Golden State won't be able to meet payments until new budget accord reached.
The world's eighth largest county is on the verge of issuing IOUs.
Suffering from both a $15 billion budget deficit and a multi-million dollar cash shortfall, California is days away from not having enough money to cover all of its bills.
Starting on Sunday, state controller John Chiang plans to delay sending state tax refund checks, payments to contractors and disbursements to counties and agencies that provide social services. He estimates that the state will be at least $346 million short in February.
"Rather than helping stimulate the economy, withholding money from Californians will prolong our pain and delay our economic recovery," he said. "Individuals who already are vulnerable will be hit hard."
Gov. Arnold Schwarzenegger and legislative leaders are behind closed doors trying to hammer out a solution to the state's mid-year budget crisis and a projected $25 billion gap for 2009-2010. The governor has proposed draconian spending cuts in virtually every department, as well as hefty tax increases, to close the widest deficit in its history
