California to issue IOUs instead of refunds during tax time

brett636

Well-Known Member
Since this is the state TOS hails from I thought it was only appropriate to highlight ultimate result of years of liberal policies and nanny state ideals. This would be the perfect moment in history for an earthquake to hit California causing it to break off into the ocean where it belongs. I wouldn't want an IOU from a bankrupt state, but luckily the state of Indiana is solvent and our government is cutting its spending rather than increasing its burden on the people.
http://www.nbclosangeles.com/news/local/California-Taxpayers-Due-Refunds-May-Instead-Get-IOUs-.html

If you expect you'll be getting a refund from California when you file your 2008 state income tax return, be prepared: you may instead receive a "registered warrant." Translation: an IOU.
California is rapidly running out of money. Blame it on the state budget deficit that continues to bleed billions of dollars from California's reserves. Facing inadequate credit to make up the difference, California's Controller John Chiang warns that by the end of February, the nation's most populous state may not be able to pay some of its debts, and instead be reduced to issuing those creditors IOUs.
"My office has projected that, in approximately 60 days, there will be insufficient cash available to meet all expenditures reflected in the 2008-09 Budget Act," stated a Tuesday letter from Controller Chiang to the directors of all state agencies. "To ensure that the State can meet its obligations to schools, debt service, and others entitled to payment under the State Constitution, federal law, or court order. California may begin, as early as February 1, 2009, issuing registered warrants...commonly referred to as IOUs...to individuals and entities in lieu of regular payments."
California has not resorted to IOUs since the 1992 budget crisis when Pete Wilson was governor. Back then, some 100,000 state employees got IOUs instead of paychecks for two months until the state approved a budget. The 1992 crisis came during summer, well past the tax season, but at least 12,000 tax refunds were also issued as IOUs, according to a contemporaneous report in the Los Angeles Times.
State workers filed a lawsuit, arguing the IOUs violated the federal Fair Labor Standards Act. They were awarded damages. In this current cash crisis, The Controller's office expects that hourly state employees would continue to receive paychecks. But IOUs could be issued to elected state officials, including legislators and judges, and their appointed staff, some 1700 in all, "as well as tax refunds owed to individuals and businesses," according to Chaing aide Hallye Jordan.
The Controller himself remains in a Texas hospital where he was taken after falling ill during a visit with family. Chiang has remained in communication with his staff by phone, Jordan told NBC Los Angeles Tuesday evening.
The Controller's office will not take the emergency steps outlined in the letter to state agencies, Jordan said, if California can resolve its budget crisis in the next few weeks. But no new budget package has been proposed since the one presented by Democratic lawmakers was rejected by Governor Arnold Schwarzenegger as inadequate. "We've made very little progress the past couple of weeks," said Aaron McClear, an aide to Gov. Schwarzenegger, while the Governor was away from the capital on a holiday vacation.
Even without a deficit resolution, issuing IOUs is not the only option for tax refunds. The state could simply delay payment. Under the law, it has until May 30, Jordan said.
In 1992, banks honored the state's IOUs, cashing them on demand, and then receiving an additional 5% from the state when it made good on the obligations. In effect, the IOUs served the state as unsecured bridge loans from banks. But this time around, with credit tight and banks still feeling the impact of the fall meltdown in the financial services industry, it is not yet clear how banks will respond.
"Nobody's making any decision whether 'Bank X' will take the IOUs as money or not," said Brian Tobin, a Culver City based tax preparer. At the request of NBC Los Angeles, Tobin reviewed a copy of Chiang's letter. Tobin noted that in past years, California's Franchise Tax Board has processed electronic refunds in as short a period as a week. This raises the possibility that taxpayers with simple returns who file as soon as possible after New Year's may be able to receive refunds before the proposed February start date for issuing IOUs.
Those who could be most affected are taxpayers who routinely plan for large refunds as a means of saving for anticipated expenses, such as property taxes which are also due in April. But with notice coming at year's end, there is not time for those taxpayers to adjust their withholding or take other steps to try to capture their return in advance from the state's coffers. "They've got their money taken out of your paycheck. That's it," Tobin said.
One final irony, Tobin sees: electronic deposit refunds are inexpensive to do. Instead sending out IOUs is a more costly procedure for a state looking to save money.
 

browndevil

Well-Known Member
Since this is the state TOS hails from I thought it was only appropriate to highlight ultimate result of years of liberal policies and nanny state ideals. This would be the perfect moment in history for an earthquake to hit California causing it to break off into the ocean where it belongs. I wouldn't want an IOU from a bankrupt state, but luckily the state of Indiana is solvent and our government is cutting its spending rather than increasing its burden on the people.
http://www.nbclosangeles.com/news/local/California-Taxpayers-Due-Refunds-May-Instead-Get-IOUs-.html
First of all I hail from the great state of California. Two things, and not to get in a blame game but prior to the recall of Gov. Grey Davis my state had a surplus. Second of all, anyone who gives the govt. an interest free loan, by getting a tax refund once a year instead of setting your deductions corectly sounds to me, foolish.
I want and expect and plan my refund to be anywhere within $100 that way I spend or invest MY money all year.
What about having an earthquake and breaking off into the ocean? Well you would lose the sights of Cheryl( the owner of this site), MoreLuck, HelenofCalifornia some pretty fine posters who add to the texture here.
 

