View Full Version : California To Run Out Of Cash In One Month, Controller Warns
squarepusher
01-31-2012, 03:16 PM
http://www.zerohedge.com/news/california-run-out-cash-one-month-controller-warns?page=1
http://www.pensiontsunami.com/
If anyone is tired of the daily European soap opera with surrealistic tragicomic overtones, they can simply shift their gaze to the 8th largest economy in the world: the insolvent state of California, whose controller just told legislators has just over a month worth of cash left. From the Sacramento Bee: "California will run out of cash by early March if the state does not take swift action to find $3.3 billion through payment delays and borrowing, according to a letter state Controller John Chiang sent to state lawmakers today. The announcement is surprising since lawmakers previously believed the state had enough cash to last through the fiscal year that ends in June." ....uh, oops? But sure, fix the problem of excess debt by more "borrowing" why not. As for the math: "But Chiang said additional cash management solutions are needed because state tax revenues are $2.6 billion less than what Gov. Jerry Brown and state lawmakers assumed in their optimistic budget last year. Meanwhile, Chiang said, the state is spending $2.6 billion more than state leaders planned on." Quick, someone come up with a plan that involves subsidies and tariffs on China, or something else that deflects from what the source of the problem really is. Because the last thing that anyone in America would want to bring up is this thing called "responsibility" for their actions, or, as in now becoming the default case, the lack thereof. And why do that, when time spent so much more productively scapegoating this, and blaming that for one's own massive errors of judgment.
From the Bee (http://blogs.sacbee.com/capitolalertlatest/2012/01/controller-state-to-run-out-of-cash-in-march-without-action.html):
The Assembly budget committee is considering a bill today that would enable $865 million of borrowing from existing state accounts, Senate Bill 95. Chiang, after consultation with the Department of Finance and state Treasurer Bill Lockyer, is also seeking about $2.4 billion in delayed payments to universities, counties and Medi-Cal, as well as additional borrowing from outside investors.
Absent these actions, the state would fall below its prudent $2.5 billion cash cushion on Feb. 29, Chiang estimated. On March 8, the state would actually end up $730 million in the red. The state would be below the safe cash cushion for several weeks ending April 13, save for several days at the end of March.
With such actions, Chiang believes the state would not have to use IOUs or delay tax refunds, maneuvers that have been relied upon in previous years. But Chiang also said that "more cash solutions may be required if our revenues continue to erode or if disbursements significantly exceed estimates."
So 3 years after Lehman filed for bankruptcy, everyone in the world continues to be terminally insolvent, but because everyone is in the same boat, everyone pretends not to notice and the best thing is just to blame Meredith Whitney for telling it like it is, if not getting the timing quite right? But at least the Fed isn't about to print up a tsunami of dollar-equivalent ones and zeros.
Humanae Libertas
01-31-2012, 03:21 PM
Trust me, they'll find a way to blame Capitalism, the free market, and people. But no, they'll never blame the state, government or the idiotic state legislature.
More socialism coming to Kalifornia.
Austrian Econ Disciple
01-31-2012, 05:16 PM
You know what happens when you ASSume. Sometimes my expectations of this breed of stupidity called humanity sinks lower and lower, then I come here and delight in the presence of fellow non-stupid travelers. We really need an easier frontier than space or the bottom of the ocean.
HOLLYWOOD
01-31-2012, 05:43 PM
Absent these actions, the state would fall below its prudent $2.5 billion cash cushion on Feb. 29, Chiang estimated. On March 8, the state would actually end up $730 million in the red. The state would be below the safe cash cushion for several weeks ending April 13, save for several days at the end of March.What a Hypocrite! I have been closely watching this California's fiscal/monetary problems.
He's been saying in the past, how tax revenues are up, the economy is turning around, etc, etc...
It's the same guy that was there when the ARRA and BAILOUT packages gave BILLIONS in cash to California. All they did was use it to pay obligations. There were never any substantial austerity measures or cuts in government expenditures to zero the deficits, plus, taxes and fees were raised on the people/taxpayers. I follow the annual budgets closely and California has been borrowing off future projected tax revenues from coming years, betting the economy would turn around each year. Well, did not on any of the models they projected plus they are in more debt in coming years. Communist Chiang is to blame for the propaganda, the lies, the future theft of revenues, and cooking the books. He did it under Governator Scharwzenegger and Jerry Moon Beam Nrown.
