Strapped States Play for Time as Fiscal Year Starts.

The article reports on the decision of the state of California to issue IOU (I owe you), a document acknowledging debt, to hundreds of thousands of creditors. John Chiang, the California controller, relates that he would sent out $3.4 billion of IOUs in July 2009 to state contractors, local governments and residents who are expecting income-tax refunds, welfare grants or college scholarships. The article discusses the impact of the issuance of IOUs on the finances of California. Chiang claims that the state may default without the issuance of IOUs.