Long Impasse = More Money?
BUDGET DAY PLUS 70 -- Welcome to the world of perverse logic, California government style.
It now appears that the long budget impasse is actually making it less likely, not more, that the state will run out of money.
Confused? Hold on to your seats.
This morning, Controller John Chiang released fiscal data from the month of August, showing that state government had $9.6 billion in funds that can be used to keep things running. That's some $5 billion more than Governor Schwarzenegger's May budget plan projected.
As a result, Chiang has delayed his much talked about plan to borrow money from Wall Street. The costly revenue anticipation warrants might still be needed down the road, he says, but not now.
Why? Because the state is living off all that cash it's supposed to be sending out to vendors that provide a number of services... services that, as we know, are suffering without a budget in place.
And in an inversely logical sort of way, the longer the impasse lasts... the less likely the state will run out of money. That's because the list of services that can't be paid for gets bigger... meaning more money still sitting in the bank that can keep basic government operations afloat.
How much? In July and August combined, the state couldn't disburse $4.25 billion. In September, without a budget, the state won't be able to disburse an additional $7.6 billion.
Think of it this way: if you stop paying your credit card bill because you're short on cash... but you use that money to pay your mortgage... then you won't get thrown out of your house, no matter how long your financial problems continue.
All of this certainly won't make those Californians suffering from reduced or threatened services feel any better. In fact, it's just the news they probably don't want to hear... if it reduces the sense of urgency at the state Capitol.
