The Financial Crisis is having an impact on at least one major state government.....
Schwarzenegger has now written to Treasury Secretary Paulson to let him know that due to the credit crunch, California cannot get short term loans. Unless California gets the needed loans, Government Business may grind to a halt.
From the LA Times:
SACRAMENTO -- California Gov. Arnold Schwarzenegger, alarmed by the ongoing national financial crisis, warned Treasury Secretary Henry M. Paulson on Thursday that the state might need an emergency loan of as much as $7 billion from the federal government within weeks.
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.
No money for the state Government? What does that mean?
If the state is unable to access the cash, administration officials say, payments to schools and other government entities could quickly be suspended and state employees could be laid off.
But what if Congress passes the bailout plan today?
They say if Congress does not approve a bailout plan -- and maybe even if it does -- there will be no lenders available to provide the state with the money it needs, regardless of the premium the state is willing to pay.
Here is a PDF version of Schwarzenegger's letter.
And from a second LA Times article, a bit more about the ramifications of frozen credit. This is California, first to feel the pinch because their state budget is so huge. Now consider the consequences in your own state....
The warnings were stark, including suggestions that operating funds to pay state workers, teachers or even healthcare workers could dry up in the weeks ahead.
"This isn't just a gridlock in Washington problem or a Wall Street financial problem, there are real-life impacts on local school districts, on providing healthcare for the aged and on and on," he said.