Controller: Calif. 'Operating On Borrowed Money', May Run Out Of Cash By March
LOS ANGELES (CBS) — The state controller warned Tuesday that California is quickly running out of cash to pay its bills.
KNX 1070's Ron Kilgore reports Controller John Chiang is sounding the fiscal alarm in Sacramento.
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The state Assembly budget committee is considering a bill to borrow $865 million to pay down some of the state's debt, but Chiang warned lawmakers may need a lot more than that.
"We've been out of money since July 13, 2007," said Chiang. "The state's been operating on borrowed money."
Chiang estimated lawmakers would need to come up with $3 billion or the state could run out of operating cash by early March.
Overly-optimistic revenue projections and overspending in key sectors like education and health care have put the state in a precarious position.
Tax revenues have fallen short by over $2 billion less than what Governor Brown and state lawmakers expected last year.
"The pace of spending was greater than had been budgeted," Chiang said. "If they spend accordingly and don't spend more, then we should recover those revenues at the end of the year."
Among the short-term steps proposed by the controller's office: delaying some payments and shifting cash around through various state funds.
In 2009, then-Gov. Arnold Schwarzenegger requested an emergency cash infusion from the TARP program to fund over $13 billion in short-term loans.
