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Santa Barbara County Not Expecting to Issue IOUs

As California grapples with its budget crisis, Auditor-Controller Robert Geis says the county has maintained a 'pretty strong cash flow'

Although California’s budget deficit may cause billions of dollars in cuts and IOUs to its 58 counties, Santa Barbara County officials said Thursday they don’t expect IOUs to be issued here.

“We anticipate not having to issue IOUs for a while, or even consider it,” county Auditor-Controller Robert Geis said.

The county’s “pretty strong cash flow” is partly because of tax and revenue anticipation notes — basically, cash flow loans. Since property taxes come only in December and April, the county borrows money at the low interest rate of 0.33 percent to get by in the meantime.

The low rate can be attributed to the county’s good financial position, including good credit, Geis said.

“We’re not worried yet, but it depends how long this stretches out,” he said.

As for IOUs, Geis said the treasurer-tax collector may buy them up and invest them so the county can give out cash now. There is an interest rate attached to the IOUs that’s redeemable in October, but if it’s bought up and invested, those investments will then earn interest.

Even though IOUs won’t be a factor in this county — at least for now — budget cuts will substantially reduce funding to many services. The California Association of Counties expects $4.3 billion in cuts and IOUs to counties, which includes $776 million in IOUs for payments due to counties in July and $510.3 million in cuts and cost shifts in health and human services.

Many services being cut, such as social services, mental health and alcohol, are legally required to be administered but will be paid with IOUs instead of normal payment, said Jeremy Tittle, executive assistant for 1st District Supervisor Salud Carbajal.

The county expects $3 million a month in IOUs, but that amount is unconfirmed, Tittle said.

“It’s just another case of the state passing on its problems,” he said.

Click here for a related story on how IOUs can be redeemed locally.

Noozhawk staff writer Giana Magnoli can be reached at .(JavaScript must be enabled to view this email address).

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