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How governors trick reporters on budget ‘surplus’

Even though California teacher pensions - and therefore that debt - are guaranteed by the state, for accounting purposes the state treats that obligation as off its balance sheet, as if its not on the hook.

By David Crane | Updated on April 14, 2014

April 13 (Bloomberg) — State governments have a surefire strategy for hoodwinking the public and the news media, and nowhere does it work more perfectly than in California. Journalists can’t stop lauding Governor Jerry Brown for turning a fiscal crisis into a “surplus,” even though that surplus was achieved by ignoring more than $6 billion in costs.

It’s not just because they love Brown. The same thing happened in 2000 and 2007, when California’s previous two governors, Democrat Gray Davis and Republican Arnold Schwarzenegger, respectively, also reported rosy budgets. Both were praised for responsible governance. Davis was considered presidential material, and there were calls to amend the Constitution to allow Schwarzenegger (for whom I worked) to run for president.

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