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California begins printing IOUs

Nearly 29,000 IOUs worth $53 million will be sent, mostly to residents awaiting tax refunds. Finance officials set the interest rate at 3.75% for banks that accept the vouchers.

July 03, 2009|Eric Bailey and Patrick McGreevy

Still, most lawmakers left the capital for the holiday weekend. Legislative leaders said they would remain behind to continue negotiations.

Meanwhile, the controller's office pumped out the IOUs for only the second time since the Great Depression. The black-inked documents look like checks but have the words "registered warrant" emblazoned on them.

Workers placed the foot-high piles of paper promises into boxes for sorting, packing and shipping as news photographers watched.

The state's Constitution requires that education and debt service payments be made -- in cash -- before all others. After that, those who must be paid in cash include state workers, the state's CalPERS and CalSTRS pension funds, In-Home Supportive Services and Medi-Cal providers.


Times staff writers Shane Goldmacher, Evan Halper , Molly Hennessy-Fiske, Gerrick Kennedy and Michael Rothfeld contributed to this report.



'We're very disappointed . . . that California has taken the unfortunate step of issuing IOUs. . . . We join all Californians in urging our Legislature and our governor . . . to resolve this budget crisis.'

-- Lisa Stevens,

Wells Fargo Bank official

in California


'This is not gonna get any better. I just don't believe it. I'm thinking one day I may have to leave here.'

-- Paula Joliette,

Los Angeles resident who

lives on Social Security


'It's time for the legislators to grow up.'

-- Gary Wolfe,

certified public accountant, Ventura


'The people in Sacramento don't understand that when they make these kinds of decisions they are imploding people's lives.'

-- Judith Dolan,

executive director,

Anderson Valley Health Center


'I can't pay bills with IOUs. I can't pay salaries with IOUs.'

-- Thomas Bent,

medical director,

Laguna Beach Community Clinic



Quick facts on

California IOUs

For the first time since 1992, the state is issuing IOUs. California does not have enough cash on hand to pay all of its bills.

* Recipients include businesses, local governments and taxpayers expecting refunds. Total: $3 billion by the end of July without a balanced budget.

* Vouchers, which look like checks but are stamped "registered warrant," bear 3.75% interest.

* Redeemable at some banks. Wells Fargo and Bank of America will cash them through July 10. Otherwise redeemable from the state or banks Oct. 2 or earlier if the state's cash flow improves sufficiently.

* More information:

(866) 267-4255.

On the Web:

Sources: State controller's office, Times reporting

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