SACRAMENTO — Wendy Hansen, a 52-year-old single mom in Monrovia, says she cannot afford a delay in her anticipated state income tax refund of $1,800.
Without the check, Hansen said, she will have to put off debt payments, long-needed repairs on her house and treatment for a back problem that she believes has been aggravated by stress over finances.
An estimated 2.7 million Californians expecting income tax refunds this month won't receive them for now, because the state's prolonged budget impasse has emptied its treasury.
"It's horrendous," said Hansen, an office manager for a doctors' office. "I'm someone who counts on that refund every year to make ends meet."
State Controller John Chiang's decision to conserve cash by withholding nearly $2 billion in tax refunds, among other scheduled payments, starting today means thousands of people and businesses that rely on state money will not be paid as usual.
With Chiang delaying for at least 30 days a total of $3.5 billion in state payments, county welfare agencies and universities are scrambling to make up the difference. They're trying to avoid interruption of tuition grants for students, child care for poor families, services for the disabled and treatment for Californians with mental health and drug abuse problems.
But local officials say that although they can cover one month's delay in payments, they may not be able to fill in the gaps beyond February. Meanwhile, companies that supply the state with goods and services are also bracing for a painful month.
The state pays about $250,000 a month to Western Mixers Inc., a Los Angeles company that provides produce to prisons, according to Jeff Foster, a sales manager at the company. He said the firm may have to delay paying its own suppliers because it won't get that money.
The cash crunch is even hitting close to Chiang's own office: It will not be paying $240,000 it owes to a company hired to help ensure that the controller's computers and databases operate smoothly.
That company, Sacramento Technology Group, may have to put off paying its own vendors, said George Usi, the firm's president. "It can impact our credit negatively."
Usi said he has enough capital to weather delays of up to 90 days, but if there is not a resolution by then, "it will be financial catastrophe" that would force him to lay off workers.
