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Budget Deal May Not Save California From IOUs

(KCBS) – The state is saddled with $8 billion of past due bills that will come due as soon as the governor signs a budget, and the state controller said Thursday there is not enough money to pay all of its debts at once.

Controller John Chiang said there is only about $2.5 billion in the treasury because the legislature took 99 days to come up with a spending plan.

“Unfortunately because of this lengthy delay in getting a budget enacted, we have built up a mountain of debt to business vendors, the taxpayers, the community colleges,” he said.

KCBS’ Doug Sovern Reports

As the budget went to the floor of the Assembly and state Senate on Thursday, Chiang still had not seen the spending plan and could not predict whether his department would be writing checks or IOUs.

“The moment the governor signs the budget, I can pay bills if I have sufficient cash. So we will test the budget to see if it provides sufficient cash,” he said.

Chiang said it is imperative the legislature and the governor craft a compromise that is honest, realistic, and actually generates enough revenue to pay all of its creditors.

(© 2010 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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