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July 2 (Bloomberg) -- On "Weird Wall Street," Trish Regan and Adam Johnson look at bizarre business stories on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Last month we brought you a feel good story out of california, anticipating their first $1 billion budget surplus after being in the hold just a couple of years before, but things may not be as good as they think year.

Analysts think that california is not doing enough to address its long-term problems, mainly their pension obligations.

The executive director at california common sense, along with steven miner langer.

Should california be using this extra money to address their billion dollars in pension issues?

Even the governors seem to think that they should be.

Among other things the california teachers' pension fund has said that there $3 billion to $4 billion per year in additional money -- just covering the obligations they already have?

Exactly, the teachers' fund is on what the state calls a path to solvency over the next couple of decades and they need about $4 billion per year for the next 30 years, so they might as well start now.

Bottom, people have made the point that there are all of these social programs that they would like to see in california, things that did not get through as a result of budget cuts.

Why not divert the money to those programs?

Structural issues, like outstanding pension obligations , when the state practices budgeting the way that it to be does, they wind up getting services.

In california moves into estimates, it jumps into these programs.

As soon as these revenues dry up, the first thing to go are the same programs.

At the same time you actually have these structural issues that get worse.

It is hard to give extra money to health care costs when you have more and more people who need medicaid expansion.

But it will cost more and more.

Investment opportunities, the stock market is gone -- down, all of a sudden it is just -- what is the big news of $60 billion?

Ultimately it is paying attention to these unaddressed structural issues, acknowledging that be have to figure out a way to get back on track and that the $4.5 billion that they need, an additional $4.5 billion every year, has to come from somewhere.

Price they have got a little bit of patting now, why not take advantage -- what they have got a little bit of -- they have got a little bit of padding now.

The problem is that california has a history of doing this.

In 2003 when they put our of schwarzenegger in office, he borrowed $10 billion to fix that particular problem and they are still paying that money off from 2004-2005. the problem is that when a fix that problem, and then the housing bubble, they did not put that money into fixing the debt.

Jerry brown worries that this is a pattern that keeps repeating itself.

Also think about the business of the state.

Eight other technology companies there, they are all great.

A tax-free state that is trying to say -- come here with your business and a lot of companies have left.

At the same time we have a job integration rates or with those companies likely to go to texas.

The problem is this debt, debt is taxes collected on the future.

Jobs are leaving, none of that is good and you wanted to add to that?

At the same time we have microeconomic sectors.

Silicon valley is doing quite well.

Sacramento and los angeles are doing well, but we have 25% unemployment in these counties.

We are still looking at a very fragile economy.

We just released a report today on this, we are already paying 22% more on bond interest.

That debt is still growing.

At this point pension obligations have at this point tripled since 2007-2008. clearly there are a lot of problems out there.

Do the voters recognize this?

This is interesting, voters voted for jerry brown's tax increase because he pushed it and said this is what i am going to do with the money, the legislator -- legislature is superseding his own wishes.

We will have to see how the voters respond.

It will come down to leadership on their part.


He has a tough task, obviously.

Is there a national story that we can take away here?

Illinois, you think about the law across the country.

Illinois does not have a surplus right now.

They do not have that problem.

Most states do not have a surplus right now.

They do not have that problem.

California has an opportunity that many states which they did have.

Autumn carter, you where the executive director for california for common sense.

What is the common sense solution?

Ultimately we have to address these structural issues in order to guarantee that we will have the quality of life accessibility.


Those are things that are problems that we need to know how to fix, but to fix them we need to address these pension obligations and retiree health- care rising costs.

Medicaid has increased 65% in california.

This is happening in other states but ultimately it is up to the state to decide the smart is that for dealing with recognizing informing the plan with these issues.

Thank you very much for joining us there today.

This text has been automatically generated. It may not be 100% accurate.


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