IOUs Instead Of State Tax Refund?

IOUs Instead Of State Tax Refund?

California Budget Deficit Could Lead to IOUs

It's an economic sage that has swept a state -- California dwindling state budget. The state of California may not give out state tax refunds this year -- and instead issue IOUs.

According to the Associated Press, the state controller said that the California government may not be able to afford state tax refunds.

California residents will still receive federal tax refunds, which are seperate from the state. However, many local residents in California are not looking forward to possibly getting IOUs.

Chuck Fisher doesn't think it's fair. After all, he said, "are they going to let us pay our taxes with IOUs?"

Some may understand the state's tough call. William Collins felt that "it's not surprising considering the large deficit." But even though Collins understands the reason behind the IOUs, he still does not like it.

Many are frusterated about working hard at their jobs, and then having to potentially wait to receive their money back from the state. According to Sergio Romero "the money we work for, we should get it back."

And many in California are concerned about those who are anxiously waiting and needing those tax refunds come this February. Jose Paz said that he feels that "it's going to affect a lot of people. a lot of people are depending on that. i mean they're waiting for those tax returns and they're not going to give it to them? what's going to happen?

http://www.kyma.com/slp.php?idN=1612&cat=News

State to Send Out IOU’s

Last Update: 1/16 5:00 pm

The State of California has issued notice that your State Tax Refund is on hold.

State Controller, John Chiang, says there's now a 30-day delay on tax refunds starting February 1st. The reason is because there is no money and the state is basically broke.

To make things worse, the bad news could have a trickle-down effect in the local economy.

Many families plan to use their refunds to pay bills or make purchases they have been holding off on.

Starting February 1st, more than $3 billion worth of state payments will be delayed, which means none of that money can be spent and experts say that can have a serious impact on the valley's economy.

State Controller John Chiang said, "This is a very painful decision. It pains me to pull this trigger but it is an action that is critically necessary."

Kevin Kennedy with The Business Journal said, "They're holding back on their spending. Obviously if you give them an IOU instead of real cash, they're not going to put that money back into the economy. So it's just going to hurt the economy even more."

Legally, the State doesn't have to pay tax refunds until May 30th. The State Controller says without a new budget deal, no checks will be sent out until then.

Meanwhile, California's budget deficit just keeps growing. California's debt is now larger than the budget of any other state except New York. It's expected to hit $41 billion over the next few months.

That hold on state payments will also impact student aid, social services and mental health programs.

http://www.cbs47.tv/news/local/story/St ... n5FKA.cspx

Californians may get IOU's instead of tax refunds

Updated: Jan 6, 2009 12:18 PM EST

California tax refunds may not come in the form of a check, they may be simply an I-O-U.

The California State budget is in a world of hurt.

About two and a half million California taxpayers got about two billion dollars in refunds last year.

This year, there's no telling if or when Californians will get their checks.

It's day 62 of a budget battle stalemate and the state will run out of money next month.

Taxpayers are worried, lawmakers are horrified.

The holiday break is over, so California lawmakers are back at work.

If the state does have to give out I-O-U's, the money the state owes people will earn interest, but they won't say what the rate will be.

This is the second time California has considered doing this.

The state had to issue I-O-U's during the Great Depression.

http://www.ktnv.com/Global/story.asp?S=9624734

California to Issue IOUs for Income Tax Refunds, Might Nix CAL Grants for Students

January 08, 2009
by Sylvia Cochran
comments (17)

The Near Bankrupt State Wants to Give You an IOU. Try Paying Your Mortgage or Tuition with It.

The 2009 income tax season is slowly revving up, and soon California taxpayers are going to file their returns with the Franchise Tax Board. Some hope to receive a tax refund check California to Issue IOUs for Income Tax Refunds, Might Nix CAL Grants for Students

However, if Arnold Schwarzenegger and his band of merry men cannot work out the budget, there is a good chance that the State of California will be paying income tax refunds with IOU slips instead of checks.

California democrats presented the governor with an unworkable budget package containing a number of illegal tax hikes -- referred to as "fees" and "surcharges" - that sought to get around voter determined (Proposition 13) two thirds majority vote requirements for any tax increases.

At issue was, among other things, a Democrat proposed gas tax hike of $0.13 per gallon! Squaring this with a Time magazine reported an estimated jump of California's unemployment rate to 8.5% by the end of 2009, the public outcry was loud and fierce. Lawsuits by taxpayer advocates and a flurry of emails and calls to the gubernatorial office caused Governor Schwarzenegger to veto the budget, leaving California in its continued fiscal mess.

