California's budget nightmare may not be over after all.
The state will be hard-pressed to pay its bills next month for critical needs from teacher salaries to nursing home services unless Congress promptly acts to calm the nation's fiscal storm, state Treasurer Bill Lockyer warned today.
Lockyer said the national crisis threatens to exhaust California's reserves by late this month. Congress thus far has been unable to agree on a $700 billion Wall Street rescue plan.
"The credit market is frozen because financial institutions are afraid to commit capital amid enormous uncertainty," the treasurer said in a written statement.
California is unable to sell infrastructure bonds and short-term securities - revenue anticipation notes - that are necessary to meet the state's cash-flow needs, said Lockyer, a former Democratic legislator and attorney general.
"Without action, we will be unable to sell voter-approved bonds for highway construction, schools, housing or water projects," he added.
"More urgently, because the state budget was so late, we have only four short weeks to complete what otherwise would be a routine revenue anticipation note sale to meet the state's cash-flow needs," Lockyer said.
Exhausting California's cash reserves would have dire consequences, he said.
"Payments for teachers' salaries, nursing homes, law enforcement and every other state-funded service would stop or be significantly delayed," he said.
"And California's 5,000 cities, counties, school districts and special districts would face the same fate."
Republican Gov. Arnold Schwarzenegger had no immediate comment today and state Controller John Chiang, a Democrat, could not be reached.
Call The Bee's Jim Sanders, (916) 326-5538.
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