Governator Asks Paulson for $7 Billion

EmploymentCrossing.com California governor Arnold Schwarzenegger has sent a letter to U.S. Treasury Secretary Henry Paulson, warning that the state might need federal help if it is unable to obtain loans to cover the state’s operating expenses. The $7 billion dollar loan would cover critical services and payments to government entities. Because tax revenues to the state are not even throughout the year, the state engages in cash flow-borrowing to maintain operations during periods when revenues are low, said Tom Dresslar, a spokesperson for State Treasurer Bill Lockyer. However, with the credit crunch and turbulence on Wall Street, the usual source of the state's loans, California and other states may be unable to obtain their routine short-term loans, said Aaron McLear, Schwarzenegger's press secretary. Without these funds, State Controller John Chiang has estimated that the state will exhaust its cash reserves by the end of October, and will be unable to make critical payments to schools, hospitals and other government entities. "We need the short-term loans soon so that state can keep making payments for critical services," Dresslar said. "Schools, hospitals, nursing homes, social services - every service that depends on the state for funding is affected."