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State Budget: Controller Could Issue 'IOU's' to Vendors Amid Budget Crisis
It would be a worse case scenario, but the state could begin writing IOU's to pay the bills if lawmakers don't nail down a fiscal budget and the state technically runs out of money in a few weeks. A field poll found that the majority of Californians are skeptical about whether Gov. Gray Davis or the Legislature will do what's needed to fix the problem.
Back from the holiday break, state lawmakers have a tall order as they are charged with coming up with a fiscal budget or the state could technically go completely broke.
In fact, financial conditions are such that the state controller could begin the budget process by issuing 'IOU's' to vendors doing business with the state.That notion of IOU's is not sitting too well with LA County Supervisor Zev Yarohslaviski who told KFWB that there is no existing budget and that issuing deferred payment notices to vendors is equivalent to a "handshake with a pauper."
"Where's the light at the end of the tunnel and how will we redeem these IOU's?" Yarohslaviski said, adding that the controller's possible contingency plan is irresponsible.
Other critics call the idea a "job killer" and say it's ridiculous to essentially tell vendors 'We'll pay you later.'
Vital services in the state that could be affected by the crisis include hospitals and jails as well as state food Inspection and prosecutorial offices.
Four months of wrangling have produced an impasse between Democrats and Republicans in the State Assembly.
Meanwhile, as the state's fiscal crisis grows worse, Californians' confidence in state leaders wanes, a new Field Poll shows.
The Field Poll released Tuesday found the majority of Californians are skeptical about whether Gov. Gray Davis or the Legislature will do what's needed to fix the problem.
By a ratio of nearly 2-to-1, poll participants also said higher taxes will be part of a solution to fill a budget gap that could hit $34.6 billion. Sixty-one percent of Californians -- including 54 percent of Republicans -- believe taxes will have to be raised. Republican lawmakers, however, have said they will not vote for a budget plan that includes tax hikes.
"I think the public has already absorbed the bad news," said Mark DiCamillo, director of the Field Poll. "They are expecting tax increases and large budget cuts from what they are hearing coming out of Sacramento."
Californians, however, largely reject plans to borrow money to be paid back during the next fiscal year. Sixty percent don't like the idea of putting off part of the problem until next year and only 26 percent said it is a good idea.
Meanwhile, confidence in California lawmakers has waned. Only 9 percent of Californians say they have a great deal of confidence that Davis will do what's right to resolve this year's state budget deficit. Thirty percent say they have some confidence, while the majority -- 58 percent -- doesn't have much confidence in him at all.
Confidence in Davis mimics that of 10 years ago, during the last budget crisis when Republican Pete Wilson was governor.
The news comes just a week after the San Francisco-based pollsters found that Davis' approval rating had reached the lowest point of any California governor in 55 years. Nearly half of the voters said they would toss him from office if a recall bid makes it to the ballot later this year.
The state's opinion of its Legislature is also bad. Only 7 percent of the poll respondents say they have confidence that the Legislature will do what's right, while 42 percent have very little confidence.
The results of the latest poll are based on a statewide survey of 502 California adults conducted April 1-6. There's a sampling error of plus or minus 4.2 percentage points.
Associated Press Contributed to this report
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