California's budget criss yet again is looming and the state may be issuing IOUs once again to cover its payments. One of the local Assemblymen introduced a bill where people and businesses that receive IOUs from the state can turn around and return those IOUs to pay their own debts to the state (car registrations, fishing licenses, back taxes, etc.) And there appears to be a fair chance for this bill to pass.
Now, on the surface, I think that it's only fair that the state should take what it is dishing out, but on the other hand, I'm wondering that with the IOUs working as a "sub-currency," how that is going to affect things in the long term. Not as much cash itself will be heading into the state coffers if citizens and businesses are returning IOUs to offset their own debt or fees, which means that more IOUs might have to be issued, leading to a downward spiral. This is the argument the governor's Department of Finance is making even though Gov. Schwarzenegger hasn't taken an official position yet.
With how crappy the job market in California has been, coupled with the crappier housing market, this is making me realize that maybe Ray and I should have moved to Colorado or overseas and live off his military pension.