates of more than 7 percent, but critics say that number is too high and when lower returns are factored in, the potential debt rises sharply.
The report says that assuming a 5.5 percent annual return would add $200 billion to state and local unfunded pension liabilities and lowering it to 4.5 percent would add $321 billion. Plugging in those numbers and adjusting for more recent budget deficits, short-term borrowing and additional retiree health care could push total debt over $1.1 trillion.
PHOTO CREDIT: Gov. Jerry Brown looks over papers as he prepares to release his budget proposal in Sacramento on Monday, May 14, 2012. Hector Amezcua, Sacramento Bee.