SAN FRANCISCO — Get cracking on the budget. Or California faces another ugly cash crisis.

That was Controller John Chiang’s message Friday in a letter addressed to Legislative leaders and Gov. Arnold Schwarzenegger.

His review of Schwarzenegger’s recent budget proposal makes it clear that it is important to act quickly to avert a cash crisis, Chiang said.

“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,” Chiang wrote. “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.”

The state’s cash position is actually better than it was at the same point last year, he said, but it’s still pretty bad.

If no actions are taken, the state will be $197 million in the red on April 1, according to Chiang, with resources to pay bills not expected to return to safe levels until April 21.

Because his policy is to keep a “prudent minimum” of $2.5 billion available, the controller said $2.7 billion in cash management solutions are needed.

Schwarzenegger made his budget proposals Jan. 8, at the same time declaring a fiscal emergency that calls for lawmakers to take action to deal with imminent budget problems within 45 days.

The governor’s budget proposals only provide $1.3 billion in cash management solutions, Chiang said, which would put the state more than $1 billion below the “prudent minimum.”

The problem for fiscal 2011, which begins July 1, will be even larger if no solutions are found, he added. The state’s current trajectory will find it with a $1.1 billion negative cash balance by July 29, Chiang said in the letter, which was accompanied by a chart that appropriately uses a red line to trace California’s cash projections.

Chiang raised the specter of a repeat of last year, when he issued about $2 billion in IOUs to a variety of creditors to preserve cash for creditors with higher legal and constitutional protections, such as bondholders.

“Only you can prevent history from repeating this year,” the letter said. “If solutions are slow to emerge and if they are neither credible nor sustainable, California will once again be unable to timely meet all of its payment obligations and my office will be forced to seek costly emergency financing, or conserve cash by delaying payments or issuing IOUs.”

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