On January 31, John Chiang, Democrat State Controller of California, sent a letter to the budget leaders of legislature to forewarn them that the money of the Golden State could evaporate as early as March 8. Mr. Chiang is in a dilemma as he said that California officials need to find $3.3 billion to cover priority programs between February 29 and April 13.
According to Chiang, on December 31, 2011, California had raked in about $2.6 billion less than what the lawmakers assumed in California's budget plan.
Administration officials under Governor Jerry Brown, Democrat, said the spending gap derives partly from the courts blocking various cuts to welfare and healthcare programs. The Brown Administration also addressed miscalculations of savings from the prison inmate realignment initiative.
Chiang is actually optimistic that he can manage the upcoming deficit without resorting to tax refund delays, IOUs and other drastic legislative measures. "And other steps we must take -- quickly and collaboratively -- in the coming days," Chiang said.
According to legislative leaders, solutions are well in progress. The State Assembly of California passed a bill on Tuesday which permits short-term borrowing from accessible funds held by certain state departments. State Senator Mark Leno, Democrat, mentioned that the state is not facing a money crisis, but a money shortage. He feels this will fix the dilemma.
As Chiang asks for $3.3 billion in cash before March 8, H.D. Palmer, spokesman for the Governor's Finance Department, stated that California financial experts have met regularly to lay the groundwork.
Palmer explained that this solution to the dilemma will entail short-term borrowing from the University of California system and state colleges; the solution also includes delaying payments to state service providers, most of which is medical.