State Controller Says California Will Run Out of Cash by March
State Controller John Chiang announced in a letter to lawmakers yesterday that California will run out of cash by early March if swift action is not taken to find $3.3 billion through payment delays and borrowing. The reason: State revenues are coming in $2.6 billion below over-optimistic projections in last year’s budget while state expenditures are$2.6 billion more than assumed. Together, these numbers “translate into a $5.2 billion reduction in cash resources,” according to Chiang. He also admits that while his suggested solution “relies on still more borrowing, payment delays and deferrals…it is the best way to manage the challenge without relying on IOUs or delaying tax refunds—actions that can disrupt the delivery of essential public services and slow California’s economic recovery.” California’s budgetary woes continue to demonstrate how a lack of fiscal responsibility and a reliance on questionable accounting principles further complicates the state’s delicate financial situation.
To see the letter, click here.