If it's going to be Banana Republic accounting, Fraud, and Cronyism, California can go down in flames for not making instituting the measures needed to stop spending and balance the budget.
PS: Califonia has huge liabilities in ridicous obligations to .gov retirement pensions and benefits. Only way out of resolving their contractual obligations, is declaring BK.
HOLLYWOOD
02-02-2012, 01:21 PM
Gotta Bump for this little GEM in today's news
http://www.sacbee.com/2012/02/02/4232990/california-government-payroll.html
California government payroll grew by $500 million in 2011 as furloughs eased
By Phillip Reese (http://www.sacbee.com/search_results/?sf_pubsys_story_byline=Phillip Reese&link_location=top)
preese@sacbee.com
Published: Thursday, Feb. 2, 2012 - 12:00 am | Page 1A
Last Modified: Thursday, Feb. 2, 2012 - 6:42 am
State government payroll increased by half a billion dollars last year, even as California cut thousands of state worker jobs, according to a Bee analysis of new data from the Controller's Office.
The payroll increase added about $140 million in wages to the Sacramento economy in 2011, contributing to a budding recovery.
The trend is largely due to a shift away from worker furloughs and toward layoffs and hiring freezes. Absent furloughs, most state workers got a full paycheck for the first time in years during 2011, plus some step raises and other union-negotiated bumps.
"Payroll would have grown a lot faster if those (job) reductions hadn't taken place," said Michael Shires, a professor of public policy at Pepperdine University. (http://topics.sacbee.com/Pepperdine+University/)
State payroll eats a large chunk of the state's budget (http://topics.sacbee.com/state's+budget/) – almost $18 billion in 2011. During recent lean times, former Gov. Arnold Schwarzenegger and current Gov. Jerry Brown have tried to keep payroll in check, but have taken different approaches.
Through much of 2009 and 2010, the Schwarzenegger administration required workers to take three unpaid furlough days a month, dubbed "Furlough Fridays." That program ended in late 2010, though many workers still had to take one unpaid furlough day a month last year.
The furloughs cut state worker pay by more than $1 billion from 2008 to 2010. But, despite threats of layoffs and hiring freezes, Schwarzenegger never substantially reduced the number of full-time state workers.
The opposite happened during the first year of Brown's administration: The number of full-time state workers fell but total payroll rose 3 percent.
With the demise of Furlough Fridays, roughly 80 percent of state workers made more money during 2011 than during 2010. The end of furloughs, combined with other raises, increased the pay for those who earned more by an average of 10 percent.
But the number of full-time state workers fell by 7,500, or 4 percent, during 2011. Most of that was due to the Brown administration's enforcement of a hiring freeze, (http://topics.sacbee.com/hiring+freeze/) though layoff notices became more common at the end of the year.
Among large state agencies, the biggest payroll increases came at the Department of Mental Health (http://topics.sacbee.com/Department+of+Mental+Health/) and the Department of Motor Vehicles. (http://topics.sacbee.com/Department+of+Motor+Vehicles/)
Mental Health's (http://topics.sacbee.com/Mental+Health/) payroll rose almost $50 million in 2011 to about $840 million. The department employed the two highest-paid state workers in California last year, not counting the University of California, (http://topics.sacbee.com/University+of+California/) which has many highly paid medical specialists.
Mohammad Safi, a senior psychiatrist at the Salinas Valley Prison psychiatric program, earned $803,000 in 2011.
Gertrudis Agcaoili, a staff psychiatrist at Napa State Hospital, earned $772,000 last year.
Beth Willon, a spokeswoman for the Department of Mental Health, (http://topics.sacbee.com/Department+of+Mental+Health/) said psychiatrists earn healthy salaries in the private sector, and that the state must remain competitive. State law mandates constant monitoring of patients, she said, and "Dr. Safi's pay reflects many hours of work after hours, on holidays and on weekends."
Agcaoili retired in 2011, Willon said, and roughly $600,000 of her pay came largely from "accumulated annual leave, holiday credit, personal leave and after hours overtime."
Willon said Mental Health will try to reduce such large payouts in the future by hiring more doctors and exploring "alternatives to after-hour coverage and ways to manage employees' accrued time."
At the Department of Motor Vehicles, (http://topics.sacbee.com/Department+of+Motor+Vehicles/) where no employee earned over $200,000 last year, the number of full-time workers held steady at 7,800, controller's data show. Payroll went from $350 million in 2010 to $382 million.
