Deficit forces California to issue IOUs

California is preparing to issue IOUs to its creditors this week as it grapples with an unprecedented cash crunch and prepares to begin its new fiscal year deep in the red.

To view dictionary popup window put your cursor on the blue scripture words.
Perplexity

“…upon the earth distress of nations, with perplexityStrongs 640: aporia, ap-or-ee´-a; from the same as 639; a (state of) quandary:—perplexity.
Strongs 639: aporeo, ap-or-eh´-o; from a compound of 1 (as a negative particle) and the base of 4198; to have no way out, i.e. be at a loss (mentally):— (stand in) doubt, be perplexed
….”
—Luke 21:25

Root of All Evil

“For the love of money is the root Strongs 4491: rhiza, hrid´-zah; apparently a primary word; a “root” (literally or figuratively):—root of all.of all evilStrongs 2556: kakos, kak-os´; apparently a primary word; worthless (intrinsically, such; whereas 4190 properly refers to effects), i.e. (subjectively) depraved, or (objectively) injurious:—bad, evil, harm, ill, noisome, wicked. which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows. ”
—1 Timothy 6:10

Once the US’s richest state, California now has the dubious distinction of having the worst credit rating in the country.

It is facing a budget deficit of $24bn (€17bn, £14.5bn) yet Arnold Schwarzenegger, its governor, and the state assembly cannot agree on a budget that would address the shortfall.

California’s fiscal year ends on Wednesday but as the state’s cash reserves are empty, IOUs will be issued to a range of creditors, including contractors, such as information technology companies and the food service groups that cater for prisons.

“On Wednesday we start a fiscal year with a ­massively unbalanced spending plan and a cash shortfall not seen since the Great Depression,” said John Chiang, the state ­controller. “Unfortunately, the state’s inability to balance its chequebook will now mean short-changing taxpayers, local governments and small businesses.”

The state is also likely to issue IOUs to the US government. California currently contributes funding for government-run programmes for elderly and developmentally disabled people but is considering issuing IOUs to cover its contributions because of the lack of cash.

Education funding is protected under the state’s constitution while payments on the state’s bond debt are also guaranteed under state law.

Democrats and Republicans in the state government last week struck an agreement on a range of money-saving measures. However, Mr Schwarzenegger has threatened to veto the plan on the grounds that it was a piecemeal solution to California’s budgetary woes.

Mr Schwarzenegger said he would veto any bills that raised taxes without reforming the state’s government. “I will veto any majority vote tax increase bill that punishes taxpayers for Sacramento’s failure to live within its means,” he said. ”The legislature will have a difficult time explaining to Californians why they are running floor drills the day before our budget deadline. We do not have time for any more floor drills or partial solutions. It’s time for the legislature to send me a budget that solves our entire deficit without raising taxes.”

  1. Linda, 30 June, 2009

    Can I send in an IOU with my electric bill?

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