By Miriam Raftery
October 2, 2010 (Sacramento) – Governor Arnold Schwarzenegger has vetoed AB 1506, a measure authored by Assemblyman Joel Anderson (R-El Cajon). The bill would have required all state departments to accept IOUs issued by the state of California. Businesses and individuals could have redeemed IOUS as payment for state taxes, vehicle licensing fees and other debts.
“The issuance of IOUs represents an embarrassing failure on the part of the state to manage its finances,” the acknowledged in a statement regarding his veto. “Unfortunately, if the Legislature does not pass a balanced budget soon, the possibility that the Controller will be forced to issue IOUs this year becomes all too real. I sympathize with businesses that were issued IOUs last year and those businesses that may receive them this year.”
But he added, “Requiring state departments to accept IOUs in lieu of cash payments defeats the purpose of issuing IOUs in the first place. It would exacerbate the state’s cash crisis and would accelerate the possibility of the state defaulting on its debt service and payroll obligations. Since IOUs could be avoided if the Legislature passed a balanced budget, I am unable to sign this bill.”
The State reports over 400,000 IOUs issued, with more than 60,000 not yet redeemed, the Examiner reported.
AB 1506 received bipartisan support in the Legislature as well as letters of support sent by many local residents and business owners, but was opposed by the Department of Finance for fiscal reasons.