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The impact of exploding federal and state debt and massive unfunded public pension and health benefits seldom get people riled up because they seem theoretical, something in the future to be worried about later.

But here's an easy way to move from the theoretical to reality. At some point, paying interest owed on debt and meeting retiree pensions and benefit liabilities will mean there is not enough tax revenue left over to pay the cop to patrol the public retiree's neighborhood.

Some argue we are already there.

While most of the media was fixated last week on "balloon boy," the California public employee retirement fund Calpers reported $50 billion in investment losses at the same time it launched an investigation of  "pay to play" allegations involving its investment advisers.

And who will pick up the tab for these losses?  Taxpayers.

David Crane, an adviser on the economy to Gov. Arnold Schwarzenegger, told the Wall Street Journal the fund losses will mean the state will have to inject an additional $3.3 billion into the Calpers fund for the 2009-2010 fiscal year. That will mean "there is less money for parks and recreation, less money for the University of California, less money for health and human services."

In a visit to Santa Rosa last February, Mr. Crane noted that in 1999 when the economy was booming, state lawmakers agreed to $250 billion in currently unfunded retiree benefits.

The financial strain of this mismanagement is trickling down to the cities with every passing day.

The Wall Street Journal said that the city of Fullerton is on the hook for an additional $5.5 million to fund city employee retirements starting in 2011. How will the city pay for it? By cutting current employee pay and services, officials said.

"In Ontario," said the Wall Street Journal, "City Manager Greg Deveraux said Calpers's woes could make it even more difficult for his Southern California city of 175,000 to provide essential services."

"Any shortfall reduces the level of services we can provide," the city manager told the Journal.

Napa City Manger Mike Parness said generous benefits agreed to during the boom years are coming back to haunt the city. For some positions, the Journal said, pension benefits as a percentage of employee compensation have soared from 14 percent to 40 percent. The city faces diverting revenue from services to pay for retiree costs.

"We must change the system," Mr. Parness told the Journal. "It's unsustainable."

Meanwhile, the state's fiscal uncertainty shows no signs of abating, with officials reporting a $2.1 billion shortfall in tax collections in the just the first three months after "closing" a $26 billion budget deficit. The state's worsening financial standing is having an impact on its ability to borrow in the bond market. Earlier this month, officials were forced to raise yields and lower the amount of a bond offering from $4.5 billion to $4.1 billion to attract investors.

In other words, the state's fiscal train wreck -- and the potential for taxpayers to be left holding the bag -- is getting closer by the day.

OK. Now back to "balloon boy."