Posted
Jun 30 2009, 12:25 PM
by
Minyanville
It's official: California is broke.
For months, the most populous U.S. state has been in the throes of a historic budget crisis, as lawmakers have repeatedly failed to agree on how to resolve a $24 billion deficit.
What was once the country's richest state is preparing to issue IOUs to a host of creditors, according to the Financial Times. Among the dubious recipients of these IOUs: contractors, information-technology companies and food-service groups that cater to prisons. Funding for education and interest payments on its bonds are guaranteed by state law.
Gov. Arnold Schwarzenegger is taking a hard line with legislators, accusing them of offering up a piecemeal solution to the state's woes: "I will veto any majority tax increase bill that punishes taxpayers for Sacramento's failure to live within its means. It's time for the Legislature to send me a budget that solves our entire deficit without raising taxes," the Governator said Monday.
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