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Manhattan Institute senior fellow Steve Malanga on the latest indications of California's fiscal problems.
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-- -- -- California is group -- valley.
Write home group up until this city just -- Euro -- incorporated.
Is early last year.
And now it's on the verge of shutting down -- a money grab by politicians -- the State's cap.
We have C -- to -- senior fellow -- the Manhattan institute's and you know it is funny that I'm maybe we would know how to say or even have heard of this place because I don't think we've ever heard of some we're going away as quickly as it.
Came to life it was only incorporated July of last year right.
And this potential bankruptcy is really an indication of the problems that the state is having because basically.
The state had a fund and the tax to help newly incorporated cities get off the ground.
It took that money back trying to fix its own budget which -- billion dollars this three years -- they can't fix their budget.
And as a result of that.
A new cities in California new and corporations in California are having as much trouble as we're used to old city to have a lot of legacy costs going bankrupt.
So so it's it's an indication of the State's fiscal problems how big are the fiscal problems going to get -- -- -- out a river valleys it near Riverside and have -- say how big are the states yeah.
Well the states is -- screwed if it -- Well State's problems are -- were -- in terms of of billions of dollars are enormous but remember -- it isn't just balancing its budget that's a problem with the state the larger problem was is that it does it.
Then has several hundred billion dollars in unfunded pension liabilities which it hasn't even begun to address and which is gonna eat away at the budget.
Years from now -- what they do something to change that is this six.
-- for news story or have some of the the warnings we've heard about all the spreading across the country.
Mean that Detroit that are insolvent.
-- essentially they can't pay their bills.
A Woonsocket in central falls in Rhode Island for the isolated -- going up quite well what's isolated as the fact that these are these these cities are actually insolvent meaning they can't pay their bills you have to be helped by someone in this case the state.
However there are thousands of municipalities across America that are suffering from the same phenomenon which is that the growing cost of things like pension and health care at a time when tax revenues were flat is squeezing everybody everybody thing going bankrupt liberal paying -- but how much hope.
We take from some of the recent votes in San Jose and San Diego California San Jose.
Went even further than San Diego in trying to reduce the retiree cost.
By going after the the pay rates to existing regret -- Well existing -- -- -- two ways -- looking that number one San Jose is considered a progressive city that nonetheless voted ardently for pension reform.
-- -- -- is in the middle Silicon Valley we have description -- Heck are they doing going bankrupt well you know that -- there there.
Well employee costs were so high they had to cut 2000 workers in the past couple years even before think went around to this vote.
But says they gotta keep up with the Jones if they end up -- -- that public employees and more because you're surrounded by well like Larry Ellison if it doesn't live in it's -- I don't thank you Steve array.
