SAN FRANCISCO (Reuters) - California’s August revenue came in above a budget forecast and as a result the state will not need to issue IOUs this month, the state controller said on Thursday.
California last year temporarily issued IOUs during a lengthy budget impasse. It was feared the state might again have to issue IOUs in September to preserve cash for priority payments, like those to investors holding the state’s debt.
But August income was $264.6 million, 3.9 percent above the forecast in Governor Arnold Schwarzenegger’s state budget proposal, State Controller John Chiang said in a statement.
“For the time being, Californians will be spared the pain and expense of a second round of IOUs,” said Chiang.
His office had planned for the possibility it would have to issue notes promising payments early this month to many depending on state money, he added.
Chiang’s statement noted that while the state’s August cash totals were high enough to remove the immediate threat of IOUs, he may still have to issue them for payments in early October.
The state would have to issue the payments unless Schwarzenegger and lawmakers quickly agree to a budget plan, which requires closing a $19 billion shortfall.
“The Governor and Legislature should not view this short reprieve as an invitation to break the budget deadlock record,” Chiang said.
The state’s government is in its 71st day of its current budget stalemate. Democrats who control the legislature want new taxes in addition to spending cuts. Schwarzenegger and fellow Republicans in the legislature’s minority are rejecting tax increases and demand deep cuts to balance the state’s books.