The State Is Already Not Paying Its Bills

It's not every day you can say this, but today I wish I was the state of California.

The state government has cash flow problems. Its fiscal leaders -- the controller, treasurer and finance director -- want to conserve cash. So what do they do? They decide to use their legal authority to defer the payment of bills to schools and counties.

How much are these bills? Together, nearly $3 billion. $2.5 billion of that is owed to the schools.

Don't you wish you could do that?

Look for more of this if the legislature and governor, as looks likely, delay reckoning with the budget until the fall or later.

On my trip to Sacramento last week, the general consensus from multiple sources was that there wouldn't be a new budget agreement until after the November elections, if then. That would be the latest budget agreement in history.

While these delayed payments and the likely use of IOUs will produce real pain, the state is better set up for prolonged budget stalemates and cash shortages. That's because, over the last several years of persistent budget crisis, the state's fiscal officers have been given more authority to juggle cash between various state accounts, robbing Peter to pay Paul.

It must be nice.

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