California scrambles to pay its bills with more borrowing
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Embedded in a Monday report from the California controller is a statistic showing just how much the state is straining to pay its bills before November’s vote on higher taxes.
Controller John Chiang, who manages the state’s cash flow, finished July with more than $18 billion in outstanding loans after using high-speed accounting to cover day-to-day expenses. That means he would borrow some money from the state’s 500-plus ‘special’ funds, used it to pay a bill and promised to repay it later when more tax revenue rolls in.
It’s a standard maneuver, especially at the beginning of the fiscal year, when expenses outpace revenues. But the controller leaned more heavily than usual on this tactic last month, tapping 81% of the money available for short-term borrowing, up from 48.4% in July 2011.
A spokesman for the controller, Jacob Roper, had a matter-of-fact explanation for the borrowing: “That’s the amount of special fund borrowing necessary to carry out the state’s budget.”
The $18 billion in outstanding loans includes $9.6 billion left over from June, as well as $8.5 billion in new borrowing in July.
H.D. Palmer, a spokesman for Gov. Jerry Brown’s Department of Finance, said the state has needed more short-term borrowing because it won’t get the extra revenue it needs until voters approve higher taxes in November. Brown is asking voters to increase the sales tax by a quarter cent and boost levies on the wealthy by one to three percentage points.
The controller’s short-term borrowing is separate from the loans taken out by the governor and lawmakers, which have also increased. There’s $4.3 billion in outstanding loans from special funds, a nearly six-fold increase since 2008.
-- Chris Megerian in Sacramento
Controller John Chiang and in 2011. Credit: Brian van der Brug / Los Angeles Times