CASH POOR KALIFORNIA TO BORROW RECORD $11B (Mortgages future to keep-the-lights-on)

WashingtonPost ^ | Friday, May 2, 2003; 2:52 PM | Rueters

[Swanks]

SAN FRANCISCO (Reuters) - California will issue $11 billion in short-term debt this spring, an amount state officials called a nationwide record, to pay its bills while legislators try to devise a budget for a state facing a revenue crunch.

"We are borrowing $11 billion so California will be able to pay its bills into the start of next fiscal year," State Controller Steve Westly said in a statement. "However, without a budget, we'll face another cash crisis and legal restrictions on which bills can be paid.

[Swanks]

SAN FRANCISCO (Reuters) - California will issue $11 billion in short-term debt this spring, an amount state officials called a nationwide record, to pay its bills while legislators try to devise a budget for a state facing a revenue crunch.

Looks like all this is Bush's fault at about election time.

[Swanks]

SAN FRANCISCO (Reuters) - California will issue $11 billion in short-term debt this spring, an amount state officials called a nationwide record, to pay its bills while legislators try to devise a budget for a state facing a revenue crunch.

"We are borrowing $11 billion so California will be able to pay its bills into the start of next fiscal year," State Controller Steve Westly said in a statement. "However, without a budget, we'll face another cash crisis and legal restrictions on which bills can be paid.

Gov. Gray Davis must present a revised budget plan this month based on vital April tax revenues before the legislature can try to hammer out a budget by the beginning of the fiscal year on July 1. Lengthy budget battles are common, however, and last year lawmakers took until September to hammer out a final spending plan.

"Everyone in the Capitol needs to be aware that this is a short-term cash solution. It does not solve the budget crisis and it does not eliminate the need for an on-time budget."

Last month, Westly said the state would borrow between $9 billion and $11 billion to help repay an outstanding $12.5 billion note sale and to ensure the state had enough cash when the new fiscal year begins on July 1.

The figure of $11 billion is the maximum allowed under state budget formulas for the spring. Last spring, California issued what was then a record $7.5 billion of the so-called revenue anticipation warrants, which are repaid in the next fiscal year, to ensure the state had enough cash.

"We believe it is the largest of this kind of borrowing nationwide," an official in the Controller's office said. "We're not proud of it."

The announcement follows approval by the California state legislature on Thursday of a $4.6 billion package of budget cuts and pension bonds. The plan, passed in both the Senate and the Assembly with little debate, would save $3.6 billion in fiscal 2003-04 and about $1 billion the following year.

Also on Thursday, the California Supreme Court ruled that state workers paid by the hour should get only minimum wage of $5.15 if a budget is not passed by July 1.

Westly said he would travel to New York later in the month to talk to investors and rating agencies about the borrowing. The state expects to receive the money in early June.

California's budgetary woes stem from a weak economy and a lackluster stock market that have hurt tax revenues and left the state facing a shortfall estimated at between $26 billion and $35 billion over the next 13 months.

The crisis has already led to costly credit downgrades.

[Calpernia]

That is nothing. Kalifornia has handled the more serious issues that all the other states ignore. They focused on peanut butter and jelly and bake sales: http://www.freerepublic.com/focus/f-news/903897/posts

They other 49 states should be envious of the leadership KA shows.

[LS]

Rush mentioned something---and I missed the source---about California trying to "borrow" against the state's employee pension fund. I didn't see that in this article. Did I just miss it?

[Reeses]

Gray Davis spent $80,000,000 in other Democrats money to preside over this Democrat mess for 4 years. Isn't raw political ambition something? He wanted this job really really bad.

[Swanks]

I Really believe the Democrats at the state couldn't care less about the fate of Kalifornia. They think they have the best of both worlds:
Spend like there's no tommorrow: for all their social programs, all supporting trad'l Dem constituants.
If (when) the State goes broke, anarchy reigns, people in the steets demanding the return of "theirs".

They dream they can then usher in a new order, devoid of any form of democracy.

[Great Dane]

Guess it's time to hit the smokers again, seems to work for CA every time.

[NormsRevenge]

$11 Billion ... 8-o

It's OK, It's for the chil'run. ( The debt, that is!)

[NormsRevenge]

Ping

[glorgau]

Keep Davis and the Dems in there. The longer it gets avoided, the deeper the schandenfruede. Things are shaping up quite nicely for the Pubs in 2004.

[Steel and Fire and Stone]

The unbelievably sad thing about this (for us Californians) is that the state is $20 to $30 BILLION dollars in the whole THIS YEAR, yet the Democrat controlled (read: dictatorship) Legislature is increasing spending even higher, as if there were no debt. They're chipping a way at the edges of the debt with accounting gimics, and are on their way to a set of massive tax hikes, yet the spigot is still wide open. You want to know how they're "downsizing" education? They just offered my brother-in-law about $100K to retire early. He makes nearly $80K now, and will pocket the check AND get a 3/4 retirement, after about 15 years teaching (30 years over all in 4 different states). Sweet deal, huh? The state education alliance (corrupt administrators and teacher-unions) are going to ensure that their no layoffs by making them prohibitively expensive. Oh, by the way, he's coming back in as a "consultant" to "mentor" junior teachers.

If they can trim $10 Billion this year, what will they do about next year when the tab for ANOTHER $30 BILLION (Plus debt service, plus higher interest because our bond ratings are descending into junk bond status) comes due? When this state owns $50 Billion, $100 Billion, etc., how will the debt ever be repaid. We can't "grow" our way out of it, because every business that can is moving out of state, in part (shifting employees, laying off Californians, etc.), and NO NEW BUSINESS is starting up.

It already reminds me of the 1991 recession, i.e. many, many commercial centers are vacant, strip malls are empty, etc.. The only difference is the traffic. Since the County I live in (as with most CA Counties) gets only about $.60 of each transportation dollar from the state, and then spends 85% of that on (empty) mass transit vehicles, there have almost no road improvements since I got out of college in 1980, except for privately funded toll roads. Unlike 1991, when I could drive during prime-time business hours anywhere in Southern California with little congestion, our freeways are clogged about six hours in the morning, and four hours in the afternoon.

Hey.. but at least its sunny out here!!

FReegards, SFS

Califorians: Do something about this! You have no excuse!

[Steel and Fire and Stone]

note: "is $20 to $30 BILLION dollars in the whole THIS YEAR" should have read "is $20 to $30 BILLION dollars in the hole THIS YEAR". The internet brings out all my vices, including my educational deficiencies.

[FITZ]

It doesn't look too good ----- maybe you could bring in more illegal aliens ---they say immigration is very good for the economy. I sure hope Rick Perry can fight off no new taxes for Texas ---but it's not looking too good ---the border area is making demands for new taxes.

[NormsRevenge]

Oh Please! Don't say the "FIRE" word. I heard a few days ago that we shipped a large number of bulk water carriers to the Middle East and thus are going to be stretched thin should the West start to burn badly this year. Of course, that would be more fuel to add to the flames of the fire and President Bush would get blamed.

[green team 1999]

bump

[NormsRevenge]

LOL ... Bill Clinton.. The Man who would be King (Martin Luther, that IS!)

[Ernest_at_the_Beach]

Thanks!

calgov2002:

calgov2002: for old calgov2002 articles. 

calgov2002: for new calgov2002 articles. 

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[Kozak]

California's budgetary woes stem from a weak economy and a lackluster stock market that have hurt tax revenues and left the state facing a shortfall estimated at between $26 billion and $35 billion over the next 13 months.

Not one word about the fact the state spends money like a drunken sailor.