California: Priceless & Centsless

From Say Anything Blog:

California’s budget woes have resulted in the state “paying” a number of its vendors with IOU’s. That’s a bad enough situation as these businesses who have already provided the goods and/or services purchased to the government have to keep paying their bills (and not with IOU’s), but now the state wants them to pay taxes on the IOU’s they’ve received as if they were income.

What's that buzz I hear within the Obama Administration and why are they grinning?