California set to issue IOUs as fiscal crisis weighs

California’s controller said on Wednesday that he would have to issue IOUs in a week if lawmakers can’t quickly solve a $24 billion budget deficit, and the state’s treasurer plans to tap a reserve fund to meet debt service costs.

The measures came as a budget crisis deepened in the most populous U.S. state and the gridlocked legislature failed to pass a proposed $11 billion in cuts.

“Next Wednesday we start a fiscal year with a massively unbalanced spending plan and a cash shortfall not seen since the Great Depression,” Controller John Chiang said in a statement announcing that he would be forced to use IOUs to pay the state’s bills beginning on July 2.

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Posted in * Economics, Politics, Economy, Politics in General, State Government, Taxes, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

4 comments on “California set to issue IOUs as fiscal crisis weighs

  1. Jeffersonian says:

    And there’s Arnie, warning Republicans that if they don’t become like him, they’re doomed. The irony is so thick you can cut it with a knife.

  2. Cennydd says:

    Want him? You can HAVE him!

  3. Jeffersonian says:

    I’ll take his movies (most of ’em) and his humidor. The rest I’m fine leaving on the left coast.

  4. jkc1945 says:

    I wonder what kind of market will develop for California Government IOU’s. I imagine that, within a few days, they will trade at percentages of their face value, just like other “notes.” But when you think of it – – who would want an IOU from the State of California? They may trade at deep discount.