California IOUs continue to flow

The San Jose Mercury reports:

California finally has a budget, but don't assume it's put an end to the embarrassment of IOUs. The state will continue to pay a chunk of its bills with promises in lieu of dollars for at least another week.

The reason? State Controller John Chiang wants to make sure the new spending plan will produce enough cash.

With tax revenues continuing to slide, Chiang last month began sending the notes to vendors, taxpayers awaiting refunds and others. So far, the state has issued more than 228,000 IOUs totaling nearly $1.2 billion.

The budget plan that Gov. Arnold Schwarzenegger signed earlier this week to close a $24 billion deficit was supposed to put an end to the IOUs. And at some point soon, it probably will. But Jacob Roper, a spokesman for Chiang, said the controller won't change course until he receives a report from the governor's finance team detailing the state's cash flow situation. That's expected sometime early next week.