California IOU Program Draws to Close

Come September 4th, the struggling state of California should finally have enough money to not have to issue IOUs to those who should instead be receiving income tax returns. The news comes from Controller John Chiang, who cited current cash-flow projections as showing that California needs only to borrow $10.5 billion for the whole year and $1.5 billion by August 28 to meet its needs.
 
Since July 2, California has issued 327,000 IOUs to its citizens, in all totaling around $1.95 billion. This was the second time that the Golden State was forced to issue IOUs, the first time occurring in 1992. The September 4 date will be officially approved by a state board consisting of the controller, the treasurer, and the finance director which will meet on August 21.
 
California struggled with a $2.8 billion budget deficit in July and was forced to issue the IOUs after running out of cash. By issuing IOUs, California was able to continue providing funding for education, debt service, and other expenses that the state constitution, federal laws, and various court orders mandate that the state must always pay.

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