State will cut off interest on IOUs after Sept. 3

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Most people and companies holding the $2.26 billion in IOUs from California probably don’t need encouragement to cash them in, but just in case: The IOUs will stop accruing interest as of Sept. 4, the day Treasurer Bill Lockyer will begin redeeming them.

In other words, there’s no benefit in waiting to get your money back, because the 3.75% annualized tax-free interest return the state is paying on the scrip will cease once the IOUs are eligible for redemption.

The original maturity date for the paper was Oct. 2, but the state was able to move that up by a month because of improved cash flow and a $1.5 billion short-term loan from JPMorgan Chase & Co.

The IOUs can be redeemed in person at Lockyer’s office in Sacramento beginning Sept. 4, or by mail. The mailing address: State Treasurer’s Office, Attn: Registered Warrant Desk, 915 Capitol Mall, Sacramento, CA 95814.

The state estimates that redemption by mail will take a week to 10 days. Lockyer encourages holders to send in their IOUs immediately.

More information is at www.treasurer.ca.gov

-- Tom Petruno