California controller: IOUs signal fiscal mismanagement

Judy Lin
The Associated Press

SACRAMENTO, Calif. and#8212; State Controller John Chiang says thousands of Californians will be hurt and it will cost millions if the state hands out IOUs instead of payments next week.

Chiang says Gov. Arnold Schwarzenegger and lawmakers need to come up with a complete solution to the state’s $24 billion deficit instead of making a political statement.

Democrats are proposing to cut and delay billions in spending to prevent the IOUs and#8212; without solving the whole shortfall. Schwarzenegger says he would veto that plan.

Without a new budget, Chiang said Friday that he will have to start issuing IOUs. Students expecting college grants and low-income seniors would not get paid, along with vendors that provide services to the state.

Chiang said taxpayers will also owe interest on the IOUs.

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