The state could begin issuing IOUs in April or May if Gov. Jerry Brown and the Legislature fail in their budget negotiations, state Treasurer Bill Lockyer said this afternoon.
IOUs could be required if the state is "unable to meet the self-imposed deadlines by the governor and the Legislature to adopt a budget in a timely way," he told academics and political consultants at a conference in Berkeley.
Brown is seeking to have a budget deal in place by March, proposing massive spending reductions and a ballot measure to extend temporary tax increases to resolve California's yawning budget deficit.
Lockyer said the "all-cut" alternative that could be required if voters do not extend tax increases is so awful Brown and Democratic lawmakers should make it public, despite not wanting to appear threatening to voters. He said state Sen. Mark Leno, D-San Francisco, is considering asking the nonpartisan Legislative Analyst's Office to issue such a document.