State Controller John Chiang says Governor Schwarzenegger isn’t bluffing about the enormity of the state’s budget crisis. Chiang told the “League of California Cities” today (Wednesday, 6.3) that the governor’s numbers are accurate and he’s urging lawmakers to act quickly to erase the state’s 24-billion dollar deficit.
Capital Public Radio's Steve Shadley reports...
State Controller Chiang says lawmakers must act before June 15th
if he’s expected to make payments in a timely manner to state agencies and creditors. He says if a budget deal isn’t approved by then he’ll have to delay some payments starting with local governments, programs for the blind and disabled and for Cal-Grants. And, Chiang warns that making late payments will make it harder for the state to borrow money...
“When you have a default, which is typically like a bankruptcy, but we are not allowed to file bankruptcy on behalf of the state of California...who’s going to loan the state money? Imagine you are the person filing bankruptcy. Is the bank going to lend you additional money? The answer is no. Then you would have all this litigation because all of the creditors are suing to get their money so it would be total chaos...”
Chiang says it’ll be easier to secure loans if lawmakers at least approve some budget measures before June 15th
Democratic legislative leaders say it may take longer than that to approve ALL of the bills they’ll need to deal with the cash shortage. Chiang predicts the state will run out of money in July if lawmakers and the governor don’t approve a complete budget package before then.