Boston (AP) -- Spurred by concerns about the state's ability to borrow, Treasurer Timothy Cahill has asked the federal government about lending Massachusetts money under the same favorable terms it's given banks and firms during the financial crisis.
Cahill's requests to the U.S. Treasury and Federal Reserve Bank of Boston were prompted by the state's inability to borrow from the short-term debt markets, The Boston Globe reported. The financial turmoil has caused credit markets to stop lending, or to charge prohibitive rates.
California has made a request that is similar to Cahill's, saying it would run out of money by the end of the month if the short-term debt markets do not ease, and if it could not obtain loans from the Fed. Massachusetts has enough available funds to cover its expenses for the coming weeks, Cahill said. But he wouldn't predict when the state would have a cash shortfall if the credit problems persist.
Cahill said if the credit markets remain tight, the Fed should offer the state the same low-rate loans or assistance the central bank has been giving the nation's banking system during the credit crisis, according to the Globe's report on Saturday.
"That's all we would ask them to do: Treat us like the investment banks," Cahill said.
Federal officials have not responded to Cahill's request, he said Friday. Officials at the Boston Fed and U.S. Treasury did not return calls from the Globe seeking comment.
Earlier in the week, Cahill's office shelved a $750 million debt offering because there were no buyers for state or municipal debt. He said he'll float the offering again next week in hopes that the federal bailout package passed Friday will calm credit markets and revive sales of municipal debt.
"We have been preparing all week for contingencies around the fact that, if we don't get access to the credit markets next week, what are our alternatives?" he said.
The state's borrowing problems come as it deals with a $223 million shortfall in projected tax collections during the first quarter of the state's fiscal year. On Thursday, Gov. Deval Patrick announced the first of what could be a series of cuts to programs and operations to deal with the sagging collections.
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