Usually a government would be thrilled to receive an interest-free loan, but California is eager to settle the books on one such unintended borrowing.
State Treasurer Kathleen Brown noted last week that about $39 million of IOUs issued during California's recent budget crisis remain outstanding.
When the state failed to pass a budget for the first 63 days of fiscal 1993, which began July 1, "people from around the nation were clamoring for payment on their IOUS," Brown said in a news release.
"Yet, more than two months have now passed [since the budget was approved] and there are still some 41,000 warrants somewhere out there earning absolutely no additional interest," she said.
Brown speculated that many of the outstanding IOUs might be in the hands of out-of-state investors who are unaware the warrants are redeemable. She said some people also may have the false impression that the IOUs continue to accrue interest.
The treasurer stressed that the IOUs stopped earning 5% once they were called for redemption. Some of the IOUs were called for redemption in August when the state had cash available, and the rest were called once the state approved a budget.
IOU holders who are uncertain how to redeem their IOUs can contact the state treasurer's office at (916) 653-2995.