California has enough cash to avoid issuing IOUs until at least October, state controller says
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.