"If state government was a business, the state might have to shut it down."

So begins a great article by Erik Smith at the Washington State Wire about the three major state funds that either are, or are headed toward, insolvency.

According to Smith,

"Reports from the three state oversight officials indicate that the Wall Street meltdown and the state’s unprecedented budget shortfall contributed to the troubles. But bad judgment calls and the Legislature’s tendency to put off difficult decisions into the future also played a part."

The state employee health insurance fund is strapped for cash, as the Spokesman-Review reported last week, because the state "cut its premium payments by hundreds of millions of dollars, using that money for other things while the insurance fund spent down a large surplus."

The Legislature's bad habit of underfunding the state's pension obligations has created major problems as well.  According to Actuary Matt Smith, "Over the next five years the state must triple its payments to nearly $2 billion every two years, an unprecedented level, in order to make the program actuarially sound."

And regular readers of The Hammer know all too well the problems with our state's workers' compensation trust fund.  It will be interesting to see if organized labor groups camp out in the offices of Mike Kreidler or Matt Smith, demanding they clarify their claims of potential insolvency the way they apparently did when State Auditor Brian Sonntag published a report showing potential problems in the workers' comp trust fund.

As Ferndale Rep. Doug Ericksen says in the article, "“The bad economy is highlighting all these quasi-illegal practices. It’s really a ‘trifecta of failure.’ "