The Los Angeles Times reports that the latest brainstorm out of Sacramento is to begin issuing IOU slips instead of California income tax refunds beginning February 1st. Moreover, if you are student relying on a CAL grant for your tuition payment, it is time to hope and pray that the admissions office will accept your vowels instead of a check for your student fees. Student grants are also not going to be funded come February.

California is running out of money, and will officially be in the red come the end of January. Republicans are digging in their heels and have proclaimed that they will not accept any budget with tax increases. Democrats have been just as adamant that they refuse to even consider a budget if it contains any spending cuts and no significant tax hikes.

Governor Schwarzenegger wields footstools and doors in an effort to provide visual aids to disenchanted voters, but he is singularly ineffective at uniting both sides at a negotiation table.

Special interest groups (think California Teachers Union) are screaming and demanding that their projects be fully and increasingly funded, and also exempt from any cuts.

In interviews that can only be described as myopic, they seek to allocate budget blame to voters passing Proposition 13 and others that protect property tax rates from skyrocketing, but they are unwilling to roll up some sleeves and help California out of the mess their special interest has gotten it in.

While the Obama stimulus plan is trying to put money back into the pockets of taxpayers, California legislators beholden to special interest groups are trying to surreptitiously fish it back out, and then issue paper vouchers for the money they cannot get.

If Sacramento cannot get its act together by the end of January, about 10 million taxpayers are going to receive a State of California issued tax refund IOU. Try paying your mortgage with it (if you still have a house) or attempt foisting it on Ralph's while you're working to put food on the table. I double-dog dare you!

Sources: http://www.latimes.com/news/local/la-me ... 181.story; http://www.time.com/time/nation/article ... 99,00.html

http://www.associatedcontent.com/articl ... html?cat=4

Taxpayers will be forced to take the IOUs, but meanwhile, the state will keep on paying out welfare and medicare to those who are not supposed to be here and have invaded our country..what kind of crap is this?

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Originally Posted by Rockfish

Taxpayers will be forced to take the IOUs, but meanwhile, the state will keep on paying out welfare and medicare to those who are not supposed to be here and have invaded our country..what kind of crap is this?

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As of yesterday.....or maybe it was the day before?......I saw where the state is also suspending the issuance of welfare checks and other benefits......to everyone, beginning Feb. 1.

What I'm so surprised at is the silence on this issue from all of the pro-illegal politicians out there and all of their advocacy groups.

The very same people who made sure this happened, now suddenly have NOTHING to say.....there's not been a single word of protest or complaint, no spouting of the usual rhetoric about the "economic devastation of immigrant families" this will cause, no calls for marches, rallies or protests.

Now that the chickens have come home to roost, they've all suddenly run out of things to say and gone scurrying off to hide like rats in a hole, have they? :roll:

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Originally Posted by azwreath

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Originally Posted by Rockfish

Taxpayers will be forced to take the IOUs, but meanwhile, the state will keep on paying out welfare and medicare to those who are not supposed to be here and have invaded our country..what kind of crap is this?

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As of yesterday.....or maybe it was the day before?......I saw where the state is also suspending the issuance of welfare checks and other benefits......to everyone, beginning Feb. 1.

What I'm so surprised at is the silence on this issue from all of the pro-illegal politicians out there and all of their advocacy groups.

The very same people who made sure this happened, now suddenly have NOTHING to say.....there's not been a single word of protest or complaint, no spouting of the usual rhetoric about the "economic devastation of immigrant families" this will cause, no calls for marches, rallies or protests.

Now that the chickens have come home to roost, they've all suddenly run out of things to say and gone scurrying off to hide like rats in a hole, have they? :roll:

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WOW! Boy is hell ever going to break loose! If the 02/01/09 date is the case then there will be Marital Law statewide in CA by June.

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Originally Posted by Rockfish

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Originally Posted by azwreath

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Originally Posted by Rockfish

Taxpayers will be forced to take the IOUs, but meanwhile, the state will keep on paying out welfare and medicare to those who are not supposed to be here and have invaded our country..what kind of crap is this?

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As of yesterday.....or maybe it was the day before?......I saw where the state is also suspending the issuance of welfare checks and other benefits......to everyone, beginning Feb. 1.

What I'm so surprised at is the silence on this issue from all of the pro-illegal politicians out there and all of their advocacy groups.