"It was the three-day furloughs ending," DMV spokeswoman Jan Mendoza said. "We didn't hire a bunch of people. We haven't had any layoffs. It's pretty much the status quo."
Those at the top of the state pay scale appear to have benefited more in the last year than those working lower-paying jobs. About 33,500 state workers, or one of every six full-time state workers, earned at least $100,000 last year, a 25 percent increase from 2010. At the same time, the number of state workers earning less than $50,000 fell.
Some of that has to do with extra overtime. As workers leave and are not replaced, agencies ask remaining employees to do more work. Overtime costs increased about $60 million, or 6 percent, from 2010 to 2011.
"Costs grow, and it's hard to save money," Shires said.
Heather Molina, a staff services manager at the Department of Corrections, (http://topics.sacbee.com/Department+of+Corrections/) said she's working hard to fill gaps left by attrition, but is glad furloughs have largely ended.
"I lost my house," she said, citing the toll of three years of unpaid days off.
Furloughs sucked hundreds of millions from the economy of Sacramento County, (http://topics.sacbee.com/Sacramento+County/) the hub of the state's workforce. The ripple effect hurt many businesses, particularly in the downtown area.
The extra money last year was a boon to local commerce, as state workers had more money to spend.
The end of furloughs "made a difference," said Julie Baxter, another Corrections manager. "It was a relief."
low preference guy
02-02-2012, 01:34 PM
I've been hearing that since 2009. Next month it'll go bankrupt.
bolil
02-02-2012, 01:57 PM
Again? These people really need to stop copying Goebbels in method.
squarepusher
02-02-2012, 02:12 PM
http://www.pensiontsunami.com/
Brian4Liberty
02-02-2012, 02:13 PM
But the size of the California budget must grow so that it can employ US citizens. Come on people, let's not be naive. The private sector is for new immigrants, the public sector is for citizens.
HOLLYWOOD
02-02-2012, 02:23 PM
But the size of the California budget must grow so that it can employ US citizens. Come on people, let's not be naive. The private sector is for new immigrants, the public sector is for citizens.LOL! Governor Moon Beam Wants You!
http://www.pensiontsunami.com/Yeah, the 90% of the Fiscal Diasters Iceberg not seen.
NidStyles
02-02-2012, 02:34 PM
Heather Molina, a staff services manager at the Department of Corrections, said she's working hard to fill gaps left by attrition, but is glad furloughs have largely ended.
"I lost my house," she said, citing the toll of three years of unpaid days off.
Furloughs sucked hundreds of millions from the economy of Sacramento County, the hub of the state's workforce. The ripple effect hurt many businesses, particularly in the downtown area.
The extra money last year was a boon to local commerce, as state workers had more money to spend.
The end of furloughs "made a difference," said Julie Baxter, another Corrections manager. "It was a relief."
That's a very dangerous attitude. The Statists trying to justify their employment by saying that the Tax revenues that pay them are stimulating the economy. I'm sure the economy would have been made better without those tax dollars changing hand's thirty times just to make it there.
I'm sure that Starbucks employee would rather have been able to afford his own latte rather than paying for the State Worker's Latte.
HOLLYWOOD
02-02-2012, 02:58 PM
HOT OFF THE PRESSES, Check this out:
California Will Borrow Up to $1 Billion to Skirt Cash Crisis
February 02, 2012, 9:01 AM EST
Feb. 1 (Bloomberg) -- California will seek a loan from Wall Street of as much as $1 billion to pay bills as the most populous U.S. state’s tax collections trail budgeted amounts, according to the treasurer’s office.
Treasurer Bill Lockyer is drawing up plans for a so-called revenue-anticipation note sale to deal with cash-flow needs, said Tom Dresslar, a spokesman. The offering probably will be less than $1 billion, he said by telephone. The plan was reported earlier by Dow Jones Newswires.
The loan will help Lockyer and Controller John Chiang deal with a $3.3 billion cash shortfall they estimate through the middle of April caused by tax revenue that hasn’t met forecasts and spending that has exceeded projected levels. Lockyer still has to settle on the exact amount to seek and the timing.
“Although this cash management plan relies on still more borrowing, payment delays and deferrals, we believe this is the most prudent and responsible course of action considering we have about four weeks before the advent of the cash shortfall,” Chiang said yesterday in a letter to lawmakers.
