Vendors are getting stiffed by state

September 5, 2008 7:47:54 PM PDT
You know what happens when you don't pay the state what you owe, but what about when it happens in reverse? On Friday, people and companies doing business with the state, are getting stiffed because of the budget crisis.

"This is just obscene," says Cyndy Mulhern, manager of Superior Produce and a small business owner.

Mulhern shows us nearly $1 million worth of invoices the state has not paid since the new fiscal year began July 1st. Her company, Superior Produce, delivers thousands of pounds of fruits and vegetables to state prisons daily.

"We can't pay our vendors, and we're barely able to pay the rest of our bills," says Mulhern.

Mulhern has already spent the $250,000 equity line of credit she borrowed against her house. She's delaying paying her bills until more money comes in.

"Now we're having to go and get an extension on our line of credit for another $200,000. That's about all we're going to be able to borrow and after that, that's it!" says Mulhern.

Superior Produce is just one of the numerous small businesses getting stiffed by the state until lawmakers and the Governor finally agree on a budget. And there's no sign the stalemate will end soon as Democrats, Republicans, and the Governor stand by their own version of the state spending plan.

"We're at an impasse. So you really have three points of view. We have to have one. I'd settle for two right now," says State Senator President Don Perata (D) Oakland.

"Look, I don't think anybody can take any form of pride in being here this late and not getting our job done. So I would say the Legislature clearly has a black eye in not getting the budget done," says Assembly member Mike Villines (R) of Clovis.

Because the state has started 17 of the last 21 years without a budget, Mulhern expects delays. Still, this is the longest budget impasse ever; her credit lines are maxed out; and she really needs the state to pay her so she can pay her suppliers.

"You can't run a business this way. How do they have the audacity to think they can do it?" says Mulhern.

The state must pay late payment penalties on their bills, but businesses will likely use the extra money to pay the interest on their loans, if they can stay in business long enough to see the payments.


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