Apparently, the state of California has been issuing IOUs to contractors that they do business with because Ahnold has no cash. They are worthless; no bank will honor them.
Small businesses that received $682 million in IOUs from the state say California expects them to pay taxes on the worthless scraps of paper, but refuses to accept its own IOUs to pay debts or taxes. The vendors' federal class action claims the state is trying to balance its budget on their backs.
Lead plaintiff Nancy Baird filled her contract with California to provide embroidered polo shirts to a youth camp run by the National Guard, but never was paid the $27,000 she was owed. She says California "paid" her with an IOU that two banks refused to accept - yet she had to pay California sales tax on the so-called "sale" of the uniforms.
But here's the prize in the Cracker Jack box. California is treating the IOUs as income and is demanding IOU holders to pax state income tax on them. And the state won't take its own IOUs back as payment.
I hope for the sake of you folks in Jersey that your governor isn't reading this blog.