IOU’s look a lot like checks….but with one big difference. You can’t cash them just yet.
At the State Controller’s office high speed printers crank out more than one-thousand IOU’s a minute. For each, the state promises to pay 3.75 percent interest on October 2nd .
“Frankly it’s a negative stimulus plan for California.”
State Controller John Chiang says he’ll send out about three billion dollars in IOU’s this month. They’ll go to vendors who do business with the state, people expecting tax refunds and counties who run programs for the poor. Chiang is asking lawmakers and the Governor to correct the 26 billion dollar budget shortfall as quickly as possible:
“Every day counts, every dollar counts. For every day they hold up and not come to agreement, it becomes much more expensive, not just for the holders of those IOU’s but to the taxpayers of California.”
Legislative leaders are expected to work through the holiday weekend on the budget. There’s new optimism from the Governor and the Democratic Senate Leader that a deal could be just days away. If that happens, the state could decide to redeem the IOU’s sooner than October second.
Some banks have agreed to accept the IOU’s…but many will only take them for about a week.