California Controller John Chiang issued the state?s last IOU on Thursday, one day before Treasurer Bill Lockyer was scheduled to begin redeeming the scrip.
Chiang also reported that the interest the state owes on the IOUs comes to $9.68 million. That will be the total cost of the program if all 449,241 of the IOUs (formally known as registered warrants) are cashed for their face value of $2.6 billion.
The state is paying an annualized 3.75% tax-free interest rate on the paper, which Chiang began to issue in early July because Sacramento?s coffers were running short of cash.
It?s conceivable that some creditors who hold IOUs for nominal dollar amounts might not bother to cash them, ultimately saving taxpayers some of the interest (and principal) cost.
Chiang said the final IOU issued was for $41.60 to Yellow Cab of Sacramento. Watch for it on EBay!
As for that $9.68-million interest bill: That?s the direct cost of the inability of the Legislature and Gov. Arnold Schwarzenegger to get their acts together and pass a balanced budget on schedule.
There?s also an indirect cost -- the further damage to the Golden State?s image as a place to live and do business. There's a reason why our credit rating is the lowest of any state.
As small a sum as $9.68 million might seem in the scheme of things, imagine what else California could have done with that money. Keep a state park open? Buy more books for schools? Keep a few more dangerous criminals from walking out of prison?
In this horrid recession, California doesn?t have even a penny to waste, let alone 968 million of them.
-- Tom Petruno
Photo: A California IOU. Credit: Rich Pedroncelli / Associated Press
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