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John Chiang announces that his office will suspend $3.7 billion inpayments owed to Californians starting Feb. 1, as a result of thestate’s cash crisis. Student grants are also affected.
Reportingfrom Sacramento — State Controller John Chiang announced today thathis office would suspend tax refunds, welfare checks, student grantsand other payments owed to Californians starting Feb. 1, as a result ofthe state’s cash crisis.
Chiang said he had no choice but to stop making some $3.7 billion inpayments in the absence of action by the governor and lawmakers toclose the state’s nearly $42-billion budget deficit. More than half ofthose payments are tax refunds.
The controller said the suspended payments could be rolled into IOUs ifCalifornia still lacked sufficient cash to pay its bills come March orApril.
“I take this action with great reluctance,” Chiang said at a newsconference in his office. But he said that without action to close thedeficit, “there is no way to make it through February unscathed.”
The payments to be frozen include nearly $2 billion in tax refunds;$300 million in cash grants for needy families and the aged, blind anddisabled; and $13 million in grants for college students.