California: No Cash State Starts Issuing IOU's On July 2, 2009 "Even As IOU"

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Doing business with the State of California? Think your bank will accept a State IOU instead of cash in payment? California's Controller John Chiang announced today "Next Wednesday we start a fiscal year with a massively unbalanced spending plan and a cash shortfall not seen since the Great Depression" and stated he would be forced to use IOU's to pay the state's bills beginning on July 2.


"The state's $2.8 billion cash shortage in July grows to $6.5 billion in September and after that we see a double digit freefall," Chiang said. "Unfortunately, the state's inability to balance its checkbook will now mean short-changing taxpayers, local governments and small businesses."


The California Legislature on Wednesday voted down $11 billion in proposed cuts to state services. The vote failed largely along party lines in both houses, with the Republicans saying it falls short of the savings needed and that it amounted to posturing by the Democrats.

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