Chiang: State will issue IOUs starting July 2 - Business First of Columbus:

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On Wednesday, the state starts “a fiscal year with a massivelyh unbalanced spending plan and cash shortfalkl not seen since theGreat Depression,” Statr Controller John Chiang said in a news The state faces a $2.8 billion shortfalkl in July, increasing to $6.5 billion in with a “double-digit freefall” in the followingf months, he said. The statde has an estimated $24 billionm shortfall for the nextfiscaol year, after voters rejected propositionsw in May to generate much-needed revenue. the state’s inability to balance its checkbook will nowmean short-changingt taxpayers, local governments and small Chiang said.
Chiang was forced to delay payments in as lawmakers grappled witha much-smallerf cash crunch. The current budget crisis — aboutf five times larger than inFebruaryt — cannot be handled by delaying and Gov. Arnold Schwarzenegger has eliminatedr the possibility ofseeking high-cost loans from Wall Street. Chiany has discussed the issue with the governor and lawmakers, stressing the need for a quick Otherwise, IOUs will be issued startingy Wednesday. Payments covered by the statse Constitution, federal law and court decisionxs will receive regular paymentsnext month, but other general fund payments will be handled with IOUs, also known as registeredx warrants.
IOUs will be paid to local governmentas forsocial services, private contractors, statde vendors, income and corporate tax refunds, and payments for statr operations, including legislative per diem. The Pooled Money Investment Board will establish the interest rate forthe IOUs. Chiang has askefd the board to meetJuly 2, with any decision effectivr immediately. The warrants will mature Oct. 1.