California set to create first IOUs

SACRAMENTO, July 2 (UPI) -- The California state controller's office is set to print 28,742 IOUs worth $53.3 million to deal with the state's budgetary problems, officials say.

The Los Angeles Times said Thursday's printing plans mark the first time in 17 years officials at the state controller's office will embrace the use of IOUs as a stopgap measure.

The bulk of the printed IOUs will eventually find their way into the hands of California residents awaiting income tax refunds.

State financial officials have yet to determine what interest rate will be tied to the IOUs when they are used at banks and other financial institutions.

Certain banks have already announced they will accept the IOUs from state residents while others have not made a decision.

The Times said the initial production of the IOUs comes a day after California Gov. Arnold Schwarzenegger officially declared a fiscal emergency.

The governor, who issued school and public university budget cuts Wednesday, said his finance team estimates the state's budget deficit at $26.3 billion.