Thanks to Stalemate, State Reaps $300,000 a Day in Interest

As California’s budget impasse drags on, its unspent income is rising--and earning a handsome profit.

Because the state by law cannot pay its bills as long as it has no budget, revenues are mounting up and are now $1 billion higher than they would be in normal times, state Treasurer Thomas W. Hayes said Thursday.

Hayes said the state so far has earned $1 million in interest on the money, and interest income is accumulating at a rate of $300,000 a day.

“We are rolling over $1 billion in bills that have not been paid. We have the cash in the bank and will earn interest on it until there is a budget and we can again legally pay our bills,” Hayes said.

Most of the interest income will be redeposited in the state general fund. Some of it will be added to the money the state owes cities and counties, so the local governments will get slightly fatter checks than usual--once the state starts sending out checks again.