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Bill Forcing California to Accept Its IOU's Reaches Governor's Desk

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(Sacramento, CA)
Tuesday, August 24, 2010
If the bill becomes law, companies and individuals who get IOU's from the state could use them to pay for things like taxes, tuition at state colleges, and DMV fees. The bill's author, Republican Assemblyman Joel Anderson says if the measure doesn't pass, it would send a bad message about California.
 "If we don't accept our own IOU's, if the governor doesn't sign this bill he's effectively told investors that we're such a dead-beat state that we won't even accept our own paper."
Anderson says his bill is widely supported and that he's received stacks of letters proving it. One of those was written by the State's Controller, John Chiang, who has said he might have to resume issuing IOU's in a few weeks, unless the state passes a budget.
Not everyone is a fan of the bill. H.D. Palmer is with the State's Finance Department. He says California accepting its own IOU's defeats the purpose of issuing them in the first place.
"It would deplete the very cash balances that we are trying to maintain without a budget so that we've got adequate cash on hand to be able to make the priority payments that the state has to make.
Palmer says the ideal solution is to pass a budget so the state doesn't have to issue IOU's. Governor Schwarzenegger has 30 days to sign the bill into law, or veto it.
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