Theodore's World: Calif. Tax Refunds To Be Delayed: Out Of Cash

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January 16, 2009

Calif. Tax Refunds To Be Delayed: Out Of Cash

Calif. tax refunds to be delayed starting Feb. 1

My Way

SACRAMENTO, Calif. (AP) - California's controller says he will begin a 30-day delay on tax refunds and other payments starting Feb. 1 because the state is running out of money.

Controller John Chiang said Friday he must delay $3.7 billion in payments next month because lawmakers have failed to address California's growing deficit.

With a $41.6 billion shortfall over the next year-and-a-half, the state is on the brink of issuing IOUs.

Chiang says his office must continue education and debt payments but will defer money for tax refunds, student aid, social services and mental health programs.

A severe drop in revenue has left the state's main bank account depleted. The state had been relying on borrowing from special funds and Wall Street investors; those options are no longer available.


Additional write up............

California could run out of cash by Feb. 1, analysts say

The Sacramento Bee

The state's nonpartisan Legislative Analyst's Office confirmed Wednesday that California could run short of cash as soon as Feb. 1 unless lawmakers and Gov. Arnold Schwarzenegger immediately cut spending and raise revenues.

The LAO's Michael Cohen and Jason Dickerson said the following:

California faces the "double whammy" of a severe drop in revenues coupled with an inability to borrow because credit markets are frozen.

The longer lawmakers and Schwarzenegger go without adjusting the budget, the more difficult it becomes to determine whom to pay.

Schools and creditors have first claim on the state's revenues, while state worker salaries and benefits, Medi-Cal claims and court-ordered payments are among those with secondary priority. State Controller John Chiang has said the first groups to receive IOUs or delayed payments will include Californians awaiting state income tax refunds and companies that do business with the state.

A prolonged budget dispute could force parties to file legal challenges to claim their share of state money.

The LAO recommended that lawmakers allow internal borrowing from several state funds to add $2 billion to the state's cash cushion. It also recommended that lawmakers defer some payments to local governments and schools to preserve cash.

A delayed budget agreement would mean the state would have to pay interest on IOUs or other borrowing. Such costs add to the deficit and have not been factored into the governor's budget.

Meanwhile, the California Transportation Commision delayed allocation of $293.5 million in funding for transportation projects because of cash problems.

Wild Thing's comment.......

Ole Arnie better stop thinking like the Kennedy's and start thinking like a fiscial conservative.

Given the choice between cutting pork and ripping off taxpayers due refunds, there’s little doubt which course Arnold will take.

When I livied in Calif. and I will always love the place for it's beauty especially. But In 1994 the voters of California voted by a 59 to 41 percent margin for prop 187 which would have stopped government services and handouts to illegal aliens. One liberal judge blocked 187 from being implemented and the Governor, Gray Davis, would not pursue the case to the Supreme Court. The liberal courts make it impossible to implement any kind of change.

Posted by Wild Thing at January 16, 2009 05:17 PM


Something has to be done in our system of government when one(1) judge can overturn the will of the people who vote legislation in place.

If California would stop giving free handouts to criminals who stole into this country, they would have the money to reimburse its citizens who were overcharged in their taxes.

Posted by: BobF at January 16, 2009 05:26 PM

There was a guy saying how everyone he knows is leaving California for states such as Sout Carolina Alabama and Texas. Another thing I will never get is why there is so much spending called for one thing in particular. INFRASTRUCTURE! Every time I hear of a particular state's budget there's always massive spending proposals on "infrastructure." Instead of just throwing money at "infrastructure" why not ask the poor schmoe who has to battle angry drivers, road rage, near aneuerysms, and rush hour traffic on a daily basis before even thinking of the word "infrastructure." I'm not saying the roads and bridges aren't important but "infrasructure" just seems like one of those loose terms that can mean just about anything IMO.

Posted by: JohnE PFC U.S. Army at January 16, 2009 06:19 PM

Excellent point about Prop. 187. California continues to spend more than it can take in and refuses to fix the problem of it's own making. It's voters support local, state, and federal liberals and this is what they brought upon themselves. A "tough love" start to them fixing their own problem would be to implement Prop. 187 now and damn the courts.

This is a national problem and we will never recover as long as we let the problem get bigger faster than our ability to fix it.

Immigrants ravage U.S. infrastructure
Financial analyst: $1.6 trillion required to repair devastation

Posted by: Les at January 16, 2009 07:35 PM

Wasn't Ahhnold the one, when running for Governor, couldn't understand why the state was in such dire shape. He has done the same thing the democrats have, spend and spent some more and now can't understand, again, why the state is in such dire shape.

There biggest problem is Illegal Aliens, they keep emptying the piggy bank to bankroll these Illegals just to show their compassion. Well, Push has finally come to shove, now they can't pay the rebates to the people who have bankrolled these illegals. Fine Job, Governor and Ahhnold is not the only one probably 70 % of the Governors are just as guilty. Living beyond the states means and the 'We the People' are getting the shaft once again.

Posted by: Mark at January 16, 2009 08:02 PM

California is losing it's businesses at an alarming rate. Too many taxes and too many regulations. Lots of productive people also leaving. California is losing it's tax base. But the politicians keep on spending and regulating.

This is what the Federal government plans to do also. Tax and spend. The American dollar is on the verge of losing it's status as the world's strongest currency

Posted by: TomR at January 16, 2009 10:38 PM

Not the first time for this; when I was living in San Jose (1981-1984) I recall that they were giving 60-day vouchers instead of income tax refund checks.

Posted by: Rick at January 17, 2009 12:21 AM

I read somewhere that whites are leaving California for points east. They can't afford it anymore. The illegals have run the place over and California is gone. Arnold turned out to be a turd for a governor because he let the Kennedy influence get to him. The handouts to illegals, to criminals, to prostitutes with kids and no daddy in sight is simply disgusting.
I used to love the Southern California Pacific Highway drive next to the Ocean. Oceanside and San Diego were two of my favorite places to be. Del Mar beach was fantastic. But I don't think I can go there anymore. I wanted my kids to see both oceans, but I guess that won't be possible.

Posted by: Lynn at January 17, 2009 08:17 AM

A Terminator in a terminated state of disarray!

Posted by: darthcrUSAderworldtour07 at January 17, 2009 09:35 PM

Californians are welcome elsewhere, just leave your politics at the state line; remember why you left in the first place!

Posted by: Rick at January 17, 2009 10:11 PM

I am so late getting to these. I just read all your comments, thank you soooo much.

Rick thanks for sharing too about when you were living in San Jose.

It is so osad to me, such beautiful places like San Jose, Malibu where we lived so many and the left destroying with their politics.

Posted by: Wild Thing at January 18, 2009 02:52 AM