On Tuesday, State Controller John Chiang (D) sent a letter to the Legislature's budget leaders to alert them that California could run out of cash by early March, the Sacramento Bee reports.
Chiang said state officials need to find $3.3 billion to pay for priority programs from Feb. 29 to April 13 (Yamamura, Sacramento Bee, 2/1).
Details of the Cash Shortage
As of Dec. 31, 2011, the state had taken in about $2.6 billion less than what lawmakers assumed in the state's budget plan, according to Chiang (Gardner, U-T San Diego, 1/31).
In addition, Chiang said the state is spending $2.6 billion more than what lawmakers had projected.
Brown administration officials said the spending gap stems in part from courts blocking cuts to health and welfare programs. The administration also pointed to miscalculations of savings from the prison inmate realignment initiative as a reason for the budget gap.
Chiang said, "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" (Sacramento Bee, 2/1).
Response
H.D. Palmer -- spokesperson for the Department of Finance -- said the state is planning to postpone Medi-Cal payments in the short term (U-T San Diego, 1/31).
Meanwhile, the Assembly Budget Committee on Tuesday approved legislation (SB 95) that would let state finance officials borrow $865 million in special funds and apply it to the general fund (Buchanan, San Francisco Chronicle, 2/1).