President Barack Obama said a bailout of states such as California would not be necessary and that his administration is in talks with state treasurers nationwide to find “creative” ways they can deal with frozen credit markets.
Many states will end up having to make some “very difficult choices” as demands on services rise while tax revenue falls, Obama said in an interview with C-SPAN.
The Democratic president said probably the biggest area in which states need help was in rolling over debt. Obama said his administration was trying to find “creative ways that we can help them get through these difficult times.”
“They are still being affected by some of the freezing in the credit markets,” Obama said in the interview, according to a transcript released by the cable-television network. Obama said “no,” when asked whether he will be forced to help financially strapped states such as California.
California’s top finance officials told lawmakers yesterday that they must slash spending and shore up the budget by the end of next month to prevent the most-populous US state from running out of cash as soon as July.
Bill Lockyer, the Democratic treasurer who handles the state’s bond sales, said short-term securities can’t be sold without a plan to eliminate a deficit that the Legislative Analyst’s Office says may total $24 billion in the next 13 months. Such borrowing allows the state to meet its obligations until the bulk of tax receipts are collected later in the year.
Controller John Chiang, who pays the state’s bills, echoed that sentiment.
“We are experiencing the greatest fiscal crisis since the Great Depression,” Chiang, a Democrat, said during a Sacramento legislative budget hearing.
