Calif. tax refunds to be delayed starting Feb. 1

January 16, 2009 5:43:46 PM PST
State Controller John Chiang announced Friday that California's cash crisis will force him to delay some payments over the next month, including assistance to the disabled and tax refunds.

It's official, as the budget stalemate drags on into its 72nd day, California will not have enough money to pay all of its bills come February 1.

Chiang has no choice but to delay nearly $4 billion in checks next month.

"It pains me to pull this trigger, but it is an action that is critically necessary," said Chiang.

The impact of this that will hit the most Californians is a delay in state income tax refunds. They won't be mailed out for at least 30 days. For February, that's worth nearly $2 billion.

While the Franchise Tax Board usually processes returns as they come in, the agency legally does not have to send out checks until May 30, which is way too long for some people.

"The money we've overpaid, which is our money, is due to us. I think it needs to be paid to us and it should be paid to us in a timely fashion," said taxpayer Wendy Lokteff.

Needy families will also be hit hard; $300 million in cash grants won't be sent to programs they depend on like SSI/SSP, which helps the aged, blind and disabled.

Sherlie Megars worries about caring for her brother who has cerebral palsy.

"On the amount of SSI that my younger brother gets, he can't make it to the end of the month ever, ever, with enough food," said Megars.

College grants will be frozen and the state won't pay contractors for the services they're providing.

The last time the state's cash account was in positive territory was in July of 2007. Since then, California leaders have been borrowing from other parts of the budget and from Wall Street to stay above water.

Chiang has been warning for months that the February meltdown was coming because the state has run out of accounting maneuvers. Still, the governor and legislative leaders have failed to resolve the crisis.


Load Comments