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State Controller John Chiang says that California's cash position is "marginally better than it was one year ago," but it's still precarious. In a letter sent today to the governor and state legislative leaders, Chiang says that things will really get tight from March 30 to April 21. Meaning what? Meaning that on March 30, the state will only have $1.2 billion of cash on hand, less than half the amount that Chiang's office considers prudent. By April 1, California will actually be in the red by $197 million. "Our resources to pay bills are not expected to return to safe levels until April 21," he writes. More from the letter:
Even with the passage of the Governor's proposed budget solutions during the current special session, at least another $2 billion in cash solutions are required to protect our cash balance in the current fiscal year alone. Should you fail to make any progress on the combined $19.9 billion two-year budget problem during the current special session and allow a stalemate to continue into the new fiscal year, you will once again face the difficult task of averting a cash crisis beginning in July.
[CUT]
There is limited time for you to act. Some may suggest that you wait because California's economy is turning around and the May Revision will contain more reliable revenue and expenditure forecasts for these two fiscal years. While I agree California's economy does show very modest signs of recovery, I strongly disagree that the General Fund's cash problem can wait another four months or more before action is required.
You can see from the chart that the red ink would really grow if the state doesn't act on the deficit by mid-summer (the fall looks pretty bad). But the numbers aren't all that great even if the governor's proposals are adopted (see blue line). Here's the letter and the chart.
Mark Lacter created the LA Biz Observed blog in 2006. He posted
until the day before his death on Nov. 13, 2013.