California and the Credit Crunch

California legislators finally passed a budget for the fiscal year that started on July 1. Now it appears that the delay may be more costly than anyone thought. To tide the state over until tax receipts begin coming in at the start of the new year, usually short term loans are taken out. But with the credit crunch now virtually evaporating all sources of loans, the state is fast running out of funds.

The warning comes as California is close to running out of cash to fund day-to-day government operations and is unable to access routine short-term loans that it typically relies on to remain solvent.

Ahhrrrrneeeeeeee sent a letter to the Feds to ask for a large loan, and I guess it could fall under the auspices of TARP (what doesn’t?), so this might be the solution to the problem. We’ll have to wait and see.