With no cash, California may just issue promises
Sue Doyle, Staff Writer
Updated: 01/02/2009 06:00:44 PM PST
Californians planning to stuff their thinning wallets with money from 2008 state income tax returns could be disappointed.
For the first time in 17 years, California finance officials warn they could pay taxpayer income tax refunds in April with IOUs. And don't get any ideas: Residents who owe tax cannot pay the state with IOUs.
Though the plan sounds like a desperate move from a down-and-out Vegas high roller, it's actually one of the few alternatives remaining for the world's eighth-largest economy as it struggles to close an ever-growing budget gap - now estimated at nearly $15 billion for this fiscal year. If nothing's done, the gap could widen to $41.6 billion by July 2010.
In the near term, the cash-strapped state could run out of money in 60 days unless Sacramento officials can agree on a budget plan.
"They are still in discussion on how to tackle the budget problems," said Jacob Roper, California state controller spokesman. "The way to avert the cash problem is to solve the budget problems."
In a letter Tuesday, state Controller John Chiang notified agencies that could be affected by the IOU payments. It could start in February with paychecks for the state's 1,700 elected officials and their staffs.
Only once since the Great Depression has the state turned to such extremes. A budget standoff in July 1992 slammed the state into a cash shortage, and several thousand state employees were paid in IOUs until a plan was approved.
Sue Doyle, Staff Writer
Updated: 01/02/2009 06:00:44 PM PST
Californians planning to stuff their thinning wallets with money from 2008 state income tax returns could be disappointed.
For the first time in 17 years, California finance officials warn they could pay taxpayer income tax refunds in April with IOUs. And don't get any ideas: Residents who owe tax cannot pay the state with IOUs.
Though the plan sounds like a desperate move from a down-and-out Vegas high roller, it's actually one of the few alternatives remaining for the world's eighth-largest economy as it struggles to close an ever-growing budget gap - now estimated at nearly $15 billion for this fiscal year. If nothing's done, the gap could widen to $41.6 billion by July 2010.
In the near term, the cash-strapped state could run out of money in 60 days unless Sacramento officials can agree on a budget plan.
"They are still in discussion on how to tackle the budget problems," said Jacob Roper, California state controller spokesman. "The way to avert the cash problem is to solve the budget problems."
In a letter Tuesday, state Controller John Chiang notified agencies that could be affected by the IOU payments. It could start in February with paychecks for the state's 1,700 elected officials and their staffs.
Only once since the Great Depression has the state turned to such extremes. A budget standoff in July 1992 slammed the state into a cash shortage, and several thousand state employees were paid in IOUs until a plan was approved.