The very same people who made sure this happened, now suddenly have NOTHING to say.....there's not been a single word of protest or complaint, no spouting of the usual rhetoric about the "economic devastation of immigrant families" this will cause, no calls for marches, rallies or protests.

Now that the chickens have come home to roost, they've all suddenly run out of things to say and gone scurrying off to hide like rats in a hole, have they? :roll:

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WOW! Boy is hell ever going to break loose! If the 02/01/09 date is the case then there will be Marital Law statewide in CA by June.

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In case you missed it elsewhere Rockfish:

And I absolutely agree that this just might be ignition of the fuse out there............ especially now that the illegal aliens will soon realize that their so called "friends" in government and advocacy organizations could not actually give a damn about them and are now too busy trying to cover their own posteriors to escape accountability....and, we can only hope.....justice, for their part in this.

Should make what happened with the Rodney King riots look like nothing more than a minor misunderstanding 8O

California controller to suspend tax refunds, welfare checks

John Chiang announces that his office will suspend $3.7 billion in payments owed to Californians starting Feb. 1, because with no budget in place the state lacks sufficient cash to pay its bills.
By Evan Halper and Patrick McGreevy
January 17, 2009

Reporting from Sacramento -- The state will suspend tax refunds, welfare checks, student grants and other payments owed to Californians starting Feb. 1, Controller John Chiang announced Friday.

Chiang said he had no choice but to stop making some $3.7 billion in payments in the absence of action by the governor and lawmakers to close the state's nearly $42-billion budget deficit. More than half of those payments are tax refunds.
The controller said the suspended payments could be rolled into IOUs if California still lacks sufficient cash to pay its bills come March or April.

"It pains me to pull this trigger," Chiang said at a news conference in his office. "But it is an action that is critically necessary."

The payments to be frozen include nearly $2 billion in tax refunds; $300 million in cash grants for needy families and the elderly, blind and disabled; and $13 million in grants for college students.


Even if a budget agreement is reached by the end of this month, tax refunds and other payments could remain temporarily frozen. Chiang said a budget deal may not generate cash quickly enough to resume them immediately.

Not all payments will stop Feb. 1. Most school and healthcare programs will be paid, as required by state and federal law. The state will continue to pay more than $6.6 billion in such bills.

And Los Angeles County officials said they would cover welfare payments to more than 500,000 local recipients -- for now.

But California is projected to be $346 million short of the funds it needs to pay all its bills in February. By March, the state would be so far in the red that even continuing to suspend payments would not cover the shortfall. California would be insolvent, making the issuance of IOUs likely.

State officials have already designed an IOU template, Chiang said, and have been negotiating with banks over whether taxpayers could cash or deposit them if they are issued. The state could be forced to pay as much as 5% interest on delayed tax refunds if they are not paid by the end of May, Chiang said.

The last time the state issued such IOUs -- the only time since the Great Depression -- was in 1992.

The suspension of payments is the latest radical move by officials to help keep the state from running out of cash as Gov. Arnold Schwarzenegger and the Legislature battle over how to avoid insolvency.

Schwarzenegger, who hopes to speed up public-works projects to stimulate the economy, wants tax increases, spending cuts and legislation to relax some environmental rules and allow private companies to do some government construction.

Democrats are seeking tax increases as well, but fewer spending cuts. Republican lawmakers would only pare spending and have been blocking any tax hikes.

Meanwhile, Schwarzenegger has ordered that most state workers take two days off per month without pay -- equivalent to about a 10% pay cut. The governor also ordered most state offices -- including all DMV field offices -- to close on those two days. The order is being challenged in court by labor unions.

The state has also halted payments of bond money for more than 5,300 public-works projects.

On Friday, the state Department of Finance temporarily exempted 276 of the projects from the freeze, reasoning that because they are nearly complete, it could cost the state more to shut them down than to finish them.

The exemption, through Feb. 1, will allow the continuation of school construction by the Inglewood Unified School District and the construction of a new Court of Appeal facility in Santa Ana. Work on new rail tracks at L.A.'s Union Station and road projects involving Irwindale Avenue, Martin Luther King Boulevard and Imperial Highway in Los Angeles County will also be able to continue.

Some projects were exempted because the state is under court order to do the jobs. Others would threaten public safety if left uncompleted, according to Mike Genest, Schwarzenegger's finance director.

