No, not another story about OR7. Nope, this one is a downer...
California to run out of cash in March
California will run out of cash by early March if the state does not take swift action to find $3.3 billion through payment delays and borrowing, according to a letter state Controller John Chiang sent to state lawmakers today. The announcement is surprising since lawmakers previously believed the state had enough cash to last through the fiscal year that ends in June.I'm shocked, shocked that legislators would overestimate how much money their attempts at raising revenues. Businesses never go to, say Nevada or Texas to avoid regulation and high taxes. Citizens never take undue advantage of entitlement programs, or heaven forbid, ever cheat.
But Chiang said additional cash management solutions are needed because state tax revenues are $2.6 billion less than what Gov. Jerry Brown and state lawmakers assumed in their optimistic budget last year. Meanwhile, Chiang said, the state is spending $2.6 billion more than state leaders planned on.
The Assembly budget committee approved a bill today that would enable $865 million of borrowing from existing state accounts, Senate Bill 95. Chiang, after consultation with the Department of Finance and state Treasurer Bill Lockyer, is also seeking about $2.4 billion in delayed payments to universities, counties and Medi-Cal, as well as additional borrowing from outside investors.Sad to say, my home state tends to be a leading indicator for other states. This is what bloated bureaucracies, over regulation, generous public pensions, and entrenched entitlements will do to a state. Watch and learn.
Absent these actions, the state would fall below its prudent $2.5 billion cash cushion on Feb. 29, Chiang estimated. On March 8, the state would actually end up $730 million in the red. The state would be below the safe cash cushion for several weeks ending April 13, save for several days at the end of March.