Randomness (r_ness) wrote,

  • Music:

That's not an IOU. This is an IOU.

From http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/02/09/MN7715QD8H.DTL:
California forced to issue IOUs to counties

California's budget woes will sweep over California's 58 counties this week when they get IOUs instead of checks for $89 million in anticipated payments for welfare, food stamps and other services.

Many counties are planning to go to court as soon as that first payment is missed. San Francisco will join a suit set to be filed by San Diego and Sacramento counties, arguing that state Controller John Chiang must release funds that already have been appropriated by the Legislature in the state budget.

The state requires counties to provide foster care programs, adult protective services, welfare payments and a laundry list of other social services and normally provides much of the money to run them. But while the legal requirements remain, the money has disappeared.
The SF Chronicle doesn't mean that literally. What they're actually saying is that the state is deferring payment until it figures out what to do.
The state's cash crunch means that the counties also won't get an $83 million payment scheduled for Feb. 25 and that no future payments will be made until the state reaches a budget agreement that eases its cash-flow problem.

The state's long-term budget problems already have stretched county resources. Since 2001, the state has not approved a cost-of-living increase for most social service programs, forcing counties to make up the difference.
If California were really issuing IOUs, they might look more like this (click on images for larger versions with legible text):

From http://en.wikipedia.org/wiki/Patac%C3%B3n_(bond)
The Patacón (officially called Letra de Tesorería para Cancelación de Obligaciones de la Provincia de Buenos Aires) was a bond issued by the government of the province of Buenos Aires, Argentina, during 2001. The patacones were used to pay government bills, including state employees' salaries during a period when the economic crisis caused regular currency (Argentine pesos) to be scarce. Patacones then circulated in the economy in much the same way as pesos.
Tags: money
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