State receipts were $2.6 billion lower than forecast through Dec. 31, while expenditures were an equal amount higher, Chiang said. In a previous report, Chiang said corporate and personal-income tax collections were the drivers of the shortfall for the fiscal year that began in July.
No IOUs Planned
Unlike 2009, when Chiang was forced to issue IOUs to creditors, the controller said the current cash shortfall can be managed through payment delays, as well as borrowing.
Lockyer in September sold $5.4 billion of short-term revenue anticipation notes that were supposed to carry the state through to the end of the fiscal year in June. State and local governments often sell such notes to bolster cash flow until more tax receipts arrive later in the year.
The latest loan also would be repaid before June 30, though not until after the earlier notes, which come due June 26, Dresslar said.
“We just need more RANS to get us through this seven-week cash-flow period,” he said.
With assistance from Alison Vekshin in San Francisco and Christopher Palmeri in Los Angeles. Editors: Ted Bunker, Stephen Merelman.
To contact the reporters on this story: Michael B. Marois in Sacramento at mmarois@bloomberg.net James Nash in Sacramento at jnash24@bloomberg.net
California Pledges to Repay $30 Billion Redevelopment Debt
http://www.businessweek.com/news/2012-02-02/california-pledges-to-repay-30-billion-redevelopment-debt.html
February 02, 2012, 9:04 AM EST
California Teacher Pension Fully Funded in 52 Years, Report Says (http://www.businessweek.com/news/2012-02-02/california-teacher-pension-fully-funded-in-52-years-report-says.html)
By James Nash
(Updates with governor’s appointees to manage closings of four redevelopment agencies in sixth paragraph.)
Feb. 1 (Bloomberg) -- Holders of almost $30 billion of California redevelopment bonds will be repaid on time, even as the 425 agencies responsible for them are dissolved today, Finance Director Ana Matosantos said.
So-called successor agencies, mostly cities and counties, will inherit the obligations that financed road, sewer, lighting and affordable-housing projects to deal with urban blight, Matosantos and other state officials said yesterday, the last day of the agencies’ 60-year existence.
Standard & Poor’s, Moody’s Investors Service and Fitch Ratings all warned that the credit ratings on $20 billion of California redevelopment bonds might be lowered because abolition of the agencies might affect debt repayments.
“The market’s become very illiquid with this kind of credit,” Craig Brothers, a managing director at Bel Air Investment Advisors in Los Angeles, said in a telephone interview. “You don’t really know where you stand in the capital structure.”
Matosantos and other Finance Department officials sought to allay concerns that closing the agencies might disrupt payments to bondholders or strain the budgets of municipalities that inherit the responsibility.
Successors to Agencies
In some places, including Los Angeles, no municipality volunteered to assume the obligations, said Mark Hill, program budget manager for the Finance Department. Governor Jerry Brown today named four governing boards to be responsible for dissolving redevelopment agencies in Los Angeles, Merced, Stanislaus County and Ventura County.
“Those pledges will all be honored,” Hill said in a webcast yesterday. “The statute requires that all of these obligations to pay those bonds transfer to the successor agencies.”
Redevelopment agencies captured a portion of property taxes in a designated area to subsidize projects intended to eliminate urban decay. They helped create an entertainment district in downtown San Diego, and spruce up a golf course in Palm Desert. The agencies had $29.8 billion in debt as of June 30, 2010, said Jacob Roper, a spokesman for state Controller John Chiang.
Scott Cottier, who helps manage $30 billion of municipals at OppenheimerFunds Inc., said his firm’s analysis of redevelopment agencies last year concluded that no matter what the governor and Legislature chose to do, the agencies’ bonds would still be paid in full.
‘Money Good’
With the agencies killed off, “the old bonds go up in value,” Cottier said in an interview. “The credit quality has gone up. These bonds are going to be money good.”
While the cities and counties should be able to pay off bondholders, the schedule may cause cash-flow problems for some, said Chris McKenzie, executive director of the League of California Cities.
“As the three national ratings agencies pointed out, this is principally a question of cash flow,” McKenzie said. “Will the cash arrive in time to make the debt payments?”
On Jan. 28, a state court in Sacramento rejected an attempt by cities to block the state from taking the assets of the 399 active redevelopment agencies in California.
