It's possible, even if the budget deal passes, according to state Controller John Chiang. He also doesn't know if the state will have enough cash to repay those IOUs when they become redeemable on Oct. 2. Chiang says it all depends on how much money is in the treasury compared to the obligations that must be paid out. "Just because you have a budget doesn't mean you have cash in the state treasury," Chiang told guests at a UCI Paul Merage School of Business luncheon in Irvine. "We need action to put money in the state treasury." From the OC Register:

"I'll pay if we have enough cash or (the October IOUs) will roll over and I'll issue a second round," he said. The state must also pay 3.75% interest on the IOUs. Chiang blamed the state's financial situation on years of spending too much and living on borrowed money. "July 12, 2007 was the last date the state of California was operating in the black," he said.