California, with no budget and with its cold, hard cash quickly leaving the building, could soon resort to drafting taxpayers as less-than-volunteer lenders to the state, or worse.

As S&P wrote in cutting $46 billion worth of California’s general-obligation debt from A+ to A today, the state could have trouble meeting basic obligations by February (which is now). Further, California is “effectively removing cash from the economy at this time, including delaying more than $2.7 billion in personal and corporate tax returns.”

The San Jose Mercury News and other publications report that if California can’t find a solution by March, state controller John Chiang “would have to delay another, presumably larger batch of payments. Sometime after that — Chiang and others aren’t ready to predict when — the state may have to issue IOUs to vendors, taxpayers and other recipients of state funds.”

But tax refund money belongs to the taxpayer, not the state. Delaying what is really just an adjustment of an inadvertent overpayment by the taxpayer as a cash-management technique amounts to California’s forcing its taxpayers to invest in the state’s debt at a zero-percent interest rate.

Issuing IOUs to taxpayers instead of sending out cash would formalize this compulsory taxpayer lending.

Either that, or issuing IOUs would seem to come dangerously close to printing currency, a right that belongs to the U.S. Treasury.

Of course, lots of small towns issued their own black-market scrip in the Great Depression when banks failed and cash dried up. They had no other way of paying their workers, and cash-poor citizens got tired of bartering among themselves.

Even apart from Constitutional and legal questions, it doesn’t seem like a wonderful idea for the largest state in the Union to take up this precedent.