Brown and fellow Democrats inserted the law dissolving the redevelopment agencies into the package of bills that comprised the state’s budget for the fiscal year that began July 1.
Since some of that redevelopment money will go toward schools, it reduces the state’s obligation to fund education by an equal amount, H.D. Palmer, a Finance Department spokesman, said Dec. 29. That frees the state to spend the money for other purposes, he said.
Killing the agencies pours about $1 billion into the current spending plan, and $430 million in next year’s, the governor’s office has said.
--With assistance from Christopher Palmeri in Los Angeles and Michael B. Marois in Sacramento. Editors: Pete Young, Mark Tannenbaum
To contact the reporter on this story: James Nash in Sacramento at jnash24@bloomberg.net
To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net
onlyrp
02-02-2012, 03:28 PM
didnt it run out of money 4 years ago already?
All Ways
02-02-2012, 04:07 PM
yes it did.
http://www.youtube.com/watch?v=YVKMA--nt4I
Brian4Liberty
02-02-2012, 04:33 PM
That's a very dangerous attitude. The Statists trying to justify their employment by saying that the Tax revenues that pay them are stimulating the economy. I'm sure the economy would have been made better without those tax dollars changing hand's thirty times just to make it there.
I agree that the State should have a minimum budget and far fewer employees.
On the other hand, in the real world, these "Statist" State employees have been forced to work for the State. Don't be surprised when they start to defend the only jobs that they can get anymore. I am not joking when I said that "the private sector is for new immigrants, the public sector is for citizens". This is especially true in California.
Liberty74
02-02-2012, 04:35 PM
CA is among the highest taxed state in the nation and like other high taxed states (IL, NY, etc.), they are running huge deficits despite increasing ever more taxes. It's the spending stupid - a result of the liberal welfare state and the gimme crowd. The big government gig is up!
HOLLYWOOD
02-02-2012, 04:39 PM
THis is the kicker:
Holders of almost $30 billion of California redevelopment bonds will be repaid on time, even as the 425 agencies responsible for them are dissolved today, Finance Director Ana Matosantos said.
So-called successor agencies, mostly cities and counties, will inherit the obligations that financed road, sewer, lighting and affordable-housing projects to deal with urban blight, Matosantos and other state officials said yesterday, the last day of the agencies’ 60-year existence.The state is now, pawning off a lot of debt onto the Counties and Cities. So look for your local taxes to go up... now you're getting hit in all levels and directions of government.
Brian4Liberty
02-02-2012, 04:41 PM
LOL! Governor Moon Beam Wants You!
To laugh or to cry, that is the question.
Bill Gates (Microsoft), Larry Ellison (Oracle), John Chambers (Cisco), Accenture, Capgemini and the majority of IT employers tell you to go fuck yourself, they want more H1-B and L-1 visas. Governor Moon Beam (and government sub-contractors) welcome you into the well paid arms of the State. What choice do people make when their mortgage have gone unpaid for years?
emazur
02-02-2012, 05:08 PM
I've been hearing that since 2009. Next month it'll go bankrupt.
Yep, I predict nothing will change and the sky won't fall in CA (even though it should).
RP-AUSTRALIA
02-02-2012, 06:42 PM
So many dumb cunts running California. It's amazing how a such a large state can get it's finances so messed up. If they were serious about saving money they could start by getting rid of the death penalty. It costs the state $300 MILLION PER EXECUTION!!! http://www.guardian.co.uk/world/2011/jun/20/california-death-penalty-execution-costsThat in and of itself would be a big saving. They could also start pardoning all their non-voilent drug prisoners which no doubt make up a big portion of California's overflowing and expensive prision system.
ryanmkeisling
02-02-2012, 07:15 PM
It has been a slow progression for this state and they just keep dragging it out. More government agencies need to go on the chopping block as well as all of the unnecessary bureaucratic BS that goes along with them.
There is a lot of it here. Sure people will lose their jobs and as has been pointed out it isn't really their fault they took a government job in the first place, but just like on a national level things have to get worse before they can ever really start to get better. I got laid off from my job as a chef 2 years ago in Tahoe and I am doing alright, I certainly did not cease to exist. I picked myself up and started doing something else, sure it is not without its risks and leaves me open to all sorts of harassment from the same government regulation that makes it almost impossible for anyone to start and grow a business, but it is what I had to do to survive.
California desperately needs more freedom because there are a lot of possibilities here and everything is mismanaged.
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