Here come the IOUs

State Controller John Chiang says he'll start issuing them on July 2 if California lawmakers and Gov. Arnold Schwarzenegger fail to resolve the $24-billion budget deficit (a pretty likely bet at this point). Those who could receive IOUs are county social service agencies, private contractors, state vendors and folks entitled to income and corporate tax refunds. From the LAT:

Chiang said the state's cash shortfall is unlike anything "seen since the Great Depression," with a $2.8-billion shortfall anticipated in July that could grow to $6.5 billion by September. Meanwhile, legislative leaders were saying even before the first vote was cast that key provisions of the Democrat-crafted budget proposal they are considering today -- in particular, tax hikes on the oil and tobacco industries -- will almost certainly fail to garner the necessary two-thirds approval.