(Corrects panel holding hearing in second paragraph.)
Jan. 31 (Bloomberg) -- California’s cash may be exhausted by March, Controller John Chiang said in a letter to lawmakers.
The nation’s most-populous state needs $3.3 billion to deal with liquidity needs for March and the first two weeks of April, Chiang said in the letter to state Senator Mark Leno and Assemblyman Bob Blumenfield, who lead the Joint Legislative Budget Committee. The Assembly Budget Committee began hearings today in Sacramento on the state’s spending plan.
Unlike 2009, when he was forced to issue IOUs to creditors, the controller said the current cash shortfall can be managed through payment delays, as well as external and internal borrowing. He urged legislators to pursue that course.
“Although this cash management plan relies on still more borrowing, payment delays and deferrals, we believe this is the most prudent and responsible course of action considering we have about four weeks before the advent of the cash shortfall,” Chiang said in the letter.
State receipts were $2.6 billion lower than forecast through Dec. 31, while expenditures were an equal amount higher, Chiang said.
The legislative panel voted to approve the internal borrowing recommended by Chiang at its meeting today.
--With assistance from Alison Vekshin in San Francisco. Editors: Ted Bunker, Pete Young.
To contact the reporter on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net.
To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net
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