SACRAMENTO – On the heels of State Treasurer Bill Lockyer’s warning that the state may soon issue IOUs, Senator Joel Anderson (R-El Cajon) introduced emergency legislation to help businesses stay afloat in such an event. “IOUs could be a death knell for already struggling California businesses,” State Senator Joel Anderson stated. “This emergency legislation could be their lifeline.”Senate Bill 120, if passed and signed into law, would force state agencies and departments to accept the state’s IOUs as payments for bills owed to the state. The State of California is facing a whopping $25.4 billion budget deficit. As reported by the Los Angeles Times, Treasurer Lockyer stated that California is facing another immediate cash crisis and could issue IOU notes in April or May.
In 2009, the state issued billions of dollars of IOUs when it ran out of money. That same year, Anderson introduced a similar proposal to protect businesses when IOUs were issued in place of actual payments. Over 3,000 letters of support flooded Anderson’s office from businesses, citizens, and elected officials – including one from State Controller John Chiang. Chiang stated in his letter, “When a person receives an IOU from the State, the State should accept the IOU for payment obligations owed to the State.” The bill sailed through both houses of the Legislature and had over 70 bi-partisan co-authors.
Governor Schwarzenegger vetoed the measure. Senator Anderson reintroduced this bill to help California businesses out of the untenable position of having to pay their own bills while the State of California is unable to pay its obligations.
Senator Joel Anderson represents the 36th Senate District, which includes portions of San Diego and Riverside County, including Fallbrook and the Inland Empire.