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By William Selway
California’s Assembly passed a bill allowing it to delay payments to programs including schools to avoid running out of cash, a move aimed at boosting confidence in bonds sold by the most-populous U.S. state.
The passage comes a day after Treasurer Bill Lockyer told lawmakers the bill was needed to send a signal to investors that California is taking steps to adequately manage its cash as it faces budget deficits through June 2011. Lockyer postponed a $2 billion sale that was initially scheduled for next week.
Assemblywoman Noreen Evans, the Democrat who chairs the budget committee, said the bill was needed so the state can return to the bond market to finance public projects that provide a jolt to the economy.
“The state does not want to add to the unemployment rate,” Evans said.
Controller John Chiang said last month that California may be forced to issue IOUs for the second year in a row because it’s spending more than it collects in revenue. The bill is aimed at preventing cash shortages projected as soon as next month by empowering officials to delay certain payments, including those to schools, universities and local governments, to conserve money for debt service and other key expenses.
California Passes Bill to Guard Cash as Bond Delayed
