Californians May Not Receive Tax Refund Checks

Arnold "The Terminator" Schwarzenegger may terminate California tax refunds, for the time being.

Reports MSNBC:

If you expect you'll be getting a refund from California when you file your 2008 state income tax return, be prepared: you may instead receive a "registered warrant." Translation: an IOU.

"My office has projected that, in approximately 60 days, there will be insufficient cash available to meet all expenditures reflected in the 2008-09 Budget Act," stated a Tuesday letter from Controller John Chiang to the directors of all state agencies. "To ensure that the State can meet its obligations to schools, debt service, and others entitled to payment under the State Constitution, federal law, or court order. California may begin, as early as February 1, 2009, issuing registered warrants...commonly referred to as IOUs...to individuals and entities in lieu of regular payments."

In 1992,the last time California issued IOU's, banks honored them, cashing them on demand, and then receiving an additional 5% from the state when it made good on the obligations.

Unbacked paper receipts (the IOU's) for unbacked paper receipts (the dollar), there's a certain mad symmetry here.