Gov. Arnold Schwarzenegger waves to tourists as he walks to a news conference with his chief of staff, Susan Kennedy, and Finance Director Mike Genest at the Capitol in Sacramento. The governor declared a fiscal emergency for California.
State finance officials set the interest rate at 3.75% for banks that accept the vouchers. Nearly 29,000 IOUs worth $53.3 million will be sent, mostly to residents awaiting tax refunds.
By Eric Bailey and Patrick McGreevy (LA Times) 11:17 AM PDT, July 2, 2009
Reporting from Sacramento — With budget negotiators at loggerheads and California government facing a cash crisis, the state controller’s office will start printing IOUs this afternoon for the first time in 17 years.
The presses are set to start at 2 p.m., churning out 28,742 IOUs worth $53.3 million that will be dispatched mostly to residents throughout the state still awaiting their income-tax refunds.
A panel of state finance officials this morning set the interest rate for the IOUs at 3.75% for banks and other financial institutions that are willing to accept the scrip. Some banks have already agreed to honor the paper, including Bank of America and Wells Fargo, which will do so until July 10. Some have not made a decision. Recipients who don’t have a bank that will cash them can redeem them Oct. 2.
Wells Fargo’s agreement came with a nudge. “We are reluctant to take this step, but are doing so to help our customers who are not at fault and with the expectation that the Legislature and governor will complete the budget within days,” Lisa Stevens, a bank official in California, said in a statement.
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