Cash Crunch Looms for State

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(Sacramento, CA)
Tuesday, July 1, 2008
State Controller John Chiang has warned lawmakers if the budget stalemate drags into September, the state will be out of cash. Jean Ross with the California Budget Project examines the impacts of state spending on the poor. She says the pots of money used for internal borrowing are largely tapped out. She compares California’s situation to a family budget. “At the beginning of a family’s financial crisis, you have some cookie jars you can rob. Well, the state has robbed all the cookie jars a long time ago. So we are just working on a much thinner margin…” Ross has expressed concerns that fallout from the slumping economy and housing market will make it tougher for the state to borrow money elsewhere. And the State Controller says without a budget in place by early August, the state’s ability to do such borrowing will be limited and expensive.