SAN FRANCISCO (Reuters) - California should sell its claims to unpaid taxes to the private sector to raise money to bolster its finances, a state tax official said on Monday.
The proposal comes as the legislature approaches its June 15 Constitutional deadline for approving a budget for the fiscal year beginning on July 1 with little to suggest an agreement on a spending plan that closes a roughly $10 billion shortfall is in the works.
“Selling aging debt is a common practice in the private sector and has also been used successfully by many local governments,” George Runner, a member of California’s Board of Equalization, said in a letter to Governor Jerry Brown and the legislature’s leaders.
The board, which collects sales and use tax along with taxes on fuel, alcohol and tobacco, has $3.1 billion in outstanding accounts receivable, other state tax agencies have similar if not larger outstanding receipts owed them and agencies that collect fees of various kinds are likely also owed significant funds, Runner told Reuters by telephone.
He estimates California agencies that collect taxes and fees have more than $20 billion in outstanding accounts receivable, either as active or written-off taxes they are owed.
If California were to sell claims to that money it would potentially have to do so at a deep discount, Runner said.
But something is better than nothing for the state’s cash-strapped government, Runner added: “You don’t get your full dollar value, but you are getting some money in the door as opposed to not getting any.”
Editing by James Dalgleish