California is now in crisis mode with little cash on hand. Contractors and individuals who are still waiting for tax refunds will instead an IOU.
Update: The following chart from reuters
With budget negotiators at loggerheads and California government facing a cash crisis, the state controller’s office will start printing IOUs this afternoon for the first time in 17 years.
The presses are set to start at 2 p.m., churning out 28,742 IOUs worth $53.3 million that will be dispatched mostly to residents throughout the state still awaiting their income-tax refunds.
State finance officials set the interest rate at 3.75% for banks that accept the vouchers. Nearly 29,000 IOUsth $53.3 million will be sent, mostly to residents awaiting tax refunds. wor
Reporting from Sacramento — With budget negotiators at loggerheads and California government facing a cash crisis, the state controller’s office will start printing IOUs this afternoon for the first time in 17 years.The presses are set to start at 2 p.m., churning out 28,742 IOUs worth $53.3 million that will be dispatched mostly to residents throughout the state still awaiting their income-tax refunds.
A panel of state finance officials this morning set the interest rate for the IOUs at 3.75% for banks and other financial institutions that are willing to accept the scrip. Some banks have already agreed to honor the paper, including Bank of America and Wells Fargo, which will do so until July 10. Some have not made a decision. Recipients who don’t have a bank that will cash them can redeem them Oct. 2.Wells Fargo’s agreement came with a nudge. “We are reluctant to take this step, but are doing so to help our customers who are not at fault and with the expectation that the Legislature and governor will complete the budget within days,” Lisa Stevens, a bank official in California, said in a statement.
The state’s three-member finance panel voted 2-1 to set the interest rate, with the governor’s representative on the board objecting, proposing instead a 1.5% rate, with a redemption date of June 2010.[...] (source: LA Times)
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You can’t blame it all on Schwarzenegger either. Recap worth watching: http://www.newsy.com/videos/california_s_new_currency
Why don’t all state of california representatives have a stop to their wages until AFTER, they settel the budget crisis. After all we the tax payers are all suffering, why not them.