10/03/2008 GAAS:705:08 FOR IMMEDIATE RELEASE Print Version | Email / Share
Governor Schwarzenegger Sends Letter to U.S. Department of Treasury Regarding the National Financial Crisis’ Effect on California and Other States
Governor Arnold Schwarzenegger sent the
following letter to U.S. Department of Treasury regarding the national financial
crisis' effect on California and other
states.
Text of the letter:
October 2, 2008
The Honorable Henry M. Paulson,
Jr.
Secretary of the Treasury
1500 Pennsylvania
Avenue, NW
Washington, DC 20220
Dear Mr. Secretary,
First of all, let me commend you for your leadership to
enact emergency economic stabilization legislation. This credit crisis has the
power to grind the U.S. economy to a halt if swift and
decisive action is not taken immediately. The federal rescue package is not a
bailout of Wall Street tycoons - it is a lifeboat for millions of Americans
whose life savings, businesses, retirement plans and jobs are at stake. I have
communicated this message to the entire California Congressional delegation and will
continue to press for passage of an emergency rescue
plan.
Like many other states, California is feeling the enormous effects of
this crisis on our economy. California's economy is dynamic and resilient,
but also uniquely sensitive to national and international economic conditions
and fluctuations in the financial markets. The credit crisis has frozen
investment and commerce, forcing businesses and families to stop purchasing
goods and services. This has resulted in tens of thousands of lost jobs and
billions of dollars in lost tax revenue to the
state.
Most immediately, California and a number of other state and
local governments are experiencing the lack of liquidity in the credit markets
firsthand. Many states and local governments have been unable to secure
financing for bond offerings and for routine cash flow used to make critical
payments to schools, local governments and law enforcement. While some states
may be able to absorb a delay or obtain high-interest financing through private
banks, California is so large that our short-term
cash flow needs exceed the entire budget of some states. We expect to issue $7
billion in Revenue Anticipation Notes for short term cash flow purposes in a
matter of days.
Absent a clear resolution to this financial crisis that
restores confidence and liquidity to the credit markets, California and other
states may be unable to obtain the necessary level of financing to maintain
government operations and may be forced to turn to the Federal Treasury for
short-term financing.
The economic fallout from this national credit crisis
continues to drain state tax coffers, making it even more difficult to weather
the continuation of frozen credit markets for any length of time. I will
continue to do all I can to encourage passage of the emergency rescue plan.
Sincerely,
Arnold
Schwarzenegger
