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Feb. 2 (Bloomberg) -- California lawmakers passed a bill to let the state borrow $865 million from internal accounts to help avert a cash shortfall that might leave the state without enough money to pay its bills.
The bill, which heads to Governor Jerry Brown for his signature, allows the state to temporarily siphon money from seven accounts, including the Transportation Revolving Fund and Health Care Deposit Fund. The loans must be repaid with interest.
California must come up with $3.3 billion by March because tax revenue hasn’t met forecasts, and spending has exceeded projections, Controller John Chiang said Jan. 31. Treasurer Bill Lockyer plans to borrow as much as $1 billion from Wall Street to help ease the shortfall.
“We are simply borrowing from Peter to pay Paul,” said Senator Joel Anderson, a Republican from Temecula, who voted against the bill.
Brown plans to sign the legislation, said H.D. Palmer, his budget spokesman. Meanwhile, Chiang has said he will delay making more than $1 billion in scheduled payments to public colleges, counties and health programs for the poor.
Pension Payment Delayed
The California Public Employees’ Retirement System, the largest public pension in the U.S. with $230 billion of assets, agreed last month to allow the state to delay making a $527 million payment until April to cover state worker benefits.
State receipts were $2.6 billion lower than forecast through Dec. 31, while expenditures were an equal amount higher, Chiang said. In a previous report, Chiang said corporate and personal income-tax collections were the drivers of the shortfall for the fiscal year that began in July.
Lawmakers also sent Brown a bill intended to spread out the loss of a $248 million school busing subsidy. The funds were cut when mid-year estimates showed tax revenue failed to grow as much as projected. Rural district would have been hardest hit by the cuts without the change.
--Editors: Pete Young, Jerry Hart
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