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Controller: State can't make $1.1 billion in payments

State Controller John Chiang announced on Tuesday that the ongoing budget stalemate prevented his office from paying an estimated $1.1 billion to "to community colleges, special education programs, nursing homes, cancer detection programs and small businesses that provide services to the State."

The new fiscal year began on July 1 and the Legislature has yet to pass a budget, with Senate Republicans holding out in hopes of winning spending cuts.

Chiang predicted the state will withhold another $2.1 billion in payments if the impasse continues through August.

Here's some of the budget-payment details, according to Chiang:

Without a budget in place for the fiscal year that started July 1, the Controller this month was legally prohibited from paying $326.6 million to community colleges, $170 million to school districts for categorical programs such as special education and remedial summer school; and $140 million to vendors who provide food, paper products and supplies to the State.

He has been forced to withhold $300 million in child development program funds that go to schools and private pre-school and day care programs under contract with the Department of Education.

If no budget is enacted in August, the Controller will be unable to disburse $100 million from the highway tax, collected in July that is scheduled to be sent at the end of August to cities and counties for local street and road maintenance and repairs.

Although he is authorized to make Medi-Cal payments to nurses, doctors and pharmacists who directly bill Medi-Cal, the Controller does not have the legal authority to pay institutions, such as hospitals, nursing homes, managed health care plans, clinics and regional centers. During previous no-budget times, those institutions have relied on a $1 billion General Fund contingency fund to tide them over. However, the Department of Health Care Services last week said the contingency fund is depleted, and DHCS will be unable to pay $227 million to hospitals this week.

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