Facing what could be the largest cash flow problem in state history, California officials are asking the federal government to back billions of dollars in short-term loans the state must seek in July.
"We're going to need cash-flow borrowing the likes of which California has never seen, at a time when market and economic forces are stacked against us," said Tom Dresslar, spokesman for state Treasurer Bill Lockyer. "That's a recipe for calamity."
While the state routinely borrows money at the start of fiscal years on July 1 by issuing interest-bearing Revenue Anticipation Notes, or RANs, a combination of factors have conspired to form a mountainous hurdle this time around.
Those factors include the sheer size of the amount needed – at least $13 billion – the state's woeful credit rating and the generally sorry state of the nation's financial markets.
Lockyer and other state and local officials have been quietly exploring the idea of doing what hordes of private financial and insurance enterprises have done in the past year: Ask Uncle Sam for help.
Precisely what kind of help it would be hasn't been decided. A spokesman for the House Financial Services Committee, chaired by Rep. Barney Frank, D-Mass., confirmed that Lockyer had met with Frank in late March, and that Frank was in the process of drafting legislation designed to aid states and local governments with problems similar to California's. [emphasis added]
"There is something in the works," said spokesman Steve Adamske, "and that should be drafted by the end of this month ... there are several ideas being considered." ...
Article here. I guess this is the "shared sacrifice" Obama is always talking about: California screws up, doesn't live within its means, and you and I are expected to pay for it. No doubt New York, New Jersey, Massachusetts and others will be lining up behind California to get their reward for budget profligacy. The line forms to the left.