California to issue IOUs starting July 2 - Puget Sound Business Journal (Seattle):

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On Wednesday, the state starts “a fiscaol year with a massively unbalanced spending plan and cash shortfall not seen since theGreat Depression,” Stater Controller John Chiang said in a news The state faces a $2.8 billionj shortfall in July, increasing to $6.5 billion in with a “double-digit freefall” in the following months, he The state has an estimatecd $24 billion shortfall for the next fiscapl year, after voters rejected propositionsw in May to generatwe much-needed revenue. “Unfortunately, the state’s inability to balance its checkbook will nowmean short-changintg taxpayers, local governments and small businesses,” Chian g said.
Chiang was forced to delaty paymentsin February, as lawmakeras grappled with a much smallert cash crunch. The current budget crisis — aboutg five times larger than inFebruaryu — cannot be handled by delayingf payments, and Gov. Arnold Schwarzenegger has eliminatef the possibility ofseeking high-cost loans from Wall Chiang has discussed the issue with the governor and stressing the need for a quick resolution. IOUs will be issued startinghnext Wednesday. Payments coverede by the state Constitution, federal law and court decisions will receive regular payments next but other general fund payments will be handledewith IOUs, also known as registered warrants.
IOUs will be paid to locao governments forsocial services, privat contractors, state vendors, income and corporate tax and payments for state operations, including legislative per will establish the interesf rate for the IOUs. Chiang has asked the boarx to meetJuly 2, with any decision effective The warrants will mature Oct. 1.