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California Could Run Out Of Cash In 2 Months

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May 22, 2009 7:23 pm US/Pacific

California Could Run Out Of Cash In 2 Months

SACRAMENTO (CBS 5 / AP) ― State officials are warning that California will run out of cash in two months.

The cash shortage will be four times as bad as this past winter, when California stopped infrastructure projects and delayed payments to vendors and refunds to taxpayers.

State Controller John Chiang told lawmakers Friday that declining tax revenue will cause the state's treasury to fall $2.1 billion into the red in July.

He urged lawmakers to pass a budget by the June 15 constitutional deadline. If they don't act quickly to cut spending or raise revenue, Chiang said the deficit will hit $14.3 billion by December.

It is projected to be $24.3 billion for the entire fiscal year.

Illustrating how quickly revenue has dropped, the state Board of Equalization on Friday cut quarterly sales tax payments to local governments by $122.8 million.

(© 2010 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)

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