SAN FRANCISCO, Sept 15 (Reuters) - California’s $211 billion pension fund for public employees has been speaking with Governor Arnold Schwarzenegger’s administration about providing it a $2 billion loan to help close the state government’s $19 billion budget gap, a spokesman said on Wednesday.
The spokesman for the California Public Employees’ Retirement System, best known as Calpers, said the talks about the loan plan, proposed by Schwarzenegger, are informal and that it is uncertain the fund can lend the money.
“We do have significant concerns about legal issues and actuarial soundness issues,” the spokesman added.
California’s state government is in its 77th day without a budget for its fiscal year that began on July 1 and analysts expect the impasse over a spending plan between Democrats and Republicans in the state capital of Sacramento may last several more weeks.
Democrats who control the legislature oppose Schwarzenegger’s plan to balance the state’s books largely by cutting spending.
Republicans in the legislature’s minority have rallied behind Schwarzenegger’s plan and are adamantly opposed to proposals by Democrats to raise some taxes and delay corporate tax breaks to raise revenue.
State Controller John Chiang said last week that California’s August revenue was better than expected, giving Schwarzenegger and lawmakers more time to hammer out a budget agreement before he would have to begin issuing IOUs to preserve the state government’s cash for priority payments, including payments to investors holding the state’s debt.
Chiang had warned IOUs could have been issued this month but last week said the notes promising payment may not be necessary until early next month. California last year temporarily issued IOUs during a lengthy budget stalemate.