IOUs Good A Month Early
The good news is that residents and vendors who received IOUs from the state of California for tax refunds and services rendered can start cashing them on September 4.
The even better news is that Sept. 4 is the day the state will stop issuing the promissory notes, a whole month earlier than anticipated.
According to a CNN report, the state is expected to have enough cash to stop issuing the IOUs by that date. California's controller's office started sending out the IOUs July 2 and has to date issued 327,000 IOUs worth a total of $1.95 billion.
After the legislature was unable to close a $24 billion budget deficit, the Controller was forced to issue the vouchers so the state would have enough money to cover debt payments and fund education.
"Along with short-term loans that are routinely obtained in the fall, this spending plan should provide sufficient cash to meet all of California's payment obligations through the fiscal year," said Controller John Chiang said.
The IOUs were sent to the state's vendors, county social service agencies and residents expecting tax refunds. The state's biggest banks accepted them until July 10, but then most cut them off, hoping to bring lawmakers and the governors to the negotiating table.
They were told they could redeem the paper on Oct. 2 or when the state had enough money in the bank, whichever came first. Holders of the IOUs will be paid an annual interest rate of 3.75%.