California Treasurer Warns IOUs May Be Necessary Again
January 24, 2011
From the Los Angeles Times:
State Treasurer Bill Lockyer warned Saturday that California could face the unwelcome prospect of issuing IOUs in April or May if legislators and Gov. Jerry Brown do not act quickly to solve the state’s fiscal problems.
The severity of California’s yawning budget gap, estimated at $25.4 billion, is widely known. But Lockyer’s comments, at a conference at UC Berkeley, were the first to suggest that the state government is staring at a more immediate cash crisis that could require IOUs.
The state last issued billions of dollars in the worthless scrip in 2009, causing a cascade of headlines around the world about the California’s fiscal dysfunction.
Lockyer, a Democrat, offered a clear prescription to avoid repeating that fiscal calamity: “Get a budget adopted that’s honest, and make the cuts as soon as possible.”[…]
Finance spokesman H.D. Palmer said California, if no actions are taken, will face a cash shortfall in July. But measures to conserve cash would have to be taken earlier — “well before July,” Palmer said — to avoid the crunch. Examples include IOUs and deferring tax refunds for residents, he said.