Last Friday, Gov. Jerry Brown (D) signed a bill (SB 95) designed to help the state avoid cash flow problems by borrowing $865 million from earmarked funds, the Sacramento Bee's "Capitol Alert" reports (Barnidge, "Capitol Alert," Sacramento Bee, 2/5).
Background
State Controller John Chiang (D) recently said state officials would need to find $3.3 billion to pay for priority programs from Feb. 29 to April 13.
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.
In addition, he 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 (California Healthline, 2/1).
Details of the Law
The law allows Chiang to borrow $865 million from various internal accounts.
The internal borrowing provisions should provide the state with enough money to operate until the bulk of its tax revenue arrives in the spring, according to the AP/San Jose Mercury News.
Chiang said the law should help the state avoid issuing IOUs or delaying tax refunds to address the cash shortage (AP/San Jose Mercury News, 2/3).