California has enough cash to avoid issuing IOUs until at least October, state controller says
Reporting from Sacramento — California has sufficient cash in its dwindling treasury to avoid issuing IOUs until at least October, a reprieve from previous projections that the scrip was imminent, the state controller said Thursday.
As California concluded its 10th week of the fiscal year without a budget, Controller John Chiang credited an unexpected drop in state spending for a slight cash cushion.
“For the time being, Californians will be spared the pain and expense of a second round of IOUs,” Chiang said in a statement. In the summer of 2009, the state was forced to issue 450,000 IOUs worth $2.6 billion to remain solvent.
“But the budget gridlock continues to harm thousands of Californians while hampering our economic recovery,” Chiang said.
Without a budget, there are many bills the state cannot legally pay. Chiang’s office estimated them at $3.35 billion in July and August and $3 billion this month. Among those not being paid are businesses that contract with California; community colleges; health clinics that serve the poor; and low-income students who have been awarded certain grants.
The state does not issue IOUs for bills it cannot legally pay, and Garin Casaleggio, a Chiang spokesman, said the volume of such bills has been higher than anticipated. The state spent $1.2 billion less than expected from June through August as departments cut costs. And tax collections outpaced projections by 3.9% in August.
State leaders, meanwhile, remain deadlocked over how to balance the budget.
On Thursday, Gov. Arnold Schwarzenegger left on a six-day trade mission to Asia.
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