The state will begin sending out $3.36 billion in IOUs today as Governor Arnold Schwarzenegger declared a fiscal emergency and California's budget deficit grew to $26.3 billion, according to the Chron. The governor also ordered state workers to start taking a third unpaid furlough day a month to save $425 million this year. The state's deficit grew by $2 billion after lawmakers failed to meet a July 1 deadline that would have allowed the state to save money on education.
State Controller John Chiang will issue the IOUs to private vendors and county governments but not to schools or state workers. It's the first time the state has had to use IOUs since 1992. The fiscal emergency forces the state Legislature into a 45-day special session to solve the financial crisis. The governor said he will veto any non-fiscal, non-essential legislation during the session.