BARSTOW Contractors at the Veterans Home of California in Barstow have begun receiving IOUs instead of paychecks due to the recent California budget crisis.

Lynn Sanetti, a veterans home contractor, got her monthly check from the state at the end of July, but instead of her regular payment she received a registered warrant also known as an IOU by the state. The warrant has a redemption date of October 3. Sanetti received a letter that said the warrant will draw 3.75 percent interest if she redeems it in person or through the mail at the State Controller's office in Sacramento after that date. Sanetti said she took the warrant to Arrowhead Credit Union and the bank would not accept it.

"I'll probably just hold onto it until the date it says and take it to a bank," Sanetti said.

Sanetti is not the only local contractor affected by the state IOUs. J.P. Tremblay, the Deputy Secretary of California Veterans Affairs, said the Barstow veterans home employs 15 individual contractors, but was unaware who received IOUs. The contractors' positions range from barber to cardiologist.

The California State Controller's office began issuing the registered warrants or IOUs on July 2 because the state was on track to run out of money in the general fund by the end of July, according to controller's officer spokesman Jacob Roper. Roper said the controller expects to continue to issue registered warrants until October 3. Employees should be able to redeem the registered warrants after that date, according to Roper. However, Roper warned that based on the current financial situation the registered warrants may not be redeemable until after October 3, but he also said there is a chance they could be redeemed sooner.

Roper said the IOUs are being issued to certain groups based on constitutional and court requirements. Payments to teachers' retirement plans and other education expenses are protected from having IOUs issued by the California state constitution, according to Roper. The state issued IOUs during an economic crisis in 1982, but a group of state employees sued the state and won to prevent them from receiving IOUs in 1993. State contractors have no constitutional, court or federal protections against receiving IOUs, according to Roper.

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