State Lurches Toward $$$ Oblivion

California's fiscal future lurched yet another step toward oblivion on Friday as state Controller John Chiang announced he could no longer make payments for services to disabled and blind people who need the money to pay for rent and food.

Chiang said payments would most likely have to be stopped by Feb. 1.

"Delaying these payments will hurt real families," Chiang said.

About one million people would be affected by the non-payments, Chiang said.

"People are going to be hungry at my house," said Shirley Magers, who receives a $900 monthly payment related to her disabilities. "(This is) not to mention the utilities. Personally I can't pay all the utilities right now."

Education will be spared from the delayed payments, but California's money meltdown has been long in the making.

"The last day the state had a positive cash balance was July 12, 2007 -- a year and a half ago," Chiang said.

Since that time, California has been using internal borrowing to pay the bills. Barring a quick deal at the capitol, taxpayers will likely receive IOUs instead of tax refunds this spring.

Lawmakers have about two weeks to strike a deal with Gov. Arnold Schwarzenegger or the cash crisis will expand to even more people.

Thousands of construction projects around the state are shutting down because state bond money has dried up.

"If it continues for a number of months into next year, it could be 200,000 jobs lost," said State Treasurer Bill Lockyer.

The board that oversees those projects voted to free up funding on Friday while top legislative leaders joined Schwarzenegger for another round of budget talks.

Schwarzenegger said he may host another meeting of top legislative leaders on Saturday.

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