California, the most populous U.S. state and the world's ninth-largest economy, is facing a "wall of debt" crisis that is hundreds of billions of dollars worse than initially feared, according to an independent study.
Gov. Jerry Brown said the debt totaled $28 billion last year, but the State Budget Crisis Task Force said Thursday that pensions, health care, infrastructure costs and other costs raised the total higher. Much higher. In an estimate, the independent group estimated that California's total debt was between $167 billion to $335 billion.
The total debt included previously undisclosed costs like an $8 billion payment for schools, $40 billion in drinking water improvements and $250 million taken from a transportation fund.
“With inadequate information, our legislators and citizens are flying blind,” said David Crane, a member of the Task Force's board, in a news conference on Thursday, according to the New York Times.
The revelation of massive amounts of new debt will strain the state's already precarious financial situation. The state government has already slashed spending and is seeking to raise taxes. Local areas like the city of Stockton and San Bernandino County have declared bankruptcy amid mounting debt problems. The state's credit rating has already been cut by Standard & Poor's.
The Task Force, founded by former Federal Reserve Chairman Paul Volcker and former New York Lt. Gov. Richard Ravitch, is also examining the budgets of Illinois, New York, Texas, Virginia and New Jersey.
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