It's not news that state budgets use accounting gimmicks, but the latest spending plan has a few that likely will make it harder to define revenues and make forecasts.
From Capitol Weekly's John Howard: "Months before California voters approved new taxes in the Nov. 6 election, accounting practices in the state budget were changed – changes that ultimately could make it much harder to define just how much money the state has taken in or is likely to get."
"The changes were approved by the Legislature and governor as part of the budget’s assumption that voters would back Propositions 30, which raises some $7 billion annually in temporary sales and income tax hikes, and Proposition 39, which raises $1 billion annually by halting a 3-year-old corporate tax break."
"At issue is a shift in the state’s accrual accounting procedures related to revenue from the two propositions. The Legislature’s nonpartisan fiscal adviser says the shift should be scrapped and replaced with a “simpler, logical” system by 2015."
Local governments, many of them struggling financially, may be tempted to close their pension plans. But CalPERS is pondering a move that would make it more costly to do so.
From Calpensions' Ed Mendel: "The cost of closing a pension fund jumped last year when the CalPERS board lowered the earnings forecast for closed funds to 3.8 percent, well below the 7.5 percent used for most CalPERS funds."
"The board continued work last week on a new investment allocation for closed funds that could drop the earnings forecast to less than 2 percent, which would push the closing cost for employers even higher."
"Closed fund investments would be switched to some of the lowest-risk bonds with very low yields. The higher 7.5 percent earnings forecast for most funds (which critics contend is overly optimistic) is based on stocks and other riskier investments."
The Affordable Care Act appears to be here to stay, although it may evolve in ways that aren't evident now.
From HealthyCal's Dan Weintraub: "But for all the hype and controversy over the Affordable Care Act, the law is really more about insurance than health. Insurance coverage is a good thing. But by itself it is not likely to make Californians much healthier."
"Chronic disease, which can often be prevented and can almost always be managed, accounts for 75 percent of all deaths in California and a similar percentage of health care costs."
"And here is the most striking fact: the worst of these diseases – obesity, diabetes, and heart disease – are all correlated with geography, and by extension, with income. Where you live tells us much about how healthy you will be and, ultimately, how long you will live."
Californians are more enthusisatic about the state of the state and its finances, even as a tough economy takes its toll, according to a new poll.
From the LAT's Chris Megerian: "Fifty-four percent of registered state voters said California is moving in the right direction on its budget, and Brown's approval rating has ticked up a few points to 49% — the highest since his 2010 election."
"The number of respondents saying the state is on the right track has more than doubled since they were asked in August 2011. Still, amid persistent double-digit unemployment and other underlying economic problems, that remains the view of a minority, only 38%."
"Similarly, the number who say the state economy is finally beginning to improve has almost doubled since July 2011, but those voters are also in the minority, just 43%."
All that talk from foes of the state's cap-and-trade system to limit greenhouse gases may not wind up costing homeowners extra and actually may prove beneficial financially, under a proposal from state regulators.
From the Chronicle's David R. Baker: "Instead, the system would actually pay residential customers a small dividend, with the money drawn from the power plants, factories and other facilities that pump greenhouse gases into the atmosphere."
"Under the proposal from the California Public Utilities Commission, residential utility customers would receive a "climate dividend," worth an estimated $30, twice each year."
"It's basically their share of the payments that polluters will be making to pollute," said Scott Murtishaw, energy adviser to the commission's president, Michael Peevey. "It's everyone's atmosphere."
