• BREAKING NEWS ABC shows live and on-demand -- Download the WATCH ABC app!

Tens of thousands of IOUs yet to be cashed

January 14, 2010 12:00:00 AM PST
Remember those IOUs the state gave out instead of refunds? Well tens of thousands of Californians still haven't cashed them in. That adds up to $50 million unclaimed and a lot of that money belongs to people here in southern California. The State had to issue $2.5 billion dollars worth of IOUs last summer to pay its bills because it was running out of cash during a budget stalemate. $50 million worth still haven't been cashed. State Controller John Chiang is sending out letters to 89,000 Californians encouraging them to redeem their IOUs.

"We want to end this shameful chapter in California history," said Chiang. "It's terrible that we had to resort to these issuances of IOUs, but it was clearly necessary."

Last year, with the recession in full swing, the state's bank account was nearly overdrawn, so California had to take the rare, embarrassing step of sending out IOUs instead of actual checks. Once the legislature finally passed a budget later that summer, IOU holders were able to cash them in with 3.75 percent interest.

There really is no financial advantage to holding on to them. The IOUs stopped collecting interest in September when they became redeemable.

The Southland has the most IOUs floating around. There are nearly $10 million dollars worth in Los Angeles County alone. Orange County has nearly $3 million. The Inland Empire had almost $2.3 million and Ventura County had $833,000.

People could be busy or they could have just forgotten. Some IOU holders could also be holding them as souvenirs. That's what Glenn Jones in Utah wants to do and is willing to pay double the face value within reason.

"It's straight up a souvenir, like you would look at any historical document," said Jones. "It's a symbol of the economic struggle that California is under."

California IOUs become invalid on September 3. Those not cashed in become a donation to the state budget, which is about $20 billion in the hole.