Cash-strapped Golden State issues IOUs

Click to follow
The Independent Online
SACRAMENTO (AP) - The IOUs are in the mail for thousands of Californians. A legislative impasse has left the recession-racked state with no budget and no cash on the first day of the fiscal year, forcing California to pay its bills in IOUs instead of cheques for the first time since the Great Depression of the 1930s.

If the budgetless state were a corporation, 'the shareholders would throw out the board of directors and demand a change of management', said the state's top finance officer, Gray Davis, who yesterday sent out the first batch of vouchers. The Democrat- controlled legislature and the state's Republican Governor, Pete Wilson, are at odds over how to deal with an immediate dollars 6bn ( pounds 3.3bn) shortage in his dollars 56bn spending plan.

If a budget is not signed, the nation's largest state will eventually have to cut services and close schools, libraries and parks. 'Today, the state of California is out of cash . . . facing the worst fiscal crisis since the Great Depression,' Mr Wilson said.