State Treasurer Bill Lockyer is seeking a multibillion-dollar bridge loan to shore up the state's cash flow for several weeks after the state enacts a budget, said spokesman Joe DeAnda.
During an appearance at the Securities Industry and Financial Markets Association today in New York, Lockyer said the interim financing would be more than $5 billion, Bloomberg reported today. The extent and terms of the borrowing is still being negotiated with several banks, DeAnda said.
The loan still depends upon lawmakers and Gov. Arnold Schwarzenegger enacting a budget, which they still have not done 89 days into the fiscal year, the longest delay on the books.
Lockyer's office is working on the bridge loan in advance so the state can access cash quickly after Schwarzenegger signs the budget. Without the bridge loan, the state would have to wait three to five more weeks to obtain the short-term loans the state needs each fall to pay its bills, known as Revenue Anticipation Notes. The state will pay off the bridge loan once it obtains the RANs.
California used $1.5 billion in similar interim financing last year to pay off the IOUs the state issued last summer. The state has not issued formal IOUs this year, although the state will have missed $6.4 billion in various payments by the end of this month.
The bridge loan would help the state's cash situation and presumably ease some pressure from having to issue IOUs. State Controller John Chiang said this month he may need to issue IOUs in early October if leaders still have not enacted the budget.
Schwarzenegger and legislative leaders are scheduled to meet this afternoon at 4:45 p.m. in the governor's Capitol office. They announced last week that they had a "framework" of a deal in place, but there remain a handful of thorny issues that have yet to be resolved.
PHOTO CREDIT: State Treasurer Bill Lockyer told a legislative committee on Friday, May 22, 2009 that lawmakers should rely heavily on spending cuts to balance the budget. Hector Amezcua, Sacramento Bee.
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