Wednesday, December 31, 2008


Controller John Chiang sends a letter to government agencies advising them who will not be paid if the state's cash runs out. Also on the list? Californians expecting tax refunds.

By Evan Halper | From the Los Angeles Times

December 31, 2008 -- The failure of lawmakers and the governor thus far to wipe out any of the state's projected nearly $42-billion deficit leaves California only weeks from running out of the cash needed to pay all of its bills. On Tuesday, State Controller John Chiang sent a letter to government agencies advising them of whom the state won't pay if coffers run dry.

Californians may not be so troubled by who is on the top of the list to get IOUs: state lawmakers, who haven't been able to come up with a budget solution that Gov. Arnold Schwarzenegger would sign.

Legislators aren't the only ones who would be stiffed. Any Californians expecting a tax refund from the state would be out of luck until the cash crisis is resolved. Some payments to doctors would also be put on hold, as would some grants to students.

Chiang's office said the state may start issuing the IOUs as soon as Feb. 1.

An $18-billion package of tax hikes and program cuts that Democrats pushed through the Legislature earlier this month would have kept accounts from running dry. But Schwarzenegger said he would not sign that package until it was modified to include more cuts in services, the privatization of government infrastructure projects, and other measures.

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