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State Controller warns lawmakers that California is running out of cash


Yesterday, State Controller John Chiang sent a letter to Capitol budget leaders informing them that California will run out of cash by early March if the Legislature does not take immediate action. The Controller suggested the state fund the $3.3 billion shortfall by borrowing and payment delays.
 

The shortfall is due in part to the fact the 2011 revenues came in $2.6 billion lower than Governor Brown’s budget had predicted and state lawmakers have spent more than they planned for.
 

Yesterday, the Assembly budget committee approved SB 95, a bill that would enable $865 million in borrowing from existing state accounts. Chiang is also seeking about $2.4 billion in delayed payments to universities, counties and Medi-Cal, in addition borrowing from outside investors. If both of these measures take effect, Chiang believes that the state would not have to issue IOUs or delay tax refunds.
 

Without these actions the state will fall below its $2.5 billion cash cushion on February 29th. By March 8th, the state would be $730 million in the red and fall below the safe cash cushion for several weeks ending April 13th.
 

Early each fiscal year, California borrows money because the state has regular monthly obligations to pay for and receives the majority of its tax revenue in the spring. Last fall the state borrowed $5.4 billion for this purpose.
 

The Brea Chamber of Commerce is committed to keeping members informed and advocating on behalf of business interests in our region. Let your state legislative representative know how you feel on this issue. Together we can build a strong business community.