SACRAMENTO, Calif. — The Golden 1 CU is accepting IOUs from its members as the state has begun issuing Registered Warrants due to its budget crisis.
SVP/CFO Donna Bland said this fiscal crisis is different from those in years past. "In prior years a budget was not approved. This year there is a budget, but the state is running out of cash due to a revenue shortfall and a budget deficit," she explained. "With not enough cash, the state must issue warrants to pay its bills. The governor has not approved issuance of any debts by the state because he wants the legislature to resolve the budgetary solution. He wants the creation of a new budget."
State Registered Warrants are not new but haven't been used since 1992, Bland said. Previous budget battles have resulted in state employees having their paychecks deferred-to which the CU responded with 0% loans.
The state begain issuing Registered Warrants for private contractors and state vendors, but state employees will continue to receive their paychecks. "It is unlikely the state will ever get to the point of issuing Registered Warrants for payroll due to a court ruling back in the early 1990s that calls for treble returns," she said.
Registered Warrants technically are considered investments because they are issued by the state, Bland said. "It is not a check or a loan, it is an investment. We will accept the Warrants from our members, authenticate the document with the state, and then physically hold on to the warrant until they are called or mature."
The holder of the Warrant will earn interest from issuance until the date it is called or Oct. 1, whichever comes first. "Some people might hold the Warrants, but most consumers just want to get their money," Bland assessed. "For our members, we will deposit those into their accounts so they have readily available funds to pay their own bills."
