Calif. Tax Refunds To Be Delayed: Out Of Cash

Calif. tax refunds to be delayed starting Feb. 1
My Way
SACRAMENTO, Calif. (AP) – California’s controller says he will begin a 30-day delay on tax refunds and other payments starting Feb. 1 because the state is running out of money.
Controller John Chiang said Friday he must delay $3.7 billion in payments next month because lawmakers have failed to address California’s growing deficit.
With a $41.6 billion shortfall over the next year-and-a-half, the state is on the brink of issuing IOUs.
Chiang says his office must continue education and debt payments but will defer money for tax refunds, student aid, social services and mental health programs.
A severe drop in revenue has left the state’s main bank account depleted. The state had been relying on borrowing from special funds and Wall Street investors; those options are no longer available.

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Additional write up…………
California could run out of cash by Feb. 1, analysts say
The Sacramento Bee
The state’s nonpartisan Legislative Analyst’s Office confirmed Wednesday that California could run short of cash as soon as Feb. 1 unless lawmakers and Gov. Arnold Schwarzenegger immediately cut spending and raise revenues.
The LAO’s Michael Cohen and Jason Dickerson said the following:
• California faces the “double whammy” of a severe drop in revenues coupled with an inability to borrow because credit markets are frozen.
• The longer lawmakers and Schwarzenegger go without adjusting the budget, the more difficult it becomes to determine whom to pay.
Schools and creditors have first claim on the state’s revenues, while state worker salaries and benefits, Medi-Cal claims and court-ordered payments are among those with secondary priority. State Controller John Chiang has said the first groups to receive IOUs or delayed payments will include Californians awaiting state income tax refunds and companies that do business with the state.
• A prolonged budget dispute could force parties to file legal challenges to claim their share of state money.
• The LAO recommended that lawmakers allow internal borrowing from several state funds to add $2 billion to the state’s cash cushion. It also recommended that lawmakers defer some payments to local governments and schools to preserve cash.
• A delayed budget agreement would mean the state would have to pay interest on IOUs or other borrowing. Such costs add to the deficit and have not been factored into the governor’s budget.
Meanwhile, the California Transportation Commision delayed allocation of $293.5 million in funding for transportation projects because of cash problems.

Wild Thing’s comment…….
Ole Arnie better stop thinking like the Kennedy’s and start thinking like a fiscial conservative.
Given the choice between cutting pork and ripping off taxpayers due refunds, there’s little doubt which course Arnold will take.
When I livied in Calif. and I will always love the place for it’s beauty especially. But In 1994 the voters of California voted by a 59 to 41 percent margin for prop 187 which would have stopped government services and handouts to illegal aliens. One liberal judge blocked 187 from being implemented and the Governor, Gray Davis, would not pursue the case to the Supreme Court. The liberal courts make it impossible to implement any kind of change.