Calif. May Need to Issue IOUs Next Week

California’s finances are so dire that the state controller says he’s going to have to start doling out IOUs to creditors soon, reports the Los Angeles Times. Likening the situation to the Great Depression, John Chiang says he’ll have to issue IOUs to social-service agencies, private contractors, vendors, and others starting July 2 unless Gov. Schwarzenegger and state lawmakers close a $24 billion deficit.

Legislators have begun debating a series of proposals, all of which are expected to fail. Assuming that happens, Schwarzenegger and leading legislators will meet behind closed doors to try to forge a compromise. Chiang says an anticipated cash shortfall of $2.8 billion in July could grow to $6.5 billion by September. (More California stories.)