State Controller Says California Will Run Out Of Cash In March

SACRAMENTO (CBS13) – California is running out of money, and if nothing is done, the state will be out of cash by March 8, according to State Controller John Chiang.

The state controller says a cash crunch is coming with California $730 million in the hole by the first week of March.

The cash problem comes because state revenues are $2.6 billion below projections and spending is up by $2.6 billion.

Chiang is asking the legislature to take quick action and come up with $3.3 billion to avoid the crisis.

In a letter to sent to state lawmakers, Chiang urged them to pass Senate Bill 95, which would allow the state to borrow money from existing state accounts.

Chiang, along with the Department of Finance and Treasurer's Office, has come up with a cash management plan that includes payment delays, external borrowing and money from SB95.

He believes the state can avoid issuing IOUs or delaying tax returns as it has done in past cash crises.

But that doesn't put vendors at ease.

Gloria Freeman owns Staff USA, which contracts with the state. She says payments to her company have been behind.

"When the state doesn't pay its bills, it means we can't pay our bills," she said. "It's a trickle down effect on the economy."