State Controller John Chaing says there won’t be enough cash to pay all of the state’s bills next month….so unless lawmakers come up with a deal by February first, he’ll have to delay nearly four billion dollars in payments:

“This is a very painful decision.  It pains me to pull this trigger, but it is a action that is critically necessary.”

Under the State Constitution, California must first make payments to schools and bond-holders.   But Chiang says he can delay tax refund checks, payments to counties for public service programs and some student aid checks.  But he warns it won’t be without consequences:

“It will prolong the pain, the agony and it will delay our economic recovery here in the state of California.”

Chiang says some of the late payments will cost the state interest.  He says if the gridlock over a budget deal continues, he could begin issuing I-O-U’s instead of checks – but it’s unclear how soon that might happen. The Governor and legislative leaders are expected to meet through the weekend to work toward a solution to the budget mess