Budget + 49: IOUs In 2-4 Weeks

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Photo: John Myers

A budget impasse that lasts beyond Labor Day could lead to another year of California issuing IOUs instead of cash for invoices owed.

But, says Controller John Chiang, he's not issuing a firm deadline to lawmakers this time around.

In remarks this afternoon to the Sacramento Press Club, the state's chief financial officer said he's watching the state's cash flow on a daily basis, and that he's sticking with his forecast from a few weeks ago -- that, absent a budget, the state's bank account would be empty in late October.

"If the current conditions hold," said Chiang, "then we would have to take action in the next few weeks." He later clarified that could be in as little as two weeks time.

In 2009, the state issued more than $2.6 billion in what government-speak calls registered warrants -- more than 449,000 individual promises to those who do business with the state to make good on money owed at a later date (the IOUs were issued between July 2, 2009 and September 4, 2009).

But unlike last year], the controller is refusing to set a drop dead date by which he'd start issuing IOUs, nor would he say today what total amount of IOUs the state might have to issue if the budget impasse goes until the end of August or beyond. When pressed as to why he's not using the stark reality of the state's bank account woes to create some leverage on action under the Capitol dome, Chiang said it doesn't work.

"I issued IOUs last year and it didn't make them come to agreement," he said. "I threatened them for six months, they didn't act."

In the meantime, a number of payments are already being delayed, and the controller's message remains pretty simple: "None of this needs to take place if the Governor and Legislature act responsibly and come up with a sound, honest budget."

Photo: John Myers

ADDENDUM: In other budget impasse news this afternoon: the California Supreme Court cleared the way for state worker furloughs to begin again on Friday, with the Schwarzenegger administration saying two Fridays plus another makeup furlough are on tap for this month... and several dozen protesters blocked L Street outside the state Capitol this afternoon, calling for an end to deep cuts in health and human services. Several were arrested by police.

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About John Myers

John Myers is Sacramento Bureau Chief for KQED Public Radio and "The California Report," heard daily on 23 public radio stations across the Golden State.
  • barbara

    This is INSANE to me that these individuals can get away with this year after year, Can’t we seek out Federal help? our State Legislator and Governor are destroying our State.
    I have seen Families of Vendors for California lose their homes and business over this.
    These people in our capital don’t care about people of this State I think they should be jailed for their consistent incompetence.