Digital News Report – The State of California may need to issue IOUs again. According to a recent report, State Treasury Bill Lockyer says that the state could be facing another fiscal crisis and may need to initiate IOUs.
This could affect the states credit rating and cost taxpayers. Also, businesses that depend on the state money could be affected. “IOUs could be a death knell for already struggling California businesses,” according to State Senator Joel Anderson.
The state Senate is proposing a solution that could help some of the businesses. Senate bill 120, if passed, could force state agencies and departments to accept the state’s IOUs as payments for bills owed to the state. “This emergency legislation could be their life line,” Anderson said.
The state is facing a $25 billion shortfall. If the state owes businesses and submits IOUs to those businesses, the state should accept IOUs as payments, according to several lawmakers.
In 2009, when the state issued IOUs, Governor Schwarzenegger vetoed a similar measure.
By Mark Williams