The longer California goes without a budget, the longer it can go before making a short-term cash borrowing.
That’s the word from the state controller’s office, and while it might appear paradoxical on the surface, it makes some sense upon further review.
There is no question among finance officials that at some point in the relatively near future, the government will need to make a cash-flow borrowing in the $10 billion range.
But the state is now 10 weeks overdue to adopt a budget for fiscal 2009. And without a budget, there is no authority to pay many of California’s financial obligations.
Through July and August, the state could not make $4.25 billion in payments due to groups like vendors, nonprofit providers of health care and day care, schools, community colleges, and college students, according to state Controller John Chiang.
Largely for that reason, as of the end of August, Chiang reported that the state has $5 billion more in unused borrowable resources than estimated in the governor’s May revise budget proposal, for a total of $9.6 billion.
“While August receipts were lower than expected, the state will still have sufficient cash to make its payments through most of October,” Chiang said in a statement.
With no end in sight to the budget stalemate, finance officials are holding off on the cash flow borrowing, which could take the form of the more traditional revenue anticipation notes issued by the state treasurer’s office, or less-secure and more costly revenue anticipation warrants issued by the controller’s office.
“They’ve kind of delayed the Raw financing schedule because, frankly, the need for a Raw will be determined after we see what a budget looks like,” Chiang spokeswoman Hallye Jordan said Wednesday. “As long as we don’t have a budget, there is no need to do any borrowing.”
After a budget is actually finalized, Jordan said, officials will know what shape the financing will take — whether it will be Raws, Rans, or a combination.