Thousands of state employees and welfare recipients in Ventura County were among those bracing themselves Monday to get paid with IOUs instead of their usual checks.

Unable to issue checks without a budget after midnight tonight, the state will be forced to issue promissory notes that nearly all banks in California have promised to cash--at least during July.

But if the budget goes unapproved much past July 31, some banks may cease to honor the state-issued IOUs, officials said.

State employees in Ventura County expressed shock Monday at the extraordinary measure, but said they are not ready to panic--yet.

"Wow, that's amazing," said C. L. Price, state lifeguard supervisor for the Channel Islands District, which covers the county's shoreline. "I truly hope they get the thing signed and they get it solved before everything falls to pieces.

"I don't know what people are going to do if they can't make their mortgage payments," Price said. "Pack their gear and walk away from their $150,000 homes? Say, 'Sue me--sue my employer?' "

Budget delays have been common for years, said Lt. Richard Williamson, a veteran California Highway Patrol officer.

"But I've been on the job for 25 years, and this is the first time they've ever issued IOUs, to my knowledge," Williamson said. "I'm prepared to survive without a paycheck for a while. Anybody with any sense has got that already set up. But it is a little unnerving."

Hal Pittman, Ventura County treasurer-tax collector, explained the IOU plan.

"If you don't have a budget, and it's not practical to say, 'We're going to close the state down,' you have to have a methodology to pay bills and pay payrolls," Pittman said. "You're kind of borrowing money, and there is no definite (schedule) on when it will be honored."

The first IOUs, known as registered warrants, will be issued Wednesday to about 34,000 part-time employees statewide, said Ed Fong, a spokesman for the state controller's office.

On July 15, welfare payments to the county Public Social Services Agency would begin coming in the form of the IOUs.

And by Aug. 1, full-time state employees would begin getting IOUs instead of paychecks, officials said.

County welfare clients, whose state and federal financial aid is passed through county agencies, will receive regular checks on Wednesday. But unless the state budget is passed, those clients will receive IOUs beginning July 15, said Helen Reburn, deputy director of income maintenance for the county Public Social Services Agency.