National

California is almost out of ways to pay bills, fund programs

SACRAMENTO, Calif. -- This is what life was like the last time California government had at least as much money in its coffers as it was spending on a daily basis:

• The leading presidential campaign contribution collector in the Sacramento metro area was GOP contender Mitt Romney.



• Baseball slugger Barry Bonds was 26 days from setting the all-time home run record.



• "Harry Potter and the Order of the Phoenix" had just set a one-day box office record for a film opening in midweek.



• The Dow Jones industrial average was at 13,861.



It was July 12, 2007, and since then California has been living on borrowed money.

As in $21.5 billion worth of borrowed money, according to state Controller John Chiang: $16.5 billion borrowed from some of the state's 1,000-plus special funds, plus $5 billion in "revenue anticipation notes," which are basically money borrowed from private investors.

But, Chiang, whose office writes the state's checks, says California is about out of stopgap tricks to pay its bills and keep all its programs running.

It's Chiang's job to wrestle with the state's day-to-day cash-flow problems while legislators and Gov. Arnold Schwarzenegger haggle over the best way to close a humongous $40-billion gap between state spending plans and projected revenues over the next 17 months.

The controller says California is down to Plan D on its checklist of paying bills. Its cash reserves are piddling; the special funds it borrows from are tapped out, and no one in the private sector is going to lend it any cash at a reasonable interest rate.

That leaves what in state government circles are called "payment deferrals" and what in real life is called "stiffing your creditors."

Read the complete story at sacbee.com

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