Looming Scenario:
California's fiscal crisis is escalating, and certain bills won't be paid if a budget measure is not enacted soon, State Controller Steve Westly warned lawmakers on June 26.
Both in a letter to lawmakers and in a Capitol news conference -- where he was joined by representatives of CTA, the Education Coalition, and other pro-education groups -- the state constitutional officer said he expects California to run out of money after September.
"As the State's chief financial officer, I want to outline what does and does not get paid if we do not have a budget by July 1," Westly writes. "As the Director of Finance noted last week, we are now operating totally on borrowed cash. Given our limited revenue projections for the next few months, the remaining borrowed resources will only allow me to pay the State's bills into September."
"As of July 1, I will no longer make payments that are not legally authorized without a budget….There is no legal authority to pay Community Colleges without a budget, and they will receive no new State money until a budget is passed.... The recent Jarvis vs. Westly decision mandated that I stop payments to education that are not specifically authorized. Therefore, education funding will be cut by nearly $400 million in both July and August. These reductions include child development funding and annual education appropriations," Westly writes.
Westly specifically listed items that can't be paid without a budget in place, including several large education items. Westly said K-12 education's annual education appropriations can't be paid, although the K-12 monthly apportionment - the "revenue limits funding" - could be paid. The state will also not be able to cover the costs of K-12 state mandates and child development.
On the can't-be-paid list are also community college funding and non-payroll expenses at the California State University and University of California and Cal-Grants.
Other large non-education items on the can't-pay-list are non-payroll expenses at the trial courts, highway user taxes, certain mental health costs, local government state mandates, and payments to certain categories of state vendors.
A court decision keeps state employee salaries on the pay list, but hourly workers would see their pay dropped to the state minimum wage until the budget is approved.