They’re baaackk! California to Issue IOUs Again

Inquiring minds are rubbing their collective heads and wondering if California will ever get it right:

California will be forced to issue IOUs to public workers and other creditors in lieu of cash in the next two months if a budget deadlock cannot be broken, the state’s financial controller has warned.

Between rising foreclosures and these IOUs it promises to be a very dicey 2011. Especially when…

…Mr Schwarzenegger and the state legislature do not appear to be close to agreeing a new financial plan for California, which issues more municipal debt than any other US state. The governor has outlined drastic spending cuts to close a $19.1bn deficit, which many in the state legislature have opposed.

However, don’t worry. California’s State Treasurer uses impeccable logic to alleviate fear:

However, there are signs that the economic picture in the state is stabilising. The IOUs were issued in 2009 at a time when state revenues were crashing, thanks to a combination of lower taxes on property and share option sales. But Mr Chiang said state finances were in a healthier position this time.

“The economy is still weak but the budget numbers are close to the projections that we made,” he said.

That is exactly the same reason a doctor once gave in a malpractice/wrongful death lawsuit to a judge:

“Your Honor, the patient is weak but he’s stablized.”

You just can’t make this stuff up.


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