July 3rd, 2009
12:30 PM ET
9 years ago

Cash-poor California turns to IOUs

NEW YORK (CNNMoney.com) - Here come the California IOUs.

Unable to meet its bills for the second time this year, the state started printing IOUs on Thursday. Some 28,750 IOUs worth $53.3 million will be issued initially, mainly for personal income tax refunds.

The IOUs helps the state controller stave off a deficit of nearly $3 billion for July. The state plans to send the IOUs to certain county agencies, small businesses and taxpayers owed billions of dollars.

The state's fiscal condition is disastrous. Officials passed a budget in February, but declining tax revenues have opened up a $26 billion deficit.

Full story

Filed under: California
soundoff (67 Responses)
  1. sensible Cape Coral Fl

    Didn't Ken Lay and Enron have a lot to do with California's current
    financial crisis? This mess surely did not happen over night.

    July 3, 2009 02:36 pm at 2:36 pm |
  2. People's Voice

    It should be I Hate U. The citizens had their chance to rasie revenue, but they voted down all the props a couple of months ago.

    Time to suffer, fools.

    July 3, 2009 02:38 pm at 2:38 pm |
  3. Yossi Gestetner

    Yeah. Liberalism can't sustain itself, economically.

    July 3, 2009 02:50 pm at 2:50 pm |
  4. Linda from Or

    What a JOKE!!

    July 3, 2009 03:15 pm at 3:15 pm |
  5. sickandtired

    I'm sick and tired of people blameing the problems of the economy on illegals, they are not the ones that are running ur state, I bet ur more an illegal han they are. Where is ur native country? There's is across the border urs is across the ocean, the only real american is the native american. Pick up a history book.

    July 3, 2009 03:39 pm at 3:39 pm |
  6. Palermo

    California destroyed its tax base a long time ago with the reduction of real estate taxes. It has never really recovered. Couple that with the deficit spending programs of Governor Reagan (which he brought with him to Washington and ran up the largest federal deficit in history) and others, you really have the perfect storm. The bill has now come due for 40 years of stupidity. It all boils down to greed. Taxpayers happily demanded and accepted all the tax cuts, totally ignoring the common good. We now have the lowest taxes in the western world...be happy.

    July 3, 2009 03:48 pm at 3:48 pm |
  7. Rich

    California seems to get all the attention but many states are struggling without any money too. California used to be such a free state, giving everyone free this and that. Bush certainly left a huge dent in this country. We cannot afford to elect another dumb candidate as our President.

    July 3, 2009 03:48 pm at 3:48 pm |
  8. Brittancus

    We are being forced-fed immigration reform, but we should not reward foreign nationals who break the law. As ICE begins its auditing of any business who is believed to be sheltering illegal workers. We as a nation should implement Italy's brand new illegal immigration law. Instead of a slap on the wrist by our laws, we should demand that Washington makes illegally immigrating a felony with appropriate consequences. As Italy we should give the legal population the right to detain foreign nationals who shouldn't be here. After it's inception we can then use a points system to settle new immigrants, who are highly skilled, with professional scientific, computer or business credentials. American taxpayers can no longer afford to subsidize the businesses and illegal families with handouts. That's the predicament of California–SANCTUARY STATE–has brought upon itself, and its hurting population. Now the State must issue IOU's, extract higher taxes and restrict health care to low income legal citizens.

    With yet another path to citizenship in this nations future, we had better take careful notice of the consequences? Without any doubt to process 13 to 20 million plus illegal immigrants is, according to Robert Rector of the reputable non-profit Heritage Foundation $2.5 TRILLION DOLLARS. It’s an accumulation of procedures necessary to investigate backgrounds of all those who come out of the proverbial shadows. But if and when another of these AMNESTIES is forced past the American voters, millions more will be equally ready to head for America, expecting a ninth Amnesty. The major one in 1986 was rife with fraud, a absolute disaster and was never enforced, that’s why our country has uncontrolled illegal immigration?

