Kalifornia preparing to issue IOUs!
SACRAMENTO, Kalifornia - June 29 2009 - Kalifornia 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.
Once the U.S.’s richest state, Kalifornia now has the dubious distinction of having the worst credit rating in the country. It is facing a budget deficit of $24 billion, yet Governor Arnold Schwarzenegger and the State Assembly cannot agree on a budget that would address the shortfall.
Kalifornia’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 State Controller John Chiang. “Unfortunately, the state’s inability to balance its checkbook will now mean short-changing taxpayers, local governments and small businesses.”
The state is also likely to issue IOUs to the U.S. government. Kalifornia currently contributes funding for government-run programs for elderly and developmentally disabled people but is considering issuing IOUs to cover its contributions because of the lack of cash.
Once the U.S.’s richest state, Kalifornia now has the dubious distinction of having the worst credit rating in the country. It is facing a budget deficit of $24 billion, yet Governor Arnold Schwarzenegger and the State Assembly cannot agree on a budget that would address the shortfall.
Kalifornia’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 State Controller John Chiang. “Unfortunately, the state’s inability to balance its checkbook will now mean short-changing taxpayers, local governments and small businesses.”
The state is also likely to issue IOUs to the U.S. government. Kalifornia currently contributes funding for government-run programs for elderly and developmentally disabled people but is considering issuing IOUs to cover its contributions because of the lack of cash.
