SACRAMENTO (CBS / AP) — California’s state treasurer said he is preparing contingency plans in case the federal government misses its Aug. 2 deadline to raise the debt ceiling.
Treasurer Bill Lockyer said Wednesday that the state is preparing to borrow as much as $5 billion in short-term loans to cover state operating expenses if the federal government begins to run out of money to pay its bills.READ MORE: Scientists Try to Save Migratory Western Monarch Butterflies as a Mystery Unfolds
KCBS’ Doug Sovern Reports:
The loan would be repaid using routine bonds.READ MORE: Fatal Fremont Hit-and-Run Crash Victim's Son Speaks; Police Search for Driver
Lockyer, a Democrat, said he wants to act before Aug. 2 in case talks between Republicans and Democrats in Washington, D.C. remain at an impasse.
That could force the federal government to default on loan obligations and shortchange states on health care and education funding.
Lockyer warned that a federal default could negatively affect state and local government borrowing costs.MORE NEWS: DACA Program Rally In San Jose; 'I’m Tired Of People In Power Not Seeing Us As Humans'
(Copyright 2011 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)