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They are literally freezing to death in California. Below-freezing temperatures the past couple of weeks have spelled doom for many who live on Bay Area streets. As many as seven people have died of hypothermia.

There are an estimated 6,000 homeless in San Francisco on any given night, with only 1,339 shelter beds. It's impossible to walk anywhere in the downtown core without encountering these poor souls, their mangled, damaged feet peeking out from beneath filthy blankets. Meantime, blocks away, the rich fill the lobby of the Westin St. Francis and pack the aisles of Macy's, one-percenters seemingly oblivious to the grinding poverty around them.

California may still possess enviable temperatures most of the year, but beyond the palm trees and warm breezes lurks a world of trouble. Jerry Brown has returned as governor to clean up the mess left behind by his predecessor, Arnold Schwarzenegger, whose tenure in office was volatile. Many have called California a failed state, and with some reason.

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The decay that has set in after years of neglect is unmistakable. Roads have suffered as a result of years of deferred maintenance. According to Forbes magazine, California leads the United States in many categories, none of them good: highest taxes, lowest bond rating, highest poverty rate, tied for highest unemployment rate, poorest state in which to do business, most cities to have gone bankrupt. The state prison system is so badly managed it had to be taken over by a federal judge. The traffic congestion is probably the country's worst.

There is also a severe water crisis. Droughts are now common. Worse, though, are the many small communities whose groundwater has been contaminated by chemicals used for agriculture, which have leached into the water table. Meantime, the state's education system remains chronically troubled, in large part due to a hyper-polarized and endemically dysfunctional political system.

Other than the sun, it's hard to see a bright spot on the horizon.

Mr. Brown, who took office in 2011, has done his best to try and turn things around, a thankless task if there ever was one. This year, after years of multibillion-dollar shortfalls, Linda Ronstadt's old dance partner introduced what he is calling a balanced budget. He promised more to follow. While he certainly has closed the massive funding gap he faced two years ago (by raising taxes and slashing spending for schools, health and higher education, among other areas), not many share Mr. Brown's rosy view of the world.

According to the Los Angeles Times, the state is legally bound to pay billions of dollars it avoided paying everyone from schools to health-care providers while it attempted to balance its books. As the paper reported, Mr. Brown's budget addressed only a small portion of the state's overall debt responsibilities. This is where the numbers get really scary.

The department of finance has said California's debt was paid down to less than $28-billion (U.S.). But that doesn't include government employee pension and health benefits that have been promised but not funded. Stanford University estimates that unfunded pension liabilities are as much as $497-billion.

Meantime, a report by the Pew Center suggests that unfunded state retiree liabilities are $77-billion and growing. Most agree that until California deals with these two areas, it will only be pecking away at its monstrous fiscal challenges. It's difficult to imagine state legislators not having to deliver some extremely unpleasant news to tens of thousands of government employees in the coming years.

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Despite its financial woes, California continues to talk about a high-speed rail line between Los Angeles and San Francisco that would cost tens of billions. On another front, the state ruled against allowing fracking for oil and gas despite having the largest shale deposits in the country. Many believe this one move alone could have helped release California from the grips of financial despair.

I have always loved visiting California, and the Bay Area in particular. But now I'm not so sure. The state's problems are deep-seated and becoming clearly visible. In fact, the shivering evidence can be found on pretty much any street corner.

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