California may need $7 bn as crisis bites: Governor
California has warned the US government it may seek a USD seven billion emergency loan to help the state pay its bills as the national financial crisis bites.
By Agencies |
LOS ANGELES: California has warned the US government it may seek a USD seven billion emergency loan to help the state pay its bills as the national financial crisis bites, a statement said on Friday.
Governor Arnold Schwarzenegger said in a letter to Treasury Secretary Henry Paulson the credit crunch had resulted in billions of dollars of lost tax revenue and was stretching state coffers to the breaking point.
Schwarzenegger said the crisis meant California, the most populous and wealthiest US state, was unable to access routine financing used to make payments to schools, local government and law enforcement.
"While some states may be able to absorb a delay or obtain high-interest financing through private banks, California is so large that our short-term cash flow needs exceed the entire budget of some states," Schwarzenegger said.
"We expect to issue USD seven billion in Revenue Anticipation Notes for short term cash flow purposes in a matter of days."
"Absent a clear resolution to this financial crisis, California and other states may be unable to obtain the necessary level of financing to maintain government operations and may be forced to turn to the federal treasury for short-term financing."
California routinely borrows money at the beginning of every fiscal year to ensure cash flow until sales tax receipts begin pouring in after Christmas and income tax is collected in the spring.
The California move comes as Congress was to vote for the second time on an unprecedented USD 700-billion bailout package proposed by Paulson to ease the credit crisis.
Governor Arnold Schwarzenegger said in a letter to Treasury Secretary Henry Paulson the credit crunch had resulted in billions of dollars of lost tax revenue and was stretching state coffers to the breaking point.
Schwarzenegger said the crisis meant California, the most populous and wealthiest US state, was unable to access routine financing used to make payments to schools, local government and law enforcement.
"While some states may be able to absorb a delay or obtain high-interest financing through private banks, California is so large that our short-term cash flow needs exceed the entire budget of some states," Schwarzenegger said.
"We expect to issue USD seven billion in Revenue Anticipation Notes for short term cash flow purposes in a matter of days."
"Absent a clear resolution to this financial crisis, California and other states may be unable to obtain the necessary level of financing to maintain government operations and may be forced to turn to the federal treasury for short-term financing."
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California routinely borrows money at the beginning of every fiscal year to ensure cash flow until sales tax receipts begin pouring in after Christmas and income tax is collected in the spring.
The California move comes as Congress was to vote for the second time on an unprecedented USD 700-billion bailout package proposed by Paulson to ease the credit crisis.
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