Controller warns lawmakers about late budget

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Tuesday’s constitutional deadline for the Legislature to pass a state budget is expected to come and go without a plan in place. But in a letter to Gov. Arnold Schwarzenegger and legislative leaders, Controller John Chiang warned that a prolonged budget standoff could be disastrous for the state.

Unlike last year, the state has enough cash to pay its bills through the summer, reducing the threat of state-issued IOUs to vendors.

But an extended stalemate could have an impact. ‘Without a budget by August 1, the treasurer, director of finance and I will be forced to [take action], which will result in a three-month delay of payments to education and other programs,’ he said. Payments to community colleges and local governments and payments to vendors for services provided after July 1 may also be delayed.

-- Anthony York in Sacramento