by Calculated Risk on 12/31/2009 12:06:00 AM

From the NY Times: New York State Has First Deficit in General Fund

... For the first time in history, [New York]’s main bank account is poised to end the year in the red.

... New York had a negative balance of $174 million in its general fund on Wednesday, with nearly $1 billion in bills owed by day’s end. ... To fill the gap, New York will be forced to rely on ... raiding its short-term investment pool ... But that account itself is dangerously low, with only about $800 million on hand, compared with a balance in more flush years of as much as $16 billion.

And the lower the short-term balance falls, the harder it is for the state to cover its day-to-day bills and the closer New York moves toward a previously unimaginable eventuality: A government check that bounces.

No problem - just write IOUs.