The state of California is not funding a mountainous $48 billion tab for medical benefits promised to future government retirees, a bill that ranked as the second largest in the nation last year. The escalating liability, which accounting rules now require listing on the balance sheet, would hurt the state's debt rating and consequently raise the cost of borrowing if it goes unaddressed. Equally as important, since tax revenues are not expected to cover it, taxpayers will be forced to sacrifice services or sell bonds at ever-higher interest rates to accommodate the obligation. "That $48 billion is quite a lot. The substantial annual increases (to fund the benefits) the states are facing . is really stunning," said Katherine Barrett, co-author of a ground-breaking report, released Tuesday, from the nonprofit Pew Charitable Trusts' Center on the States."
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