    If we command of the Democratic leadership who originally tried to kill E-Verify, such as Sen. Harry Reid, House Speaker Nancy Pelosi, we have an ongoing chance of combating the illegal immigrants of stealing further into the workplace. With Obama admitting that unemployment is farther on the rise, why would they be entering discussions of forcing another Amnesty down our throats. E-Verify is rapidly catching on and accelerating in the workplace and should not be denied to the American worker. CALL YOUR SENATOR AND REPRESENTATIVE AND DEMAND It should be fully funded, permanent and an a Federal identity check for everyone in working America? NUMBERSUSA, CAPSWEB for more details. ICE has a phone number to call when suspicious activity is determined in the Factory, office, restaurant or any industry.

    July 3, 2009 03:48 pm at 3:48 pm |
  9. B.H.

    California has become a state like many others in the country of
    -The Haves- and Have Nots-. Some would call it Social Darwinism, the top wealthy minority pay little or no tax to help support the system, and the middle and low income carry the tax burden.. This country needs to start taking care here and stop trying to police the whole world! We are BROKE people.

    July 3, 2009 03:52 pm at 3:52 pm |
  10. Moe, NY

    Can the taxpayers expect to charge interest on these IOU's? In my opinion, the taxpayers certainly should be able to charge interest, as if the shoe were on the other foot, the government would certainly charge us interest. Wonder if the government will accept an interest free IOU from me? Just curious!

    July 3, 2009 03:54 pm at 3:54 pm |
  11. Kevin in Ohio

    The problem here is the spend spend spend mentality of the California Legislature. Time to give up protecting frogs, trees, and illegal aliens. Its that simple.

    July 3, 2009 03:57 pm at 3:57 pm |
  12. tonyde28

    I guess this means anyone who owes taxes next April can send a IOU to the govt, right? Maybe pay a fine by IOU as well? Actually, I dont see the problem in California. Dont they love paying for all the illegals they have there? Sanctuary cites and all that crap! Every need an illegal has is paid for by the stupid people of California. So whats the problem Cal??? The people of Ca. wanted it this way, and now they've
    got it!!! I guess its a good thing the Federal Govt thinks its ok that illegals break our laws too.....they think the same way as the people in California! What do you idiots think now?

    July 3, 2009 03:58 pm at 3:58 pm |
  13. B.H.

    You could start by making some of the wealthy folks start to pay their fair share of the tax burden.

    July 3, 2009 03:59 pm at 3:59 pm |
  14. Eric

    California's financial problems all stem from late 70's Prop 13, which limited property taxes to 1% of assessed value and couldn't go up by more than 1% a year. A huge windfall to big property owners (note to "Jon in CA" – they aren't liberals.) But this caused unavoidable shortfalls in local governments budgets, who were now unable to afford basic costs of police, fire, and public education. State ends up picking up part of the tab, which works when market is humming, but not now. Without the illegal workforce, California would have been in the tank long ago.

    July 3, 2009 04:00 pm at 4:00 pm |
  15. Linda

    Where is the Terminator when you need him!
    Arnold is better on film than as Governor.

    July 3, 2009 04:08 pm at 4:08 pm |
  16. Marie in California

    Years of California's Senate and Assembly being controlled by Democrats, plus some Democrat governors before Arnold have led us to this point. The Governator is the only voice of reason in Sacramento when he says "Cut spending......no new taxes."

    The Democrats in state government can't make it happen, even though California voters in the May special election voted 2 to 1 for no more taxes, no borrowing, and no raises for state senators and assembly members unless they balance the budget. People are fed up with being gouged for money.

    As goes California, so goes the country?


    July 3, 2009 04:31 pm at 4:31 pm |
  17. Wondersteer

    Taxes need to be increased to resolve the imbalance. Of course, the folks who use the most services (the indigent, the working poor, the disabled and Ill) should pay most of the taxed. After all, fair us fair. I agree with the earlier post that noted that prisoners should pay for their accomodation ( or perhaps their families-talk about effective peer pressure to reduce crime). Most importantly, this us not a Democrat or Republican issue, it is a Cslifornian issue.

    July 3, 2009 06:35 pm at 6:35 pm |
1 2 3