“The fact that it’s gotten worse isn’t surprising, but it just means [state lawmakers are] more desperate than ever, which means there will probably be more of a problem for local governments,” Starbird said.
Previous estimates of a single-year total loss of $10 million could grow as legislators attempt to close a larger gap, he added.
State Controller John Chiang today planned to send IOUs in lieu of $3.36 billion in payments to state departments, businesses, residents and educational institutions, all of which could have dramatic local effects as California’s budget crisis rolls forward, officials said.
The move was made necessary after lawmakers failed to close the state’s deficit — previously projected to swell to $24 billion by the end of next year because of plunging tax revenues — before Chiang’s Wednesday deadline for sending IOUs in an effort to preserve California’s cash, said Chiang’s spokeswoman, Hallye Jordan.
“The controller has said this will harm thousands and cost the state millions,” Jordan said.
While the IOUs will allow the state to maintain enough funds to cover short-term obligations, failure to adopt a new budget has bumped the state’s shortfall up to $26 billion, said H.D. Palmer, spokesman for the Department of Finance.
The larger deficit creates the possibility of even deeper cuts to state programs than are currently being discussed in Sacramento, he said.
Those proposed reductions have threatened to strip tens of millions of dollars from the budgets of the Glendale, Burbank and La Canada unified school districts, along with funds from cities, social service programs and Glendale Community College.
