Climate exec warns California ‘functionally bankrupt’ over $1T gap

California is “functionally bankrupt,” climate entrepreneur David Friedberg said in a recent interview.welding,He points to pension obligations, regulatory restrictions and government spending as drivers of a potential long-term financial crisis.

Friedberg was asked to share a little-discussed “hot take” on politics and policy. He framed California’s fiscal outlook as a largely overlooked issue with implications that could extend beyond the state.

“People don’t realize how screwed up California is, and I worry that if California goes down, the union will go down, too,” Friedberg said.

He argued that the scale of California’s fiscal risk is tied directly to the public pension system, which guarantees retirement benefits to state employees and retirees. According to Friedburg, the difference between the amount contributed and the amount owed has grown significantly over time.

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He argued that the scale of California’s fiscal risk is tied directly to the public pension system, which guarantees retirement benefits to state employees and retirees. According to Friedburg, the difference between the amount contributed and the amount owed has grown significantly over time.

“The amount they owe is somewhere between $250 billion and $1 trillion more than what’s been paid,” Friedberg said.

Friedburg contrasted California’s position with that of the federal government, emphasizing that states operate under stricter fiscal constraints and cannot rely on monetary policy tools to offset deficits or liabilities.

“If it were the federal government, it would be: OK, we’re going to print more money,” he said. “California doesn’t have the ability to print money, so California has to pay for it.”

He also noted legal precedents that, in his view, limit the state’s flexibility in meeting pension obligations even for existing employees whose benefits have already been promised.

“There was a Supreme Court case in California that said once an employee is offered a pension, you can never restructure the pension,” Friedberg said. “It should stay forever.”

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In addition to benefit protections, Friedberg said California does not have a legal mechanism for declaring bankruptcy, which further limits the options generally available to organizations facing bankruptcy. (Tom Stoddart/Getty Images)

In addition to benefit protections, Friedberg said California does not have a legal mechanism for declaring bankruptcy, which further limits the options generally available to organizations facing bankruptcy.

“The state cannot declare bankruptcy. There is no way the state can functionally declare bankruptcy. There is no law that allows that,” he said. “No state has declared bankruptcy.”

Under current financial structures, pension obligations must be paid before other obligations, including debts to investors who fund government operations, Friedburg said.

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“Pension benefits are above bonds in California,” Friedberg said. “So you have to pay the retirement benefits before you pay all the bondholders.”

Friedburg described the situation as a looming “fiscal cliff” and argued that the size and nature of the problem left limited paths forward without broader economic or political consequences.

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Newsom’s upcoming podcast will be the second podcast he has been involved in. (Getty Images)

“I asked… where did the $14 billion for that high-speed rail project go? There was no rail,” he said. “Whose pocket is this money in?”

“Where did the money go?… You can follow the dollars. Where did they go? Who has all this money?” Friedberg asked.

He said California needs structural changes to fix the problem.

“California’s functional bankruptcy is a huge risk for the country, and I think we need to figure out what we can change to fix it,” Friedberg said.

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Newsom’s office did not immediately respond to Fox News Digital for comment.