California Eyes IOUs for Second Time Since DepressionThe Governator is also seeking a bailout from Washington (but don't call it a bailout):
California, the world's eighth-largest economy, may pay vendors with IOUs for only the second time since the Great Depression, State Finance Director Mike Genest said.
In a letter to legislative leaders Dec. 1, Genest said the state "will begin delaying payments or paying in registered warrants in March" unless an $11.2 billion deficit is closed or reduced. California, which approved its budget less than three months ago, may run out of cash by March, state officials say.
Analysis: Schwarzenegger: Federal aid request no bailoutOn a personal note, I've been stunned at the "business as usual" attitude that permeates the state agencies I'm aware of. Management teams are not being given any direct instructions, so they continue on like none of this is happening. Hiring continues unabated. State employees are in complete denial. Meanwhile, the money pile keeps shrinking.
Gov. Arnold Schwarzenegger doesn't think you should call potential federal aid to California a bailout, handout or any other kind of out.
He prefers the term "investment."
The Republican governor emphasizes there is a distinction between the type of money he desires – public works money for California construction projects, as well as higher Medi-Cal reimbursements – and the type of direct budget aid that Assembly Speaker Karen Bass has suggested.
He sees his public works request as a $26 billion New Deal-type infusion into projects that create jobs and bolster the economy, not as a budget solution.
Further updates when they come in.