Posted on 07/02/2009 4:51:15 PM PDT by SeekAndFind
Facing a budgetary crisis of its own making, California has begun to issue IOUs instead of cash payments to at least some of its creditors. For the first time since 1992, the state government has too little cash to meet its obligations. However, Governor Arnold Schwarzenegger insisted that the state was “responsible” enough for banks to accept the IOUs at face value:
California’s controller will start paying many of the state’s bills with promissory notes as soon as Thursday after lawmakers failed to close the state’s worsening budget deficit, adding a new measure of indignity to a state sinking deeper into dysfunction. …
State Controller John Chiang said his office is prepared to issue promissory notes totaling $3.3 billion in July.
It will be the first time since 1992 that California will have issued promissory notes. The move is almost certain to further damage state’s credit rating, already the lowest of any of the 50 U.S. states, saddling taxpayers with billions of dollars in higher interest payments on bonds that have yet to be sold.
Issuing the promissory notes — formally referred to as individual registered warrants — also will have real-world consequences for those on the receiving end. Small businesses that rely on state contracts will be most affected. …
Bank of America announced Wednesday it would cash the state’s promissory notes for its customers through July 10, bank spokeswoman Colleen Haggerty said. Schwarzenegger and state officials asked other banks to do the same, noting that California has never defaulted.
“We will make those payments,” he said. “We are responsible.”
If they were responsible, they wouldn’t have to issue IOUs now. The state government has been a model of irresponsibility for the past couple of years as this utterly predictable budget crisis approached.
(Excerpt) Read more at hotair.com ...
Coming soon nationwide.
It will be interesting to see if taxpayers issue IOU’s to the state.
Sure. Oh yeah. I'm certain they have a lot of faith in the state
I wonder if the creditors could find anyone willing to buy up the notes for, say, 50 cents on the dollar.
Those IOUs are not worth toilet paper....where are the state-destroying liberals going to get the money?? They are driving businesses and top-earning individuals out of the state faster than they know. What goes around, comes around.
Worth visiting the link to see who gets paid in cash and who gets the IOUs.
Damned straight they are (at least the smart ones). Taxpayer IOUs are in the form of increased number of withholding allowances. Why take the chance they won’t be able to pay you your refund next January? My wife and I are adjusting allowances right now so we pay the state.
It's time to bring charges against the b*stards behind this for violating the oath they took to uphold the United States Constitution.
ML/NJ
Selling your receivables (”factoring”) is very common. Don’t know if you can do it with a government warrant, though.
Nope, the feds can just print more money. The states can't.
Meanwhile the State’s Employees will be paid with real money - no IOUs for them!
People always have to learn the hard way.
Years of warnings mean nothing.
Let the pain begin.
Figure it out yet? The people who most need cash get IOUs, while the people who could stand to operate on credit get cash. I guess this is also “responsible”. |
That old document? Nobody pays attention to it anymore. It's obviously obsolete; it doesn't even allow government to perform vital roles like controlling health care and regulating carbon dioxide.
Better hurry before they pass a law that says you can’t.
Good point. I sometimes forget to think through all of these new scenarios we now have to deal with.
Excellent point. I wouldn’t put it past them to even try to pass a law to retroactively revert you to prior withholding levels if you made an adjustment after 1/1/09.
Those paid with registered warrants:
http://www.sco.ca.gov/5919.html
Those not:
http://www.sco.ca.gov/5917.html
Note: regular paychecks are also called warrants also.
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