From ABC News
SACRAMENTO, CA (KGO) — The State of California will consider issuing IOUs rather than writing checks that are almost guaranteed to bounce. California’s $42 billion budget stalemate is forcing the state controller to put off paying some bills for 30 days, like income tax refunds and college grants.
The governor and other legislative leaders failed to meet a self-imposed January 1st deadline for resolving the state budget stalemate.
Now, payments required by law, like funding for grade schools, are being made. But, other payments are being deferred and it is having a large impact.
College students, for instance, will not be getting $13 million worth of Pell grants. The UC and CSU systems are deferring university fees for most affected students to help them weather the crisis. But, at SJ State University there are still 500 students worried about not getting cash this month for housing and transportation.”Many of the students went through the winter break not knowing whether they were going to be able to make their rent payments, whether they were going to pay for the gas they need for their cars, or whether they could eat out at McDonalds today because maybe that might be too much tomorrow. We had a number of students in our own office who had lots of concerns and questions about the situation,” said Pat Lopes Harris with the university.
Schools are helping students on a case-by-case basis.
The Department of Social Services will not be getting $424 million from the state this month. That will affect everything from public assistance for seniors and the disabled, to cuts in mental health services and food stamps. The state will also hold onto a whopping $2 billion that should be paid out in February as income tax refunds.
This will hit many families hard.
“People are living on a tight budget. Mortgages are a lot bigger in California. They use that refund in order to pay their real estate taxes,” said Gael Knight of Knight & Company.
Knight thinks the effects of this will trickle down, affecting a number of agencies from the city level all the way up to the state level.
California is not yet issuing IOUs, but that could become necessary in March or April.
Right now there is simply not enough money to pay all the bills. They are electing not to pay the bills they do not have to, at least for the month of February.