California's Treasurer Bill Lockyer tells the NYT this morning that a $7 billion emergency loan from the federal government would have been a last resort in the event that the financial rescue plan did not pass the House. He also suggested that the recovery package would help open things up. “We want to make sure we exhaust every avenue,” he said.
Typically, he said, the state gets routine short-term loans in the fall to cover its bases until state coffers refill in the spring from tax revenue and other sources. But the shuttered credit market has upended the budgeting. And Mr. Lockyer said that even if the credit markets loosen, it could cost more to borrow, noting that in the weeks leading up to the crisis borrowing terms had increased substantially.
The warning that Gov. Arnold Schwarzenegger sent to Treasury Secretary Hank Paulson about the need for a loan came up during this morning's House debate, and chatter is that it could have pushed a few lawmakers into voting yes.