The Governator just asked the Treasury for a $7 billion loan.

[randomness]

From http://www.latimes.com/news/local/politics/cal/la-fi-calif3-2008oct03,0,6959549.story:

California Gov. Arnold Schwarzenegger, alarmed by the ongoing national financial crisis, warned Treasury Secretary Henry M. Paulson on Thursday that the state might need an emergency loan of as much as $7 billion from the federal government within weeks.

The warning comes as California is close to running out of cash to fund day-to-day government operations and is unable to access routine short-term loans that it typically relies on to remain solvent.

"Absent a clear resolution to this financial crisis," Schwarzenegger wrote in a letter Thursday evening e-mailed to Paulson, "California and other states may be unable to obtain the necessary level of financing to maintain government operations and may be forced to turn to the federal treasury for short-term financing."

The cash needs to be in the state's bank account by Oct. 28 to be available to fund a scheduled $3-billion payment to more than 1,000 school districts.

Comments

[meepodeekin.livejournal.com]

Wow. When I lived in CA we had high schools going bankrupt and closing for the year in March, but I think November would be a new record. WTH was the Governator doing with his government's own money?

[r-ness.livejournal.com]

The problem is that budgeted payments need to go out before the tax revenues are fully in. In this case it isn't an issue of California spending more than was budgeted, it's that they can't get any normal short-term loans which would allow them to make payments they've already committed to making.

[meepodeekin.livejournal.com]

Wow. If the government of CA's credit isn't good enough for a 6 month loan, whose is?

OTOH, if this were a person and not a state I would be mocking them soundly for living paycheck-to-paycheck to such an extent as to consistently need to use a paycheck loan service for EVERY SINGLE pay cycle. That really is not sound financial planning.

[dianec42.livejournal.com]

I would be mocking them soundly for living paycheck-to-paycheck to such an extent as to consistently need to use a paycheck loan service for EVERY SINGLE pay cycle

Well, it is California. If anyone can explain to me how this state ever got so screwed up, I'd be both appalled and fascinated to hear it.

[agrimony.livejournal.com]

Of course, when you only get paid once a year, it's hard not to live paycheck to paycheck.

Here's a quote from the NYTimes, which explains this better than I just did. :)

[r-ness.livejournal.com]

"Typically, he said, the state gets routine short-term loans in the fall to cover its bases until state coffers refill in the spring from tax revenue and other sources.

"But the shuttered credit market has upended the budgeting."

(from http://www.nytimes.com/2008/10/04/us/04calif.html)

[whitebird.livejournal.com]

It doesn't help that there's already a backlog of three months of payments for a lot of stuff because of the budget not passing until, what, yesterday? The day before. Some stupidly insane amount of time. During which, many state employees and services were not paid.

Stupid gits.