State Now Running on Borrowed Money
California director of finance Steve Peace says that the state is now operating on borrowed money. He says the proceeds from an $11 billion bond sale have been deposited into state accounts as the governor and legislature attempt to construct a budget to deal with a projected $38 billion deficit by the middle of next year.
The governor and Legislature have agreed on spending cuts and saving proposals that would trim the deficit by about $12 billion dollars.
Davis and majority Democrats in the Legislature also are counting on another $4 billion in revenue in the fiscal year starting July 1 by a large increase in vehicle taxes.