"Hey Fred, I got my paycheck cashed in IOU's from the State, I can afford a cheeseburger now with what these are worth!"
Posted on 07/30/2009 7:57:47 AM PDT by SmithL
A California vendor sued state officials Wednesday for paying bills with IOUs, calling the notes an unconstitutional dead weight on small businesses everywhere.
The lawsuit, filed one day after Gov. Arnold Schwarzenegger signed a new budget agreement, highlights California's continued cash problems.
Despite the budget deal, state Controller John Chiang will continue issuing IOUs to pay certain bills until he's convinced the state has sufficient cash, said his spokeswoman Hallye Jordan.
Since July 2, Chiang has disbursed more than 222,000 IOUs worth a combined $1.1 billion to vendors, taxpayers owed refunds and local governments that deliver social services with state dollars.
The lawsuit by Nancy Baird, who owns a small business in the San Luis Obispo area, seeks class-action status on behalf of all IOU recipients.
Baird received an IOU for $27,752.16 to pay for embroidered shirts she produced for a California National Guard youth camp. She is demanding that the state stop issuing IOUs and immediately redeem the notes issued so far.
The state has said it will redeem all IOUs by Oct. 2 at an annualized interest rate of 3.75 percent. Baird's suit, though, referred to her IOU as "a worthless piece of paper."
(Excerpt) Read more at sacbee.com ...
Which the IRS will instantly declare to be taxable income.
Isn't sending an IOU a case of not paying your bills? That would be like me claiming I paid my bill to the power company by sending a letter telling them that I will pay in October if everything works out.
Of course if the IOUs are paper, you can eat them to survive. I wonder, do the banks let you deposit the IOUs as cash? Bet not ...
"Hey Fred, I got my paycheck cashed in IOU's from the State, I can afford a cheeseburger now with what these are worth!"
Is Parker brothers a vendor to the state of California? Seems to me the state could pay this vendor entirely in IOUs, as they could include these IOUs without any modifications into some of their games.
Kind of hard to pay your bills when you receive these worthless “IOU” pieces of paper from the California state government. Kind of hard to pay taxes as well. This is a fraud and Schwartzi-boy is at the root of it. He was elected in response to his predecessor not making the California state budget work - and was killing the state. Now Schwartzi-boy is on the same path.
Do these vendors now issue IOU's to their vendors, who in turn issue IOU's to their vendors, who in turn issue IOU's to their vendor, and on and on and on?
By the way, do the employees get to issue IOU's to their mortgage companies and auto loan lenders and to pay for their utilites and such and such and such, if they do not get paid?
Interestingly, greenbacks aren't but a step or two up the "worthless paper" ladder. But at least they're still universally recognized - for now.
I got an idea! Hold off on funding the state union pensions and they should have plenty of cash to pay the vendors!
At this point, any business operator with a brain would only do business with the state of California on a COD basis.
do the banks let you deposit the IOUs as cash? Bet not ...
I called my bank, Chase, formerly Washington Mutual formerly Great Western, for some other reason yesterday and the first thing their 800 number recording said was that they had been accepting State of California Warrants (IOUs) as a courtesy to their customers but as of some cut-off date which I think was July 10, they no longer would.
Though I fear the woman in this article will be quickly driven out of business.
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