Associated Press & Tove Tupper
 
June 30, 2009
 
SACRAMENTO -- California officials are facing a midnight deadline to find a way to balance the budget and avoid the need to issue IOUs for the first time since 1992.
 
Democratic senators tried today, for the second time in two days, to pass stopgap measures to avoid the immediate need for IOUs.
 
Those stopgap bills rely primarily on cutting education funds remaining in this fiscal year's budget. That option would be lost if the measures aren't enacted by midnight, the end of the 2008-09 fiscal year.
 
That and other Democratic attempts to resolve the budget problems have failed to draw support from Republicans, who want deeper spending cuts and no tax increases.
 
Roughly $3 billion worth of IOUs to those who depend on or deliver state services including state contractors, college students, welfare recipients, and the disabled will be issued starting Thursday unless a compromise on closing the deficit is reached quickly. The IOUs do come with interest.
 
Meanwhile, Siskiyou County says if the IOUs are issued, it could receive several-million dollars. County officials say its banks still have not decided if they will accepts the IOUs.
 
"It's rather embarrassing to be the fifth largest economy in the world and issuing IOUs, but it is truly a cash flow situation. So if the state does not pass it's budget they do not have the ability to do any internal borrowing and in that case they do not have the ability to send out," said Siskiyou County Treasurer Wayne Hammar.
 
Siskiyou County says it hopes this is only a short term fix, because if its two banks, Premier West and Union Bank of California, do not accept the IOUs, then the county only has enough money to last for four to eight weeks. After that, it will be forced to cut state funded programs in the area.
 
Programs that could end up on the chopping block could include human services, mental health programs, alcohol and drug addictions programs, and even reimbursements for county schools.