Will Bailout Loosen Calif. Credit Market?

State Leaders Worried About Getting Short-Term Loans To Cover Basic Operating Expenses

(CBS/AP)  Gov. Arnold Schwarzenegger and California's top finance officials reacted cautiously Friday to congressional approval of the $700 billion Wall Street bailout package.

They have been worried that the credit market will hurt the state's ability to get short-term loans to cover basic operating expenses, a step California takes each fall until the bulk of its tax revenue arrives in the spring.

Even with the bailout plan passing, Schwarzenegger predicted a difficult path ahead in the financial markets.

"California's not out of the woods yet," he said during a news conference in San Diego, noting that California soon will begin seeking loans on the open market. "It will be difficult. We will be going through challenges in the future."

He said he would convene a meeting on Wednesday with the four legislative leaders to discuss the state's financial situation.

While California seeks short-term loans every year, the situation is especially precarious this year because the nation's credit market has seized up under the strains of the housing-related economic meltdown and because state lawmakers delayed passing a budget for nearly three months.

The record-long budget impasse prevented the state from going to the bond market sooner.

CBS News correspondent Ben Tracy reports that the state expects to run out of cash by October 28th - unable to provide state support to nursing homes and hospitals, infrastructure and law enforcement and funding for more than 1,000 school districts.

On Thursday, Schwarzenegger sent a letter to Treasury Secretary Henry Paulson asking the federal government to protect California if the state is unable to secure financing for routine borrowing.

"Absent a clear resolution to this financial crisis that restores confidence and liquidity to the credit markets, 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," Schwarzenegger wrote.

Paulson has said he hoped approval of the bailout package will infuse optimism into the banking sector and reinvigorate the credit market for both large and small borrowers.

A spokesman for the state treasurer's office said pursuing a federal loan is just one option if the credit markets do not respond as Paulson predicted. California also will seek private loans within the next few weeks, spokesman Tom Dresslar said.

"Like everyone else, we're waiting for the market reaction. Hopefully, confidence and trust will be restored and hopefully the state will be able to meet its cash-flow needs and continue to provide uninterrupted crucial service for the people of the state," Dresslar said. "But there's no guarantees. As of this moment, we're continuing to pursue with the governor every possible avenue of borrowing to meet our cash-flow needs so we can keep the state running."

Earlier this week, the controller's office said California will need to borrow $7 billion to pay its expenses throughout the fiscal year, which ends June 30.

"We hope that (the bailout plan) will be sufficient to loosen the tight credit market so that the treasurer can issue the $7 billion we need," said Hallye Jordan, a spokeswoman for the state controller.

[frankinaz]

Illegal immigration is costing California millions of dollars every year, yet nothing is being done to end this drain on the taxpayers. Areas of the state tend to encourage, and not discourage illegal immigration.
Too bad the courts shot down Proposition 187 there.
Something needs to be done in California before that state drowns in it''s own illegal immigration costs and other associated problems. It''s leaders need to wake up and realize that California does not have unlimited resources and money to keep supporting uncontrolled and unregulated numbers of illegal immigrants.

[sjc_1]

That common sense sounds good, but what it means is teachers get laid off. Schools are one of the main uses of property taxes. Everyone wants good schools, but also want lower taxes. This means that you pay teachers less and/or have larger class sizes.

[my2centss]

Spend tax money like it was your own. If you don''t have it, don''t spend it.

[brianbwb-2009]

No worries, very soon (probably July of 09) the US Dollar will collapse under the weight of a $13 trillion dollar deficit, with no middle class to generate the revenue to pay it back.

At that point it would be extremely advisable for California, the world''s 12th largest economy, to secede and form it''s own country.

Start getting the paperwork in order Arnie, don''t wait until after the anarchy starts to try to put Humpty together again.

[sjc_1]

Warren Buffet told Arnold to rewrite Proposition 13 when he came into office. He ignored that advice and now this is what they have. Many people have their property taxes frozen at 1979 levels and not adjusted for inflation, while the costs of many items and services have more than doubled in that time.

[wl7bzh]

Ok drought, fires and now economic collapse for California-I wonder if there is a pattern here?

[brittanicus-2009]

No federal funds for a ''Sanctuary city or State'' that is supporting millions of illegal aliens with welfare payments. No money from Federal coffers to pay that should be accountable for ''SANCTUARY cities or San Francisco that has killed thousands of legal Americans, at the hands of a cesspool of criminal aliens.

The federal SAVE ACT (H.R.,4088) enforcement only law before NOVEMBER. If you want to keep paying corporate welfare, to support illegal aliens then neglect signing this PETITION, to stop Sanctuary city laws that are spreading across AMERICA.

SIGN JUDICIAL WATCH, A LEGAL ORGANIZATIONS PETITION, TO RESCIND ALL ''SANCTUARY CITIES & STATES. www.sanctuarybusters.org/?source. www.numbersusa.com to Petition the SAVE ACT. For immigration facts not propaganda or lies,
I