| CA Controller Says He May Still Issue IOUs |
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| In The News | ||||
| Tuesday, 28 July 2009 07:33 | ||||
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OC Register, 7-23-09, 3:11 pm
“Just because you have a budget doesn’t mean you have cash in the state treasury,” Chiang told guests at a UCI Paul Merage School of Business luncheon in Furthermore, he said he doesn’t know if he’ll be able to repay the IOUs already issued when they can be redeemed beginning Oct. 2 Chiang said it all will depend on the state’s cash flow and how much money is in the treasury on any given day compared to the obligations he must pay. “I’ll pay if we have enough cash or (the October IOUs) will roll over and I’ll issue a second round,” he said. The state must also pay 3.75% interest on the IOUs. Chiang blamed the state’s financial situation on years of spending too much and living on borrowed money. “July 12, 2007 was the last date the state of He noted there are many assumptions in the proposed budget that may not come to pass and could throw it out of whack again. For instance, the budget proposed to sell off part of the State Compensation Insurance Fund for $1 billion. “But it may not sell for $1 billion and it may not sell this year,” Chiang said. With unemployment rising, he said tax receipts may come in lower than anticipated. In April, the state was expecting $14 billion in income taxes but only received $7 billion. Chiang, however, was cheered somewhat by the rising stock market. The Dow topped 9,000 today for the first time since January. “With the stock market going from 6,000 to 9,000, it could be reflected in September when estimated tax payments come in,” he said. Chiang appears to be hedging that taxes on short-term capitol gains on investments maybe better than anticipated. State taxes on short-term capitol gains in article source: http://ocbiz.freedomblogging.com/2009/07/23/calif-controller-says-he-may-still-issue-ious/13509/
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