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| CA tax refunds will be delayed | |
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| Tweet Topic Started: Jan 16 2009, 05:26 PM (109 Views) | |
| Cabann | Jan 16 2009, 05:26 PM Post #1 |
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(01-16) 12:48 PST SACRAMENTO -- State Controller John Chiang warned today that he will delay nearly $3.7 billion in state payments in February - including income tax refunds and help for low-income and disabled residents - unless Gov. Arnold Schwarzenegger and lawmakers strike a budget deal for the cash-strapped state by end of this month. The 30-day delay in payments will likely keep the state from running out of money next month, avoiding the use of IOUs in February and likely in March, Chiang said. But his office, which has the responsibility to manage the state's cash flows, would resort to IOUs if the state runs out of cash to meet its financial obligations, Chiang said. "This is a very painful decision," the controller said at a news conference in his Sacramento office. "It pains me to pull this trigger (to delay payments), but is an action that is critically necessary. "The fallout from issuing IOUs and the state going into default would be long-lasting and something to be avoided at all costs," he added. Chiang acknowledged that delaying payments would be devastating for thousands of poor and disabled residents who depend on cash assistance from the state, and would create hardship for vendors that do business with the state agencies. In addition, the state will not send nearly $2 billion in income tax refunds slated in February, he added. By law, the state has until May 30 to issue the refunds so it will not face financial penalties. In most years, the state has issued tax refunds as soon as they are processed by the state Franchise Tax Board, Chiang said. But there will be penalties for other delays. The controller is expecting the state to incur more than $16 million in interest by delaying other payments for 30 days. Despite California's prolonged fiscal mess, Schwarzenegger and the Legislature have been unable to find middle ground on how to close an expected $42 billion budget deficit, which includes about $2 billion in reserves, through June 2010. In an unusually short State of the State address Thursday, Schwarzenegger said he will forego the annual tradition of rolling out his vision and priorities for the year until he and the Legislature agree on a budget solution. He and the legislative leaders have been negotiating all week and are scheduled to meet again today. E-mail Matthew Yi at myi@sfchronicle.com. http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/01/16/BASI15BSS2.DTL&tsp=1 Edited by Cabann, Jan 16 2009, 05:27 PM.
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