John Chiang: California’s books still look good

California took in $15.03 billion in revenue in April – $119.9 million short of estimates, but still leaving the Golden State in relatively solid financial condition, state Controller John Chiang reported today.

Total revenues for the first 10 months of the fiscal year exceeded Gov. Jerry Brown’s January projections by $4.6 billion (6.1 percent), due largely to $4.4 billion (8.5 percent) in better-than-expected personal income tax revenue.

“We’ve reached an important milestone in California’s economic recovery. For the first time in nearly six years, we closed out a month without borrowing from internal state funds to pay our bills,” Chiang said in a news release. “But, there remains significant debt that must be shed before we can claim victory and these unanticipated revenues provide us with an important opportunity to take further steps toward long-term fiscal stability.”

Chiang said California had to borrow at unprecedented levels over the past six years from its own internal special funds and from Wall Street to meet its payment obligations; the state also withheld some payments and used IOUs for only the second time since the Great Depression. June 2007 was the last time the State was able to pay its bills without leveraging its internal funds.

California ended the last fiscal year with a $9.6 billion cash deficit, but April 30, that deficit narrowed to $5.8 billion, Chiang said. The gap is being covered by $10 billion in external borrowing, which the state will start repaying later this month.

Personal income taxes for April came in $275 million (2.2 percent) below monthly estimates outlined in the governor’s budget, due mostly to fewer returns filed and more refunds paid out than expected in the month of April. But corporate taxes for April were $6.6 million (0.5 percent) above monthly estimates and sales tax receipts were $113.4 million (26.6 percent) above estimates.


NRCC launches phone calls against McNerney

The National Republican Congressional Committee today announced it’s robo-calling people in Rep. Jerry McNerney’s district to highlight his “continuing government spending spree with money borrowed from foreign countries like China.”

“While families throughout California have to cut back and live within their means, Jerry McNerney continues to support Democrat policies that spend money we don’t have and borrows money from countries like China,” NRCC Communications Director Paul Lindsay said in a news release. “These calls highlight what McNerney seems to forget, which is that there are real consequences to continuing his policies that borrow $4 billion a day to fuel his addiction to government spending. As growing debt, interest and inflation threaten the economy, McNerney’s California constituents simply want to know when he will stop burdening them with more debt.”

The call’s script is as follows:

Hello, I’m calling from the National Republican Congressional Committee with an important alert about your Congressman Jerry McNerney. Thanks to McNerney’s addiction to spending, the federal government borrows $4 billion every day. That’s given us fourteen trillion dollars in debt on the backs of our children and grandchildren. And Jerry McNerney is making it worse. He voted for another Pelosi budget that would strangle our economy with more spending, more debt and more borrowing from China. Call Congressman McNerney at 202-225-1947 and tell him to stop spending your money. Paid for by the National Republican Congressional Committee. Not authorized by any candidate or candidate’s committee. 202.479.7000.

“The Washington Republicans who are bankrolling this baseless attack are the same people behind the radical budget plan to end Medicare as we know it, slash education funding for our kids’ schools, and give more handouts to large corporations that ship American jobs overseas,” McNerney spokeswoman Sarah Hersh replied today. “This charade is nothing more than a partisan attack at a time when we should be focused on ways to create jobs and pay down the debt. Congressman McNerney has a strong record of fiscal discipline and is committed to finding budget solutions that work, but without hurting children and seniors who count on after school programs and Medicare.”

It’s not as if the Democratic Congressional Campaign Committee doesn’t do likewise. The DCCC on Tuesday announced automated phone calls to constituents of 42 House Republicans – none in California – holding them “accountable for choosing to end Medicare rather than end taxpayer giveaways for Big Oil making record profits or tax breaks for the ultra rich.” That call’s script:

Hi, this is Claire from the Democratic Congressional Campaign Committee calling about Congressman XXXXXXX’s vote to end Medicare. Everyone agrees we must cut spending and tighten our belt, but Congressman XXXXXXX has made all the wrong choices. He actually voted to end Medicare, rather than end taxpayer giveaways for Big Oil making record profits or tax breaks for the ultra rich! Seniors who pay a lifetime into Medicare deserve the benefits they’ve earned. Under the XXXXXX-Republican plan Medicare ends, benefits to seniors are less, and costs to seniors increase – in order to pay for Big Oil taxpayer giveaways and the ultra rich’s tax breaks. America is built on shared sacrifice. XXXXX is choosing to place the burden on seniors. That’s not right. Please call Congressman XXXXXX at (XXX) XXX-XXXX and tell him to keep his hands off our Medicare!


California’s money well runs dry

Payments to state contractors? Aid to the aged, blind and disabled? Your state tax refund?

Not gonna happen on time — or at all, unless legislators and the governor do their jobs — State Controller John Chiang said today. Cash shortages expected in February are forcing him to delay critical payments next month.

“For months, I have warned State leaders that our cash flow will be in serious danger this Spring. Without corrective action from the Governor and Legislature, there is no way to make it through February unscathed,” he said.

Actually, the state’s General Fund cupboard has been bare for 17 months; California has been skating by, borrowing internally from special funds and from Wall Street. But now that money’s running out, too, and Chiang projects the state will be at least $346 million short in February.

The state constitution, federal law or court rulings put education, debt service and certain other payments first in line for what little is left, so Chiang intends to put a 30-day delay on everything else that’s supposed to be paid out of the General Fund. Besides the things I mentioned up top, that’ll include disbursements to State agencies that fund critical public services ranging from public safety to health and welfare.

“I take this action with great reluctance,” Chiang said. “I know it will put many California families who rightfully expect their State tax refunds in a desperate position. Individuals who already are vulnerable will be hit hard. Small businesses that don’t get paid may have to lay off more workers. Rather than helping stimulate the economy, withholding money from Californians will prolong our pain and delay our economic recovery.”

And this will get us through a few months, but won’t do anything to solve the problem, he added. “Only the Governor and the Legislature have the power to avoid this drastic and painful path. They have a narrow window of opportunity to quickly enact a sound solution to bridge the State’s cash and budget deficit, and I urge them to seize it.”

And if they don’t, he said, these payment delays might have to be extended.