California Facing a Financial State of Emergency
Bill Lindner
January 17, 2009
Because lawmakers have failed for months to address California's growing budget crisis, income tax refunds as well as hundreds of millions of dollars worth of other bills won't be paid on time.
In his recent State of the State address, California Governor Arnold Schwarzenegger said "I will not give the traditional State of the State address here today because the reality is that our state is incapacitated until we solve the budget crisis. The truth is that California is in a state of emergency."
California State Controller John Chiang says to make sure the state has enough money to meet its mandated obligations such as payments to public schools, debt service and other payments deemed by the state Constitution, federal law or other court rulings, certain payments will be delayed by 30 days.
California faces a more than $41 billion deficit over the next 18 months if nothing changes.
If the Governor and the Legislature fail to enact a sound budget solution that provides much-needed cash by February 1, the state will be $346 million in the red at the and of February and $5.2 billion in the red in April according to Mr. Chiang.
Payments that assist more than a million aged, blind and disabled Californians --- that go to pay their rent, utilities and put food on the table --- and payments to state agencies that fund critical public services ranging from public safety to health and welfare will be delayed if a budget solution isn't passed.
Tax refunds will also be delayed.
Mr. Chiang also noted that if tax refund payments are postponed beyond the date prescribed by law, it will end up costing the state tens of millions of dollars in interest payments.
As pointed out by Mr. Chiang, delaying these payments will hurt real people, many of whom are barely hanging on financially in these tight times and Businesses who have state contracts may have to lay employees off.
If California still has a cash fund crisis in March or April, the suspended payments could become IOUs.
A list of payments to be made can be found here. A list of payments to be delayed can be found here.
In his recent State of the State address, California Governor Arnold Schwarzenegger said "I will not give the traditional State of the State address here today because the reality is that our state is incapacitated until we solve the budget crisis. The truth is that California is in a state of emergency."
California State Controller John Chiang says to make sure the state has enough money to meet its mandated obligations such as payments to public schools, debt service and other payments deemed by the state Constitution, federal law or other court rulings, certain payments will be delayed by 30 days.
California faces a more than $41 billion deficit over the next 18 months if nothing changes.
If the Governor and the Legislature fail to enact a sound budget solution that provides much-needed cash by February 1, the state will be $346 million in the red at the and of February and $5.2 billion in the red in April according to Mr. Chiang.
Payments that assist more than a million aged, blind and disabled Californians --- that go to pay their rent, utilities and put food on the table --- and payments to state agencies that fund critical public services ranging from public safety to health and welfare will be delayed if a budget solution isn't passed.
Tax refunds will also be delayed.
Mr. Chiang also noted that if tax refund payments are postponed beyond the date prescribed by law, it will end up costing the state tens of millions of dollars in interest payments.
As pointed out by Mr. Chiang, delaying these payments will hurt real people, many of whom are barely hanging on financially in these tight times and Businesses who have state contracts may have to lay employees off.
If California still has a cash fund crisis in March or April, the suspended payments could become IOUs.
A list of payments to be made can be found here. A list of payments to be delayed can be found here.
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