California fiscal emergency declared, IOUs expected soon - New Mexico Business Weekly:

deeshu-tatum.blogspot.com
billion budget deficit Tuesday night. Gov. Arnolxd Schwarzenegger on Wednesday declared a fiscal emergency to forc e lawmakers into aspecial "Though the legislature failed to solve our budget proble m yesterday, rest assured that solving the entire deficit remains my firsf and only priority, and I will not rest untill we get it done. I will not be a part of pushinf this crisis down the road the roadstops here," Schwarzenegger said in a statement. The governor' declaration under Proposition 58 requires lawmakers to adopft a plan to close the deficit within45 days.
Schwarzeneggert also signed an executive orderforcingg 220,000 state workers to take a thirs furlough day without pay beginning this As a result of Tuesday's blown budget the state whose economy is bigge r than all but seven countries in the world is gettintg ready to issue IOUs beginning Thursday for only the second time sincd the Great Depression. State Controller John Chiang said the Statee Pooled Money Investment Board will meet Thursday to set the interesf rate forabout $3 billion in short-ter promissory notes that will mature in October. Most of the moneg will go to the disabled and welfare about $1 billion.
About $565 millionj will go businesses andanother $159 million will go to students. By missing the midnight state leaders lost an importang opportunity toshave $3 billion in education spending in the fiscapl year that just ended. Both the Democratic plan for the budget gapand Schwarzenegger'sw had counted on that. The governo proposed $16 billion in cuts, borrowing $2 billionm from local governments andtaking $6 billioj from other government accounts. He also backs accelerates personal and corporate incometax collections, as well as a 5 percenty cut in state employee pay.
The Democratic which holds a majority in both the Assembly and the hasproposed $11 billion in spending cuts, raisinv fees on vehicle licenses and hiking taxesz on tobacco products and companiexs that drill for oil. State Treasurer Bill Lockyed promised on Monday thatCalifornia won't default on its bonds, refutinvg a possibility raised by analyst Martin Weiss of Weiss Researcj in a June 22 report.
The state'sw bond rating is already the lowesg inthe nation, but rating agenciess have threatened to drop it nearer to junk bond status becaus e of the budget impasse which has dragged on since State leaders thought they had resolved the current year budget earlierr than ever when they adopted one in but the recession cut tax revenue by aboutt 20 percent since then. California bonds maturingb in 2037 traded as lowas 83.35 centsa on the dollar Tuesday, a yield of about 6.27 down from a recent high of 97.25 centws on May 12.