Julie Small
June 03, 2009
 Listen

State lawmakers are struggling today to close the state's multi-billion dollar deficit by June 15th. State Controller John Chiang says there are hundreds of millions of good reasons to meet that deadline. KPCC's Julie Small caught up with the controller today in Sacramento to find out what's at stake.

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Julie Small: Chiang says if the budget deficit problem isn't fixed by the end of July, California will slide a billion dollars into the red. That's why the controller, the man who pays the state government's bills, plans to borrow cash from Wall Street well before then.

He's aiming for June 15th. Democrats in the legislature say they'll try to pass a partial budget solution by then. Chiang says that would give the state some leverage to negotiate more favorable terms.

John Chiang: It will give us a better ability to talk to the lenders, to explain how California's going to work through our solutions. Clearly, they're going to ask for more solutions. They may increase the costs of borrowing because we don't have a full solution and clearly that's passed on to the taxpayers of California.

Small: Republicans in Sacramento say they won't agree to a partial budget solution. That means Controller Chiang probably can't borrow on June 15th the way he'd planned – and that will cost taxpayers a lot of money. Chiang says the credit markets are tighter, the state's credit rating is lower – and California's deficit is deeper.

When the state budget was late last fall, Chiang got ready to borrow $5 billion. With the state's finances in a mess, fees and interest would have cost an extra $500 million. The legislature passed a budget before that happened – but Chiang might not be so lucky this time around.