California to run out of cash in March? (my title)

[❤ mollymouser ❤]

blogs.sacbee.com/capitolalertlatest/2012/01/controller-state-to-run-out-of-cash-in-march-without-action.html

note: I shortened the title for the forum

Controller: State to run out of cash in March without action

California will run out of cash by early March if the state does not take swift action to find $3.3 billion through payment delays and borrowing, according to a letter state Controller John Chiang sent to state lawmakers today.

The announcement is surprising since lawmakers previously believed the state had enough cash to last through the fiscal year that ends in June.

But Chiang said additional cash management solutions are needed because state tax revenues are $2.6 billion less than what Gov. Jerry Brown and state lawmakers assumed in their optimistic budget last year. Meanwhile, Chiang said, the state is spending $2.6 billion more than state leaders planned on.

The Assembly budget committee approved a bill today that would enable $865 million of borrowing from existing state accounts, Senate Bill 95.

Chiang, after consultation with the Department of Finance and state Treasurer Bill Lockyer, is also seeking about $2.4 billion in delayed payments to universities, counties and Medi-Cal, as well as additional borrowing from outside investors.

Absent these actions, the state would fall below its prudent $2.5 billion cash cushion on Feb. 29, Chiang estimated. On March 8, the state would actually end up $730 million in the red. The state would be below the safe cash cushion for several weeks ending April 13, save for several days at the end of March.

With such actions, Chiang believes the state would not have to use IOUs or delay tax refunds, maneuvers that have been relied upon in previous years. But Chiang also said that "more cash solutions may be required if our revenues continue to erode or if disbursements significantly exceed estimates."

California borrows money early each fiscal year because the state has regular monthly expenses but receives the bulk of its tax revenues in the spring. The state borrowed $5.4 billion last fall for this purpose.
Assemblyman Bob Blumenfield, D-Woodland Hills, downplayed the significance of the new borrowing in a hearing. He said $5.4 billion was small relative to the $10 billion state leaders were prepared to borrow last year.

Some Republicans raised questions about when the borrowing from state accounts from would be paid back and why the state is spending more than expected.

Michael Cohen, chief deputy director of Brown's Department of Finance, said the state would pay back special funds whenever programs need the money to operate. Cohen also said the state is spending more money than expected because courts have blocked some cuts, while some savings may come later in the fiscal year than forecasters predicted.
Updated at noon to reflect comments from today's legislative hearing.

[TD2K]

But Chiang said additional cash management solutions are needed because state tax revenues are $2.6 billion less than what Gov. Jerry Brown and state lawmakers assumed in their optimistic budget last year. Meanwhile, Chiang said, the state is spending $2.6 billion more than state leaders planned on.



Drat when those assumptions don't work out. They'll definitely try the old IOU tactic again.

www.lao.ca.gov/reports/2010/bud/fiscal_outlook/fiscal_outlook_2010.aspx

[Deleted]

Maybe the solution is to cut out all aid to U.S. citizens & only continue with the aid to illegals.

[handyman2]

Goverments can only use the old double barreled pencil accounting scheme for so long and then reality sets in. It is not if Ca. will run completely dry but when.

[❤ mollymouser ❤]

Jan 31, 2012 18:43:24 GMT -5 @oldtex said:

Maybe the solution is to cut out all aid to U.S. citizens & only continue with the aid to illegals.

Ummmm ... nope!

[dumdeedoe]

WOW that was quick,,,didn't the year just start?

[❤ mollymouser ❤]

The fiscal year starts July 1 in California.

[jarhead1976]

Remember Enron, California still paying for those thieves. Cheney , Lays with Bush.

[floridayankee]

Jan 31, 2012 18:13:12 GMT -5 ❤ mollymouser ❤ said:

blogs.sacbee.com/capitolalertlatest/2012/01/controller-state-to-run-out-of-cash-in-march-without-action.html

note: I shortened the title for the forum

Controller: State to run out of cash in March without action

California will run out of cash by early March if the state does not take swift action to find $3.3 billion through payment delays and borrowing, according to a letter state Controller John Chiang sent to state lawmakers today.

The announcement is surprising since lawmakers previously believed the state had enough cash to last through the fiscal year that ends in June.

What's really surprising is that people actually find this news surprising.

[floridayankee]

Feb 2, 2012 8:58:19 GMT -5 @toughtimes said:

I have to say, I find it shocking. A city, yes. My profligate burg did in the 1970s. But a whole, STATE?

You find it shocking that a state with wondrous laws such as the recently signed bill giving illegal immigrant college students access to state-funded financial aid is going broke?

Really?

[floridayankee]

Feb 2, 2012 10:06:34 GMT -5 @toughtimes said:

I am a wee bit provincial. I have never actually gone further West than Colorado and New Mexico.

It's a big, beautiful country with a lot to offer. You should get out more.

[Deleted]

It feels like this happens every year. CA's problems are so massive.

[Deleted]

I hear a lot of stories about California and wonder if they are as crazy as they say or if it's just a bunch of sourballs from NY saying it.

I'm a traumatized refugee.

[flopsy]

i'm sure plenty of the stories you hear are true