California Controller John Chiang yesterday said the state needs to issue $7 billion of revenue anticipation notes this year.
The determination clears the way for state Treasurer Bill Lockyer to move forward with short-term borrowing this month.
“There is no question that today’s economic uncertainties and a tight credit market may create enormous challenges to the state to borrow at one time the entire $7 billion I have determined the state will need to meet its obligations through the end of the fiscal year,” Chiang said.
Last month, California lawmakers passed a budget almost three months after their deadline, following a standoff between Republicans lawmakers who wanted to close a $15 billion budget deficit by cutting spending and Democrats who wanted tax increases. They came up with what Lockyer described as a “banana republic budget” that closed the gap mostly through accounting gimmicks.
The late budget forced Chiang and Lockyer to scramble to determine the state Ran needs and to market the deal quickly in the midst of the deepest credit crunch since the Great Depression.
“The difficulty is also compounded by the short window of time between now and the final days of October, the period in which my office has projected the state will likely run out of cash,” Chiang said.
