Legislative leaders meet with gov.

November 14, 2008 6:12:29 PM PST
The crisis on Wall Street is having a direct impact on California's budget woes. The state needs to secure $7 billion in loans right now. The crisis on Wall Street is having a direct impact on California's budget woes. The governor held an emergency meeting late Wednesday afternoon.

Lawmakers are usually back in their home districts this time of year, so it is rare the governor calls some of them back to the capitol, unless it is an emergency.

With a global financial crisis contributing to California's mounting problems, Governor Schwarzenegger summoned Legislative leaders from both parties and the state's money experts to his office. The first order of business is dealing with how California will pay its bills, when it runs out of cash October 29th.

"We want to make sure that we are always ahead of the game and that we react quickly, that we're together as a team," said Gov. Arnold Schwarzenegger (R) of California.

State leaders are focused on Wall Street and whether California can get a short-term $7 billion loan until the bulk of tax receipts start arriving in the spring. The credit markets are still tight, but just on Wednesday, one state was able to get a similar loan, a Revenue Anticipation Note, also known as a RAN.

"Massachusetts was able to get their RAN. So we believe we will too. It might take a couple of weeks, but that's what we're focused on now," said Assembly Speaker Karen Bass (D) of Los Angeles.

However, a Wall Street loan hardly solves California's financial problems. September's revenue totals are nearly a billion dollars short of projections. The state's finance department estimates that deficit will balloon to $3 billion during the remaining fiscal year, even with a Wall Street loan.

So state-funded programs are bracing for more cuts. Transportation officials are especially nervous. The sales tax on gasoline totaling $1.4 billion meant for road projects was untouched in the last round of budget cuts. They worry that's the first thing state leaders will raid.

"Your commute would get worse. It wouldn't get better. If you're looking for that carpool lane to be built, that probably would not be put out to bid. And all the jobs that would be created would not happen," says Dave Ackerman, a transportation lobbyist.

California Treasurer Bill Lockyer is set to test the credit markets next week. Instead of the entire $7 billion, he'll settle for $4 billion and worry about the rest later.


Load Comments