California to Issue IOUs for Income Tax Refunds, Might Nix CAL Grants for Students
The Near Bankrupt State Wants to Give You an IOU. Try Paying Your Mortgage or Tuition with It.
However, if Arnold Schwarzenegger and his band of merry men cannot work out the budget, there is a good chance that the State of California will be paying income tax refunds with IOU slips instead of checks.
California democrats presented the governor with an unworkable budget package containing a number of illegal tax hikes -- referred to as "fees" and "surcharges" - that sought to get around voter determined (Proposition 13) two thirds majority vote requirements for any tax increases.
At issue was, among other things, a Democrat proposed gas tax hike of $0.13 per gallon! Squaring this with a Time magazine reported an estimated jump of California's unemployment rate to 8.5% by the end of 2009, the public outcry was loud and fierce. Lawsuits by taxpayer advocates and a flurry of emails and calls to the gubernatorial office caused Governor Schwarzenegger to veto the budget, leaving California in its continued fiscal mess.
The Los Angeles Times reports that the latest brainstorm out of Sacramento is to begin issuing IOU slips instead of California income tax refunds beginning February 1st. Moreover, if you are student relying on a CAL grant for your tuition payment, it is time to hope and pray that the admissions office will accept your vowels instead of a check for your student fees. Student grants are also not going to be funded come February.
California is running out of money, and will officially be in the red come the end of January. Republicans are digging in their heels and have proclaimed that they will not accept any budget with tax increases. Democrats have been just as adamant that they refuse to even consider a budget if it contains any spending cuts and no significant tax hikes.
Governor Schwarzenegger wields footstools and doors in an effort to provide visual aids to disenchanted voters, but he is singularly ineffective at uniting both sides at a negotiation table. Already the special interest groups (think California Teachers Union) are screaming and demanding that their projects be fully and increasingly funded, and also exempt from any cuts.
In interviews that can only be described as myopic, they seek to allocate budget blame to voters passing Proposition 13 and others that protect property tax rates from skyrocketing, but they are unwilling to roll up some sleeves and help California out of the mess their special interest has gotten it in.
While the Obama stimulus plan is trying to put money back into the pockets of taxpayers, California legislators beholden to special interest groups are trying to surreptitiously fish it back out, and then issue paper vouchers for the money they cannot get.
If Sacramento cannot get its act together by the end of January, about 10 million taxpayers are going to receive a State of California issued tax refund IOU. Try paying your mortgage with it (if you still have a house) or attempt foisting it on Ralph's while you're working to put food on the table. I double-dog dare you!
Sources: http://www.latimes.com/news/local/la-me-tax-refunds7-2008jan07,0,7471181.story; http://www.time.com/time/nation/article/0,8599,1870299,00.html
Published by Sylvia Cochran - Featured Contributor in Automotive, Politics, Travel and Lifestyle
Sylvia Cochran works out of sunny Southern California and has been freelance writing -- full-time -- since 2005. SEO-optimized Internet copy includes news analysis, political Op/Ed and parenting as well as a... View profile
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- Governor Schwarzenegger wields footstools and doors in an effort to provide visual aids to voters
- Sacramento is to begin issuing IOU slips instead of California income tax refunds beginning 02-01
- Democrat propose gas tax hikes of $0.13 per gallon (among other things)
20 Comments
Post a CommentUnsurprising.
Amazingly, California is the lowest-tax jurisdiction I've lived in this decade (London and NYC).
Still, this seems to run contrary to the notion of Keynesian fiscal stimulus.
ARNOLD MUST GO!!!
i say we overthrow this government, they dont know what theyre doing
So if we get an IOU for the taxes, do we also get a penalty fee and interest? That's what a taxpayer owes if they can't pay what is owed come April 15....
Oh but we better pay them on time right? What a crock! Wonder what tomorrow won't bring. Amazingggggg
Great information, though, sorry to hear about it. California has so many promises it's a shame they can't disperse the wealth. Pitiful they threw away the opportunities of increased funds by passing Prop 6. Millions of dollars bye bye
definitely not good...
Oh JEEZ! I'm a California resident and boy oh boy do I need that measly little refund! As bad as this sucks, it's REALLY awful about the Cal grants for students. I just graduated from grad school last year, and a TON of my friends were screwed over because they were promised state funds for participating in difficult training programs, and they were left with NOTHING and had to scramble at the last second to borrow money from family members and take out private loans! Can't wait to see how we're going to get out of this one!
California is such a joke - I know, I'm a resident. We're taxed just about to death, yet the legislators still can't make the state run on the gobs of money that pour in. We personally pay an obscene amount of property tax, only because we bought recently, and I've always been of the opinion that it's time to revamp prop 13 - a sympathize with those on fixed incomes, but a LOT of people here have gotten away with paying a miniscule fraction of what we pay for the same model house each year thanks to 13. I'm all for lower taxes and limited tax hikes, but fair is fair, and I hate paying $4500 a year more than my neighbor for the SAME house. Ah, California.
Can the state REALLY get away with issuing IOU checks to students rather than sending the grant money promised BY the state!?
Honestly, what does the state of California expect us to do? We APPLY and RECEIVE grants for a reason. There is obviously a necessity that is not being met...
and WHO is going to compensate for the hundreds of thousands of dollars that students won't be receiving?
The universities that are already suffering a severe budget cut?
Or parents that don't have the money to begin with?
Thanks, Mr. Schwarzenegger, for the personal contribution t