The following is a summary of the presentation by California State Controller Hon. John Chiang
from the Los Angeles Economic & Business Forecast for 2013, which took place Thursday, February 21, 2013 at Metropolitan Water District Headquarters in Los Angeles, CA, and was sponsored by Metropolitan Water District of Southern California and the Latin Business Association:
California State Controller The Honorable John Chiang
The recession and financial crisis in 2008 and 2009 taught us that for a long period of time, we can’t spend more than we earn. You can borrow for long-term capital investments like education, but if you borrow too much, you risk a shutdown.
We are far more productive than many other societies – California is the world’s ninth largest economy with a nearly $2 trillion annual economic output.
The three things that help drive an economy forward are investments in human capital, access to financial capital and infrastructure – including roads, bridges and schools.
Our recovery has been different from recession recoveries of the past. Instead of a quick drop and recovery that is “V” shaped, ours is slowed recovery that looks like a “U” while we deleverage or reduce our dependence on borrowing and increase savings.
One positive outcome from our cash crisis – we proved to the market that we protect payments to schools and bondholders and not go over the fiscal cliff. The Controller took the extraordinary step of delaying $4.2 billion in personal income tax refunds and money owed to private businesses and other payments during February 2009. In July through September 2009, he issued $2.6 billion in IOUs for only the second time since the Great Depression. The last thing California needs is to default on our obligations, and we sent a signal that we are going to recover strongly.
We’re seeing a recovery but we still need to make significant investments and reduce debt. Through Proposition 30, voters gave the State a 7-year window to fix our debt so we can invest in schools, healthcare and infrastructure.
The Controller also disclosed the State’s long-term health care obligations for retirees – we know if we don’t get health care costs down by pre-funding our obligations and keeping people healthier by tackling chronic diseases, California will face a $63.8 billion price. It’s a hefty sum, but it’s manageable and by being health-smart and financially intelligent we can reduce the amount by tens-of-billions of dollars.
Finally, the Controller urged attendees to search for their unclaimed property at www.claimit.ca.gov. Because of his reforms to the program, Controller Chiang has reunited owners with more than $2.1 billion of property that had been lost or forgotten – $1.3 billion that had been sent to the State, and $767.7 million that was reclaimed by owners from the business before it was sent to the State. During the first four years of his administration, Controller Chiang also returned almost 157 million stocks and securities to owners, which is more than 25 times the amount returned to owners during the previous decade.