"We're going to take the risk of allowing them to continue a little longer because we are very hopeful will have a budget by Feb. 1," Genest said.
Contractors lined up at a meeting of state finance officials to warn of the consequences of stopping the bulk of the public-works money. They said shutting down projects already underway would ultimately cost the state significantly. According to Caltrans Director Will Kempton, the state would have to pay $350 million in legal costs, claims for contract breaches and expenses for securing sites that go dormant.

"The bulk of those dollars are lost . . . to the taxpayers," Kempton said. "You can't just walk away from a construction project. You have to make sure it is buttoned up."
It is not just the state that would take a hit. Some school districts relying on state funds do not have the reserves in place to cover the payments they will owe builders if work stops.

Counties are also feeling the pinch. They process the welfare payments scheduled to be halted by the controller's office Feb. 1. The state is freezing those payments, along with millions of dollars in salaries to county workers who run the programs.

Some county officials say they don't have reserves in place to cover the state until the budget crisis is resolved.


"We simply don't have the cash," said Pat Leary, assistant administrator for Yolo County. "We are in critically bad times."

About a third of all state welfare payments go to Los Angeles County, where officials said they can shift money around to keep the payments flowing in the short term.

"The million-dollar question is how long this will last," said L.A. County Chief Executive William T Fujioka. "We cannot sustain a huge and very long hit."

evan.halper@latimes.com


http://www.latimes.com/news/local/la-me ... 2460.story

Thanks, azwreath, it was a good read. My sister in law is a school teacher in CA and her kids are in CA colleges..I wonder now if they, like millions of other CA citizens will change their tune about illegal immigration...

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Originally Posted by azwreath

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Originally Posted by Rockfish

Taxpayers will be forced to take the IOUs, but meanwhile, the state will keep on paying out welfare and medicare to those who are not supposed to be here and have invaded our country..what kind of crap is this?

---

As of yesterday.....or maybe it was the day before?......I saw where the state is also suspending the issuance of welfare checks and other benefits......to everyone, beginning Feb. 1.

What I'm so surprised at is the silence on this issue from all of the pro-illegal politicians out there and all of their advocacy groups.

The very same people who made sure this happened, now suddenly have NOTHING to say.....there's not been a single word of protest or complaint, no spouting of the usual rhetoric about the "economic devastation of immigrant families" this will cause, no calls for marches, rallies or protests.

Now that the chickens have come home to roost, they've all suddenly run out of things to say and gone scurrying off to hide like rats in a hole, have they? :roll:

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I suspect the reason is that it will call attention to the fact that illegal aliens are indeed receiving welfare and more Americans will be calling for more enforcement. Their sob stories will no longer work.

Illegal aliens will soon realize that their "advocates" will do nothing to help them.

Enforce federal laws NOW Arnie, before it's too late for CA.!

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Originally Posted by Rockfish

Thanks, azwreath, it was a good read. My sister in law is a school teacher in CA and her kids are in CA colleges..I wonder now if they, like millions of other CA citizens will change their tune about illegal immigration...

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I REALLY HOPE SO BUT WITH OUR MEDIA AND THE WAY IT PORTRAYS THE PROBLEM THE MAJORITY OF TAXPAYERS WILL PROBABLY JUST BUY INTO "ITS JUST A BAD TIME RIGHT NOW CRAP" AND FORGET EXACTLY HOW MUCH CA TAXPAYERS SHELL OUT TO ILLEGALS ONLY. I BET MOST ANY SMART TAXPAYER WOULD THINK ABOUT MOVING OUT.

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Originally Posted by 93camaro

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Originally Posted by Rockfish

Thanks, azwreath, it was a good read. My sister in law is a school teacher in CA and her kids are in CA colleges..I wonder now if they, like millions of other CA citizens will change their tune about illegal immigration...

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I REALLY HOPE SO BUT WITH OUR MEDIA AND THE WAY IT PORTRAYS THE PROBLEM THE MAJORITY OF TAXPAYERS WILL PROBABLY JUST BUY INTO "ITS JUST A BAD TIME RIGHT NOW CRAP" AND FORGET EXACTLY HOW MUCH CA TAXPAYERS SHELL OUT TO ILLEGALS ONLY. I BET MOST ANY SMART TAXPAYER WOULD THINK ABOUT MOVING OUT.

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Yea, but no..gotta disagree here a little bit..If the govt owes you..you will want your money..especially when you think about the times where April 15 was a burden. I am really hoping the citizens of CA raise holy caine abuot this! The media can't smooth over everything. Sooner or later, CA citizens are going to catch on. Let's just hope it isn't too late.