If a company did this, wouldn't it be called bankruptcy?

MSNBC has the story here:

If you expect you'll be getting a refund from California when you file your 2008 state income tax return, be prepared: you may instead receive a "registered warrant." Translation: an IOU.

California is rapidly running out of money. Blame it on the state budget deficit that continues to bleed billions of dollars from California's reserves. Facing inadequate credit to make up the difference, California's Controller John Chiang warns that by the end of February, the nation's most populous state may not be able to pay some of its debts, and instead be reduced to issuing those creditors IOUs.

"My office has projected that, in approximately 60 days, there will be insufficient cash available to meet all expenditures reflected in the 2008-09 Budget Act," stated a Tuesday letter from Controller Chiang to the directors of all state agencies. "To ensure that the State can meet its obligations to schools, debt service, and others entitled to payment under the State Constitution, federal law, or court order. California may begin, as early as February 1, 2009, issuing registered warrants...commonly referred to as IOUs...to individuals and entities in lieu of regular payments." . . .



Blogger Ken said...

They did this same thing a few years ago (under Gray Davis), paying state employees with IOUs. They encouraged banks to treat them as normal checks, which would be paid ... eventually. The whole scheme sort of ground to a halt when some employees, rather than pass the "buck" onto their banks, saved the IOUs and attempted to use them to pay their state income taxes.

1/01/2009 11:19 AM  
Blogger John A said...

Prediction: these will become "carbon credit" vouchers - i.e. any acyual monies will go to "developing" countries (China and India, not anywhere in the African or South American continents), after being soaked for various fees by the likes of Gore's outfit.

1/01/2009 2:15 PM  
Blogger Unknown said...

I would suggest that all of the citizens show up at the state capital with their IOU's and trade them for property contained in the state house. I would imagine that I'd like the Gov's chair in my den.

1/03/2009 1:13 PM  

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