California Plans to Stop Issuing IOUs One Month Early
State Controller John Chiang says California can stop issuing IOUs to vendors on Sept. 4, a month earlier than he expected.
The decision came after meetings between Chiang (chung), Treasurer Bill Lockyer and Gov. Arnold Schwarzenegger's financial advisers. They needed to review California's cash flow and assess investors' appetite for buying California bonds.
When Schwarzenegger signed California's revised $85 billion budget two weeks ago, it gave the state the leeway to seek short-term loans to cover its daily expenses, ending the need for the IOUs.
Chiang says the state will need to borrow $10.5 billion for the coming fiscal year. He's also recommending the state start redeeming the $1.95 billion in IOUs on Sept. 4.
Faced with a cash deficit of $2.8 billion in July, California was forced to issue IOUs to preserve cash for education, debt service and other payments. Since July 2, the California has issued 327,000 IOUs.