IOUs May Be Used as California Continues Without Budget

The state's controller said that not having a budget presents the largest financial threat.

California may have to begin issuing IOUs unless lawmakers can balance its budget.

According to a report from state Controller John Chiang, July's revenues were 1.9 percent below projections released by the governor's office in May.

While he said that the $91 million shortfall on those estimates does not change the state's cash position greatly, Chiang did say that not having a balanced budget poses the biggest threat to the state's finances.

"I urge the governor and Legislature to show leadership by immediately addressing the potential cash crisis," Chiang said.

California recently put forward a series of deferrals, while the one associated with education spending may be accelerated from October to September. Chiang said that without a budget, the state may have to rely on measures such as IOUs by the end of August or beginning of September.

The state's education department said recently that the number of schools that will not be able to meet their future financial obligations increased 38 percent this year. Unless districts find a solution, some may have to consider filing bankruptcy.