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John Chiang says California's cash will dry up if officials don't act

The Sacramento Bee | by Kevin Yamamura | February 1, 2012

California will run out of cash by early March if the state does not borrow more money and delay some payments, the state's cash manager warned Tuesday.

Controller John Chiang said state leaders must find $3.3 billion to ensure California has enough cash to pay for priority programs between Feb. 29 and April 13.

"I believe the upcoming shortfall can be effectively managed without resorting to IOUs, tax refund delays and other drastic measures with (legislation) and other steps we must take - quickly and collaboratively - in the coming days," Chiang wrote Tuesday to the Legislature's budget committee chairmen.

The latest cash problem comes after the state has received $2.6 billion less than what Gov. Jerry Brown and Democratic lawmakers assumed in their optimistic budget last year. Meanwhile, Chiang said the state is spending $2.6 billion more than state leaders planned.

Brown officials attribute that spending gap to courts blocking health and welfare cuts, as well as overestimating early savings in prison costs from redirecting inmates to counties.

 

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