Beall Advises Governor to Tap Earmarked Federal Funds to Avoid Financial Crisis
Recommending a practical solution to California’s fiscal crisis, Assemblymember Jim Beall Jr. has asked the Governor to request the acceleration of California’s receipt of federal funds.
“This is a quick, viable option to obtain federal money that is already earmarked for California,’’ Beall said. “This alternative requires no state or federal legislation. But, the Governor must file a request.’’
In a letter that was co-signed today by Assembly Speaker Karen Bass and the Democratic Caucus and delivered to the Governor, Beall said the action would save the state taxpayers hundreds of millions in interest on the issuance of IOUs.
The federal Cash Management Improvement Act permits states to obtain early draw-downs of federal grant funds if they agree to reimburse the government for its costs. That cost is tied to the average rate of interest for Treasury Bills during a specified period of time. For example, the most recent 13-week T-bill rate was 0.6 percent during fiscal 2008-09, far below the private bond market rate.
Accelerated federal block grant payments could eliminate interruption of the Temporary Assistance for Needy Families program. In addition, the state could seek early disbursements of stimulus funds for education, transportation, and child care.
“The state is already entitled to the federal funds,’’ Beall said, “and we can spend this money before we actually begin spending state dollars.’’