SACRAMENTO — For just the second time since the Great Depression, California began paying some of its bills with IOUs Thursday, as this year's version of the state's annual budget battle dragged on.
The IOUs began going out a few hours after state financial officials set a 3.75 percent interest rate on them, along with a redemption date of Oct. 2.
Several of the state's leading banks, meanwhile, said they would accept the IOUs, formally known as registered warrants, but only until July 10. Others had not decided yet.
"Given the poor credit rating of California the worst in the nation banks may be hesitant to extend credit to the state," Rod Brown, president and CEO of the California Bankers Association, said in a prepared release.
While legislative leaders and their number crunchers scurried between closed-door meetings, and Gov. Arnold Schwarzenegger held news conferences in Los Angeles and Fresno to demand quick action, the state controller's printing presses began churning out 28,742 warrants, worth $53.3 million, which will be mailed to people awaiting tax refunds.
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