SAN FRANCISCO (CN) - Small businesses that received $682 million inIOUs from the state say California expects them to pay taxes on theworthless scraps of paper, but refuses to accept its own IOUs to paydebts or taxes. The vendors' federal class action claims the state istrying to balance its budget on their backs.
Lead plaintiffNancy Baird filled her contract with California to provide embroideredpolo shirts to a youth camp run by the National Guard, but never waspaid the $27,000 she was owed. She says California "paid" her with anIOU that two banks refused to accept - yet she had to pay Californiasales tax on the so-called "sale" of the uniforms.
The classconsists mostly of small business owners, many of whom rely on incomefrom government contracts to keep afloat. They say California has usedthem as "suckers" as it looks for a way to bankroll its operationswhile avoiding its own financial obligations.
"Instead ofseeking funds through proper channels, the State has created anightmare," the class says. "Many of these businesses will not surviveif they are required to wait until October 2009 to have these forcedIOUs redeemed by the State."
The class claims the state isviolating the Fifth and Fourteenth Amendments. It demands thatCalifornia be ordered to honor its own IOUs, plus interest. They arerepresented by William Audet.
One-way "money" transaction ripping off We_The_Sheeple with scrip? Even democrat "Gray" Davis didn't pull that when he was governor.