Channahon

Well-Known Member
Here' a problem I have with any government entity.

As a taxpayer, you DO NOT have the option of paying your taxes, unless you want leins on your property and warrants for your arrest for tax evasion. As we are all held accountable to pay our taxes.

Now are the governments, city, state, federal, held accountable to spend our tax dollars? Has anyone ever received a finacial statement from the governments, letting us taxpayers know how our monies are being spent?

I don't think so, unless you try to find some websites online, and with that some information is vague or outdated.

As I see it, auditing, and evaluations of taxpayer spending is owed to the taxpayers. As my husband has said in the past, if we knew how much of taxpayers monies were being wasted, we would be sick.

So to even ask the public to take and IOU for tax refunds, time for a revolt by the people.
 

chev

Nightcrawler
Honestly, I would rather owe a little bit or nothing at the end of the year than have the govt holding it interest free. :happy2:
 

UPS Lifer

Well-Known Member
First of all I hail from the great state of California. Two things, and not to get in a blame game but prior to the recall of Gov. Grey Davis my state had a surplus. Second of all, anyone who gives the govt. an interest free loan, by getting a tax refund once a year instead of setting your deductions corectly sounds to me, foolish.
I want and expect and plan my refund to be anywhere within $100 that way I spend or invest MY money all year.
What about having an earthquake and breaking off into the ocean? Well you would lose the sights of Cheryl( the owner of this site), MoreLuck, HelenofCalifornia some pretty fine posters who add to the texture here.

Nobody wants to see any of the posters you mentioned (or even you) break off into the Pacific Ocean but I wouldn't mind seeing TOS rowing in a boat off the coast!!! LOL!


Seriously though... This is the first full year I do not have to file income taxes in CA! I am soooooo happy about that!

Grey Davis was the worst governor California has had in my lifetime.

I have watched Arnold try and pass legislation dealing with education, teacher and professor seniority, as well as pension reform. Every union has spent millions against legislation that would ease the financial burden in CA.

Don't get me wrong, I am not against unions but common sense needs to prevail. If there is no money something has to be done.

Don't forget who controls the legislature and has controlled the legislature for more years than I can count.... and it doesn't begin with an "R"!

California is or was the 7th largest economy in the world but this is what happens when you can't get away from partisanship (Democrats) and run the state like a business and make the hard decisions that need to be made.

This is really a big embarrassment to the legislature of CA! My whole family resides in Southern Cal and I hope this situation gets resolved not only for them but for you as well.
 

browndevil

Well-Known Member
Nobody wants to see any of the posters you mentioned (or even you) break off into the Pacific Ocean but I wouldn't mind seeing TOS rowing in a boat off the coast!!! LOL!


Seriously though... This is the first full year I do not have to file income taxes in CA! I am soooooo happy about that!

Grey Davis was the worst governor California has had in my lifetime.

I have watched Arnold try and pass legislation dealing with education, teacher and professor seniority, as well as pension reform. Every union has spent millions against legislation that would ease the financial burden in CA.

Don't get me wrong, I am not against unions but common sense needs to prevail. If there is no money something has to be done.

Don't forget who controls the legislature and has controlled the legislature for more years than I can count.... and it doesn't begin with an "R"!

California is or was the 7th largest economy in the world but this is what happens when you can't get away from partisanship (Democrats) and run the state like a business and make the hard decisions that need to be made.

This is really a big embarrassment to the legislature of CA! My whole family resides in Southern Cal and I hope this situation gets resolved not only for them but for you as well.
Hey Lifer I have been wondering were you have been. Thanks for your reply to this post. Since you have lived here I appreciate and respect your opinion. Yes we Californians are in a world of hurt but you had your escape route to the desert. Congrats on your first year of not having to file your income tax. We will miss your contribution this year LOL:happy2:
 

av8torntn

Well-Known Member
This is really a big embarrassment to the legislature of CA! My whole family resides in Southern Cal and I hope this situation gets resolved not only for them but for you as well.

The really big embarrassment will be when the state of CA drags the rest of us into their mess. With the power they have in the US Congress it is only a matter of time before the rest of us are forced to bail you guys out. Look for something like 100 billion dollars from the rest of us for your giant CA government.
 

UPS Lifer

Well-Known Member
The really big embarrassment will be when the state of CA drags the rest of us into their mess. With the power they have in the US Congress it is only a matter of time before the rest of us are forced to bail you guys out. Look for something like 100 billion dollars from the rest of us for your giant CA government.

Well, hopefully what you say won't come true. I have personally heard Arnold say (when a couple of other governors and a few mayors asked for the bailout) that California got into this mess and we won't go to the Fed Government for a bailout. A governor who takes responsibility... how refreshing!

This is what should have happened when Wall St (and Detroit etc.) was going belly up. The taxpayers can't bail out everybody that gets into trouble.
 

av8torntn

Well-Known Member
Well, hopefully what you say won't come true. I have personally heard Arnold say (when a couple of other governors and a few mayors asked for the bailout) that California got into this mess and we won't go to the Fed Government for a bailout. A governor who takes responsibility... how refreshing!

.

Well I hope you're right but I don't think it will be something obvious like a bill named the CA bailout bill. Those guys in DC can get creative when they spend our money.
 
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