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Some of what you wanted to know about IOU's but were afraid to ask.
By Jessica Lussenhop
They're not just for deadbeat brothers-in-law anymore! Since the state legislators are severely constipated with this year's budget, state Controller John Chiang has run out of money to pay for things like tax refunds and contractors, and IOUs should be arriving this week all over the state. Though they look almost identical to a normal state check, a green band near the bottom clearly denotes they are "registered warrants," or IOUs. The warrants have a 3.75 percent interest rate, and though they are not redeemable until Oct. 2, some banks have announced that existing customers can cash them in until July 10--if they allow the banks to pocket the interest. Santa Cruz County, which will receive the bulk of the IOUs here locally, will be able to redeem them at Bank of the West and Union Bank, though County Administrative Office spokeswoman Dinah Phillips says it's still unclear which departments are getting IOUs and in what amounts. She says Treasurer Fred Keeley will collect the IOUs as they come in before ferrying them to the banks, which will sit on them for a week before floating the money to the county.
To people on the receiving end of checks from the county--and those could include anyone from CalWORKs recipients to Cal Grants students to pesticide contractors--it will seem like business as usual. But the county and banks can't keep this up forever. "Nobody knows when the Legislature will come together," says Phillips. "If anybody knew that, they should spend their time buying lottery tickets."
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