Assemblyperson Portantino responds to CA CAFR $8 trillion: he ignores it

Below is Assemblymember Anthony Portantino’s response to my request to address the State of California’s Comprehensive Annual Financial Report (CAFR) data and collective state CAFR’s from ~14,000 various government entities in the state that respectfully document $600 billion and $8 trillion in surplus taxpayer assets (recall that the budget “crisis” is $16 billion). Following is my response to Wendy Gordon, Anthony’s Communications Deputy. I have still not heard from my appointed contact, Robert Oakes, consultant to California Senator Carol Liu.

<> wrote:

Carl – here is the reply from Assemblymember Portantino:

“Carl, as you know, you suggested this idea to me several years ago when Sofia was in your class at LCHS.  At the time, I was chair of the Revenue and Taxation Committee and I instructed my staff to research the issue.  We actually found some merit in your proposal and would have taken it a step further had I not been removed from my committee chairmanship for not supporting the suspension of the Prop 98 school funding guarantee.  As the legislative deadline for this session passed back in February and I am terming out of office this year I will be unable to pursue this idea during this legislative suggestion.  As I said above, given the enormous interest paid by the state for our Revenue Anticipation Warrants and Revenue Anticipation Notes it makes sense for us to look at creative ideas.  Thank you for your continued interest.”

Anthony J. Portantino
Assemblymember, 44th

Wendy Gordon

Office of Assemblymember Portantino

626.577.9944 office


Thank you, Wendy. I recommend that Anthony revise his statement because what he references is my request of four years ago that he explore the benefits of a state-owned bank. That point is the second-to-last of the seven I requested that my Assemblymember address. As Anthony and you may know, a state-owned bank proposal evolved into AB 750, passed by both houses and with Anthony’s vote, but vetoed by Governor Brown. The current version is AB 2500.

That means he failed to address this topic of $600 billion of non-disclosed taxpayer assets revealed in the CA state CAFR, and $8 trillion in collective state CAFRs. 

As I stated, I want to help Anthony shine on this issue. To do so, of course, he’ll have to address it. Since Anthony was shunned by his party leadership and not running in 2012 (and I wish him well with his mother’s care in the near future), I respectfully suggest he’s in strong position for leadership that requires refutation of the Governor’s public statement’s of “no option” but austerity (video of this lie here).

And that said, there are strong reasons to revise his initial statement. The first is irony in his non-response to CAFR-disclosed hundreds of billions and trillions is his membership on this committee:

Committee on Accountability & Administrative Review

Primary jurisdictions are identifying savings and efficiencies in the management of state government, reviewing and studying the implementation, operation, and effectiveness of state programs and agencies.

The second irony is Anthony not responding to $8 trillion in public assets, $600 billion of which is listed in the California financial report, while engaged in the problem of a $16 billion budget deficit as the claimed cause of state austerity.

My recommendation that was not addressed: verify the CAFR data, make a statement verifying its objective existence, and recommend full independent audit and cost-benefit analyses for our options to be understood.

Again, Wendy, with all respect, just as you had no idea of the existence of this $600 billion and $8 trillion in taxpayer assets, neither do the people of California As the below 300-word public summary again and concisely documents, the $600 billion is not needed to fund pension plans; in fact, the current structure retains $600 billion of taxpayer assets to produce just $1 billion of revenue. Non-disclosure of this game-changing data seems to be an obvious crime of massive economic fraud by officials with fiduciary responsibility.

I want to polarize official response to one of two positions:

  1. What I assess as the unlawful position of economic fraud: the intentional deception of people you owe factual accounting that causes damages. Keeping the public ignorant of $8 trillion in assets while actively stating or not correcting official statements of “no option” but austerity causes massive damages of austerity.
  2. The lawful and public service position I recommend above.

What Anthony does is up to him, and I respectfully advise that he revise his statement to the lawful category. I’m not singling-out Anthony and Senator Carol Liu; they’re my state legislative representatives and the ones I should contact. As Anthony references, we talked about a state-owned bank (Ellen Brown and I also briefed Senator Liu). I very much enjoyed his daughter’s participation in my AP Gov/Econ class. I also enjoyed chatting with his younger daughter when Anthony and I jogged around the high school track.

