On May 29, 2009, I informed you of the precarious nature of the State’s cash condition and alerted you to impending risks which threaten the State’s ability to meet its payment obligations.

The situation has not improved. Based on actual revenues received during the month of May, and finalized May Revision data provided by the Department of Finance on June 1, I have the following updates to the State’s 2009-10 cash outlook:

While the severity of the shortfall has worsened since my last letter, the time available tocorrect our budget and cash deficits has not materially changed. The State will run out of cash in less than 50 days without corrective action by the Legislature and Governor.

Likewise, without credible and durable budget solutions that produce positive results in the State’s cash position and demonstrate the State’s ability to repay at time of maturity, any form of cash flow borrowing – whether a Revenue Anticipation Warrant (RAW) or Revenue Anticipation Note (RAN) – will be met with heavy skepticism by investors. At best, this will result in a borrowing of limited size and at significant expense. At worst, it could result in a failed sale. As disclosed to you in my previous letter, I am reluctantly preparing to sell RAWs as a precautionary measure and will be meeting with rating agencies and launching an investor outreach effort in less than two weeks.

Again, I respectfully urge the timely adoption of a truly balanced budget, with immediate cash solutions, as the only responsible approach to resolving the State’s cash crisis.