Californians are getting the best government IOUs can buy

It was 29 days ago that the California comptroller predicted the state would be out of money in 50 days. Unless California’s rich uncle dies (and his estate goes through an exceptionally fast probate) California will be broke in three weeks.

Last week California began issuing IOUs to conserve its cash. California IOUs are like Disney Dollars. They’re only useful in a fantasy world. In Disneyland mice and ducks talk and wear pants. In the California legislature public employee unions can get endless pay and benefit increases.

Part of California’s problem is that tax receipts have fallen disastrously, but the bigger problem is that California’s spending has risen disastrously. Matt Welch likes to note that California’s budget has grown faster than can be accounted for by the rate of inflation and the increase in its population. All the while, public sector union pensions funds have been helping themselves to public money like Scrooge McDuck.

According to Adam Summers—a policy analyst at the Reason Foundation, the nonprofit that publishes this magazine—the state’s annual pension fund contribution vaulted from $321 million in 2000–01 to $7.3 billion last year. According to public databases, more than 5,000 people are drawing pensions in excess of $100,000 from the state of California each year.

This is all going to come crashing down at some point, with that three week deadline looming large. California isn’t the only state with pension problems, but it looks like California is going to blow up first.

• More underfunded public pensions
• Obama’s GM plan pits unionized retirees against non-unionized retirees
• Automaker collapse will send worker pensions to government hands
• Pension Benefit Guaranty Corporation lost its shirt in stocks
• The Pension Benefit Guaranty Corp.
• More on the public/private pension fund disparity
• “it is only a matter of time before civil servants become civil masters”
• Knox County sheriff’s pension fund in trouble already
• “If you did not know it before, you do now. California is bankrupt.”
• California will lead states seeking bailout
• How did Vallejo, California go bankrupt?
• Goldman Sachs warns on NJ, CA, WI, FL, OH, MI bonds