But let’s get back to making Anthony a star on this issue:

Wendy, I know that Anthony’s busy. I worked with members of Congress for 18 years in policy to end poverty that led to two UN summits for heads of state. I tried to make this easy by:

  • providing the CAFR links and page numbers,
  • explaining the data as an economics teacher,
  • framing the easiest response possible in my recommendation.

So even though I made this easy, I’m willing to give Anthony the benefit of the doubt that he somehow misunderstood the issue.

Would Anthony like to revise his statement?

Please feel free to call on me if I can help Anthony understand the objective and verifiable data in the CAFR documents.

Perhaps the below 300-word statement for people to share in their local papers can help. As I advised Anthony’s daughter, Sofia, in AP Econ (and please ask Anthony to say hello to her for me), learning economics in an ongoing part of civic education 🙂

Governor Brown saying a $16 billion budget deficit with “no option” than austerity is similar to claiming no money in a checking account to pay for our children’s schools, but having 35 times that amount in savings.

The state’s budget claim is a lie of non-disclosure. Both parties’ leadership does not inform you of this game-changing status:

California’s 2011 Comprehensive Annual Financial Report (CAFR) shows a tax surplus of $600 billion dollars in cash and investments. The online public report on page 83 lists $460 billion of investments claimed to help fund state pensions. Pages 234-235 show these investments had $10 billion income, and cost $3 billion in expense (Wall Street investors). Page 107 shows $6 billion interest cost for the state’s $164 billion debt. 

Therefore state investment income minus debt interest cost equals ~$1 billion. This means the state retains $600 billion in taxpayer assets for $1 billion in benefits. 

Even-more astounding is $8 trillion in total surplus taxes from sampled data of California’s various ~14,000 government entities’ CAFRs (for example, page 63 of L.A. County’s 2011 CAFR shows $66 billion in cash and investments). 

$8 trillion returned to each of California’s 12 million households equals $500,000. Of course, these colossal investments should be considered by multiple and independent cost-benefit analyses to discover our options; we can’t simply all cash them in. Ellen Brown’s work for state-owned banks document other options.

Californians do not know about CAFR data. It’s not the job of government to lord over public riches in silence. I recommend polite pressure for Assemblymember (name) and Senator (name) leadership for full and independent audit and public options.

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One Response to Assemblyperson Portantino responds to CA CAFR $8 trillion: he ignores it

  1. gozounlimited says:

    California Budget Is A Sham

    Republicans, who’ve been shut out of budget negotiations, boycotted the Senate Budget Committee on Thursday after complaining that Democrats hadn’t made budget documents available 48 hours before Friday.

    Sen. Jean Fuller, R-Bakersfield, called on state Controller John Chiang and Treasurer Bill Lockyer to determine whether the budget is truly balanced.

    “These ‘take it or leave it’ budgets have been unbalanced, built on gimmicks, and are neither transparent nor honest,” Fuller said. “Therefore, it is crucial that the top two fiscal officers of our state review and express an opinion about whether or not this budget is balanced.”

    Legislative Democrats are calling for $8 billion in cuts — just short of the governor’s $8.3 billion. Both are assuming $5.9 billion in hoped-for revenues from the governor’s tax proposal that will be voted on in November, and $2.3 billion more in fund shifts and internal borrowing. Legislators want a budget reserve of $544 million, just more than half of the $1 billion reserve the governor proposed. The governor wants $8.3 billion in cuts.

    “With full budget committees called for next week, I gather the budget is not yet done,” said Sen. Bill Emmerson, R-Hemet. “Now, as we approach the deadline, the budget that’s before us is incomplete.”

    Democrats said that they only needed to pass the main budget bill to meet the deadline, and that working on trailer bills through the end of the month is a common practice. Brown has 12 days to decide whether he will veto the whole budget, veto individual line items or sign the budget bills, but is expected to continue to negotiate with his fellow Democrats over the next week or

    “Discussions are ongoing,” said Gil Duran, Brown’s spokesman.

    Working beyond the June 15 deadline is, some say, in violation of the spirit of Proposition 25, which gave Democrats a majority vote on budgets but also targets legislators’ pay if they miss the deadline.

    “If it’s a budget matter, it needs to be passed on time,” said Larry Gerston, a political science professor at San Jose State. “If they’re saying, ‘We’ll get to the rest of that later,’ they have not met the intent of the law. The whole thing’s a sham.”

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