California (STOCA1)’s cash may be exhausted by March as tax collections trail budgeted amounts, Controller John Chiang said in a letter to lawmakers.
The nation’s most-populous state needs $3.3 billion for March and the first two weeks of April, Chiang said in the letter to state Senator Mark Leno and Assemblyman Bob Blumenfield, who lead the Joint Legislative Budget Committee. The Assembly Budget Committee is holding a hearing today in Sacramento on the state’s spending plan.
Unlike 2009, when he was forced to issue IOUs to creditors, the controller said the current cash shortfall can be managed through payment delays, as well as external and internal borrowing. He urged legislators to pursue that course.
“Although this cash management plan relies on still more borrowing, payment delays and deferrals, we believe this is the most prudent and responsible course of action considering we have about four weeks before the advent of the cash shortfall,” Chiang said in the letter.
State receipts were $2.6 billion lower than forecast through Dec. 31, while expenditures were an equal amount higher, Chiang said. In a previous report, Chiang said the collections shortfall for the fiscal year that began in July was led by corporate and personal-income taxes.
The Assembly panel voted to approve $865 million in internal borrowing recommended by Chiang at its meeting today.
“In recent years, we’ve had cash-flow bills every year because of the state’s tight cash position,” said Blumenfield, a Democrat from Woodland Hills and the Assembly committee’s chairman. “Our cash situation is doing a little bit better and this bill will help.”
The Assembly is expected to vote on the borrowing Feb. 2, according to Anthony Matthews, a spokesman for Blumenfield.
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