California's huge government pension fund CalPERS will today report that it lost almost a quarter of its investment portfolio, a $56.8 billion hit.

Last fiscal year, CalPERs reported an $8.5 billion loss.

The hit comes as California struggles to close the door on a $26.3 billion budget hole. Now cities and states will have pony up more in the form of taxes to cover the decline in pension and healthcare payouts for 1.6 million workers and retirees.

CalPERS did well through the boom, posting double-digit returns over a half-decade to reach a record balance of $247.7 billion in mid-2007, the LA Times reports.

CalPERS now plans to spread the losses over three decades to blunt the impact on local authorities, who are in no position to raise taxes during a recession.

California lawmakers crowed about the success of their own budget deal, but media reports suggest a similar tack of robbing Peter to pay Paul.

The state that seem destined to issue IOUs indefinitely instead will borrow $4 billion from local governments, collect some taxes earlier and shift pay to state workers to the next fiscal year, among other tactics.

Fifteen billion in cuts were also made to close the deficit.