NEWS

Thu, Jul 02

California Paying With IOUs

With its budget gap growing and the state facing a massive cash crisis, California has approved using registered warrants or “IOUs” to pay vendors and taxpayers. This is only the second time the state has adopted the emergency payment method since the Great Depression. Officials authorized the measure allowing the state to issue the registered warrants in lieu of cash payments to vendors, local agencies and individuals owed money. The IOUs have a 3.75 percent interest rate and an Oct. 2 maturity date. The first round of IOUs will be printed today and will be sent primarily to taxpayers owed tax refunds. The state could issue as much as $3.36 billion in IOUs this month.

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