California Delays $2.9 Billion School, County Payments Amid Budget Impasse, page 1

California Delays $2.9 Billion School, County Payments Amid Budget Impasse

www.bloomberg.com

California will delay paying $2.9 billion of subsidies to schools and counties in September, a month earlier than projected, to save cash amid an impasse that has left the state without a budget for 54 days.

The state’s top financial officials -- the controller, treasurer and finance director -- told lawmakers today that the 90-day deferrals need to start next month instead of October to make sure there’s enough money to pay bondholders.

IOU 2 is now in the redux stage, look out California your Terminator leader is at it again. What a colossal mess ! Add this to the recent new 500 million dollar school (arguably prepaid and without state money I believe), massive teacher layoffs and a litany of other problems and you have a very serious problem. The people running this circus are completely lost and hanging on for dear life it would seem. At what point will IOU's simply be disregarded ? Who will falter first, California or Greece ?

The state, with the world’s eighth-largest economy, issued $2.6 billion of IOUs last year after a similar budget stalemate. That was only the second time since the Great Depression that California had to use warrants to cover costs and conserve cash.

In fairness though:

Schwarzenegger’s budget office opposes the IOU bill because it may reduce the state’s cash position to less than projected, said Palmer, the spokesman. Draining the state’s coffers would defeat the purpose of the warrants, he said.

brill

www.bloomberg.com
(visit the link for the full news article)

[edit on 23-8-2010 by brill]