Happy I.O.U. Day

Add a new date to your national calendar, between Tax Day and Independence Day: July 1 is I.O.U. Day for states that consistently don’t pass their budgets on time.

This year is worse than usual: eight states, most with budget gaps in the billions, have yet to pass a budget as a new fiscal year begins today. State governments in Arizona, California, Connecticut, Delaware, Illinois, Ohio, North Carolina, and Pennsylvania are in various states of budgetary disarray. But most of these states don’t have to cut services yet – being perpetually late has taught them all about stop-gap measures.

Some states can pass interim budgets, or keep services going by executive order. But even states like California, which can legally continue operations temporarily without a budget, is running into a big problem this year: a lack of cash. Tax revenues are down, emptying the state’s coffers, and California’s controller says he will begin paying creditors with I.O.U.’s tomorrow. (Although if the interest rate is set at 5%, as it was in the last I.O.U. pay-out in 1992, some liquid creditors may be happy for the extra return.)

However, Arizona and Illinois are legally ill-prepared and will have to cut services immediately. On Tuesday night, Arizona park rangers started to ask campers to leave state parks. Services that will be shut down next include help for victims of domestic violence and child abuse investigations.

Delinquent budgets are not a new trend. California, Illinois, North Carolina, and Pennsylvania haven’t passed a budget on time for at least the last two years. Pennsylvania hasn’t passed a budget on time for the past eight years, continuing a tradition of tardiness dating to the 1970’s and 80’s, according to two researchers at Franklin & Marshall College. They write that this year’s budget crisis is nothing compared to 1977, when legislators fought in the House and the budget wasn’t approved until late August. And this chart lists budget enactments in North Carolina all the way back to 1961. (Half the budget was late that year, too.) Until perennially late states reform their budget processes, keep I.O.U. Day on your calendar.