California State announces that effective July 2, 2009, all personal and business tax refunds, including direct deposit, will be issued as paper registered warrants.

The California State Controller has stated that "without action by the Governor and Legislature to stave off a severe cash deficit, the Controller was forced to issue individual registered warrants, also called IOUs, beginning July 2."

A registered warrant is a “promise to pay,” with interest, that is issued by the State when there is not enough cash to meet all of the State’s payment obligations.

California State has stated that "if there is sufficient cash available, registered warrants, or IOUs, will be paid by the State Treasurer on October 2, 2009. If the Pooled Money Investment Board (PMIB) determines there is sufficient cash available for redemption at an earlier date, they may be redeemed earlier than October 2, 2009. These IOUs are issued in the place of regular warrants, or checks. The interest rate, set by the PMIB on July 2, 2009, is 3.75% per year."

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