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Move over Greece. California's back and broker than ever!
While austerity-ridden Greece continues its indefinite domination of global headlines, the Golden State and its money troubles popped up again this Wednesday, surprising Californians who thought their state was solvent ... or at least solvent till June.
According to the
Sacramento Bee, California will run out of cash by early March if the state does not borrow more money and delay some payments. Crunching the numbers, the state's Controller John Chiang said state leaders must locate $3.3 billion to ensure California has sufficient cash to pay for priority programs between Feb. 29 and April 13.
Fine. We'll say it. Chiang needs some
ka-ching and he needs it now. At last check in 2010, California was the ninth largest economy in the world with a $1.9 trillion GDP. Greece came in 32nd with a GDP of $302 billion.
"I believe the upcoming shortfall can be effectively managed without resorting to IOUs, tax refund delays and other drastic measures with (legislation) and other steps we must take - quickly and collaboratively - in the coming days," Chiang wrote Tuesday to the Legislature's budget committee chairmen.
The big problem, says the Bee, is that state has received $2.6 billion less than what Gov. Jerry Brown and Democratic lawmakers assumed in their highly optimistic budget last year. Meanwhile, according to Chiang's calculations, the state is spending $2.6 billion more than state leaders planned.
Ouch! That's quite a hole. Governor Moonbeam could probably tax all those new
Facebook millionaires all the way to Mars, let alone Nevada, and that still won't fill it.
The buzz from the Bee is that California's leaders plan to raise the necessary billions by borrowing from some of the state's transportation funds, delaying Medi-Cal payments and hitting up Wall Street for a big fat short-term loan. And because the state's credit is deteriorating, Chiang & Co. would also ask the highly rated
University of California to borrow $200 million on its behalf.
You see California school kids! You don't have to study Greece to learn to act like a deadbeat. You can see all the same slippery maneuvers right from your classroom windows.
Written by Gregg Greenberg in New York.