Treasurer: IOUs Could Be on the Horizon if Budget Action Stalls
On Saturday, state Treasurer Bill Lockyer (D) said California might need to start issuing IOUs in April or May if Gov. Jerry Brown (D) and lawmakers fail to reach an agreement to close the state's budget gap, the Sacramento Bee's "Capitol Alert" reports.
Lockyer said IOUs could be necessary if the state is "unable to meet the self-imposed deadlines by the governor and the Legislature to adopt a budget in a timely way" (Siders, "Capitol Alert," Sacramento Bee, 1/22).
The governor'sÂ recently released budgetÂ proposal calls for $12.5 billion in spending cuts and a five-year extension of income, sales and vehicle taxes.
As part of the spending reductions, the governor's plan would cut:
- $1.7 billion from Medi-Cal, California's Medicaid program
- $486 million from In-Home Supportive Services; and
- $135.7 million from Healthy Families, California's Children's Health Insurance Program (California Healthline, 1/21).
Brown has asked the Legislature to approve the spending cuts by March. He plans to ask voters to approve the tax extensions in a June special election (Herdt, Ventura County Star, 1/22).
Possibility of IOUs
H.D. Palmer, a spokesperson for the state Department of Finance, said California will face a cash deficit in July if lawmakers fail to pass a budget package.
Palmer added that the state might undertake certain measures before July to conserve funds. Such measures could include issuing IOUs and deferring tax refunds (Goldmacher, "PolitiCal," Los Angeles Times, 1/22).
During California's 2009 budget impasse, the state issued IOUs to cover more than $53 million in payments to health clinics, businesses and others.
California's Constitution requires that the state issue cash payments first to education and debt service, then to state workers, pension funds, IHSS and Medi-Cal (California Healthline, 7/6/09).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.