Summer doesn't officially end until September 22. But the state's Summer of Debt -- at least from a cash perspective -- will end on September 4, according to Controller John Chiang.
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A pretty good jab at the folks in the state Capitol came in today from Treasurer Bill Lockyer, a written statement on the deficit negotiations that now seem slower, not faster.
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You're not really surprised that things turned out this way today, are you?

Of course, that's not to say that some parts of today's budget news weren't unexpected. And few would venture a guess as to what happens next... though indications are the Legislature will be spending the final weekend of June in session.

For a formal look at today's events, dial in to The California Report tomorrow morning. In the meantime...
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One of the most often quoted stats about California is that, were we a nation, we'd be the world's eighth largest economy.

But such power can also work in reverse, say economists. And now, there is speculation that whatever ugly deficit deal state lawmakers strike, its necessary slashing of public services could either slow, or stop, the economic recovery of the entire nation.
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An unsurprising, but still sobering, bit of late afternoon news on the state of California's finances: Treasurer Bill Lockyer has formally asked the feds to back up the state's massive borrowing needs over the next few months -- essentially a guarantee that the United States Treasury will step in should the state or any local governments default.
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Treasurer Bill Lockyer says the $4 billion general obligation bond offering became a $6.54 billion offering due to sharp demand, as blogged about yesterday.

Some good financial news for California coming out of the office of Treasurer Bill Lockyer this morning, as more than half of the planned $4 billion in state general obligation bonds were sold before midday on the West Coast.

A spokesman for Lockyer says $2.4 billion in GO bond purchases were made by individual investors this morning. It's been nine months since the state has sold GO bonds, the kind of bonds that are considered to be pretty much the gold standard in government debt (in that they are backed by the "full faith and credit" of the state).

[UPDATE 5:15 pm - Final first day total was $3 billion in bonds sold. "Things are going very, very well," Lockyer said in a phone interview this afternoon.]
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And now, the latest developments from the "Clear as Mud" files... everyone who's anyone around the state Capitol wants to know whether California's share of the federal economic stimulus package is large enough to allow some of the less-than-loved budget decisions to be rescinded.

But finding an absolute answer to that question... well, that's what has landed us in the muddy water.
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Today marks the beginning of probably the most closely watched California bond offering in recent memory, as the state plops the bait in the rough waters of Wall Street... waiting for a bite. A big bite.

The state treasurer's office has launched the sale of revenue anticipation notes (RANs), which amounts to a short-term bridge loan that seems to be desperately needed to deal with California's seasonal ebb in tax revenues. The plan is to sell a $4 billion RAN in phase one, and up to another $3 billion after that, if all goes well.

That last phrase... "if all goes well"... is why this has become news. Wall Street's jitters have persisted in recent days, and the success of the RAN sale isn't guaranteed. Governor Schwarzenegger has even gone so far as to put the feds on notice that a weak market response to the sale could force California to come calling, hat in hand, for a loan (though his most recent communique was more upbeat).

A spokesman for Treasurer Bill Lockyer says the initial sales to individual investors could come with an interest payment (yield) of up to 4% for RAN purchases paid back by the state on May 20. The yield would rise to as much as 4.5% for RAN investors who are willing to wait for repayment until June 22. Final interest rates won't be known until later this week, when the fishing line is thrown into the water for institutional investors.

We may get some preliminary sense of how the fishing is going later this afternoon.

[1:46pm update -- Well, the early data might be a good sign. The treasurer's office reports almost $1.5 billion in RANs bought by investors in just the first few hours today, an amount that's almost 37% of the entire initial offering.]

[update 5:30pm -- Final numbers show the state sold $1,836,000,000 worth of RANs today. That's almost 46% of the entire first round of notes, which sounds good. A written statement from Lockyer called it "an excellent start" to a "good deal" for California taxpayers.

And this tidbit from the guv's folks: Schwarzenegger himself bought $100,000 worth of RANs today. Looks as though he'll make an extra $4500 in interest payments by the time the notes are paid off.]

With the historic budget impasse's conclusion, it may be conventional wisdom to think the state's fiscal woes are -- at least temporarily -- over. But this morning, the state's top investment officer warned that California is in danger of running out of money due to the uncertainty of what happens next on Wall Street.

Treasurer Bill Lockyer's released his annual debt affordability report for state government today, but it was the particularly dire attached written statement that will make headlines:

"“For 10 days, state and local governments have been closed out of credit markets – long-term and short-term – in spite of the fact that they represent no default risk and provide a good tax-free return to investors," wrote Lockyer. "The credit market is frozen because financial institutions are afraid to commit capital amid enormous uncertainty."

That's particularly bad news for California, as state government typically needs a short-term loan around this time of year to keep the bills paid.

You may remember that the issue of loans was much discussed by both Lockyer and Controller John Chiang during the budget stalemate; at that time, the fear was an expensive loan known as a Revenue Anticipation Warrant (RAW), which was the only option for the state's money needs in the absence of an enacted spending plan. Now, even the frequently used loan known as a Revenue Anticipation Note (RAN) appears in trouble.

Without a RAN loan, the state's cash reserves could be depleted by the end of this month. That means all of those state services that went without during the budget impasse... and more... could end up without cash.

"Payments for teachers' salaries, nursing homes, law enforcement and every other state-funded service would stop or be significantly delayed," says the written statement from Lockyer. "And California’s 5,000 cities, counties, school districts and special districts would face the same fate."