Board of Equalization Member Senator George Runner called upon the Governor and legislative leaders to consider selling off a portion of the billions of dollars in debt owed the State of California to help close the state’s estimated $10 billion budget deficit.
“Rather than raise taxes on the hardworking people of California, we ought to sell off debt to raise the cash we need—just like private businesses do,” said Runner. “The State of California is currently sitting on billions of dollars of uncollected debt that could be worth hundreds of millions of dollars on private debt markets.”
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Selling aging debt is a common practice in the private sector and has also been used successfully by many local governments.
Runner added, “Selling debt makes a lot more sense than selling buildings you have to turn around and lease back.”
In a letter addressed to Governor Jerry Brown, Senate President Pro-Tem Darrell Steinberg, Senate Republican Leader Bob Dutton, Assembly Speaker John Perez and Assembly Republican Leader Connie Conway, Runner provides details on the State Board of Equalization’s outstanding accounts receivable and written-off debt. He suggests that other agencies may have similar or larger amounts available for sale and encourages the state leaders to quickly explore the possibility.
Runner writes, “The sale of these assets could provide much-needed one-time cash. Combined with rising revenues, this revenue could help protect priority programs and eliminate the perceived need to impose higher taxes on struggling Californians.”
The State Constitution requires the Legislature to pass a balanced budget by June 15.