BILL NUMBER:  AB 1506
  VETOED	DATE: 09/30/2010




To the Members of the California State Assembly:

I am returning Assembly Bill 1506 without my signature.

This measure would require all state departments, upon a specified
determination made by the State Controller's Office, to accept
registered warrants, also known as IOUs, in lieu of cash payments.
The issuance of IOUs represents an embarrassing failure on the part
of the state to manage its finances.  Unfortunately, if the
Legislature does not pass a balanced budget soon, the possibility
that the Controller will be forced to issue IOUs this year becomes
all too real.  I sympathize with businesses that were issued IOUs
last year and those businesses that may receive them this year.  IOUs
place enormous financial strains on recipients who are unable to use
them to pay their own obligations, including debts owed to the
state.  However, requiring state departments to accept IOUs in lieu
of cash payments defeats the purpose of issuing IOUs in the first
place.  It would exacerbate the state's cash crisis and would
accelerate the possibility of the state defaulting on its debt
service and payroll obligations.

Since IOUs could be avoided if the Legislature passed a balanced
budget, I am unable to sign this bill.

Sincerely,



Arnold Schwarzenegger