California ? California will stop paying bills with IOUs on Sept. 4 and plans to redeem outstanding notes that same day, ending a “shameful chapter in the state’s history,” state Controller John Chiang said Thursday.

The announcement means vendors, small counties and tax filers with refunds can expect to be reimbursed — with interest — just before Labor Day weekend. Some said just knowing an IOU end date brought relief since they can more easily plan the rest of their own budgets.

Even though lawmakers and Republican Gov. Arnold Schwarzenegger cleared the main cash hurdle more than two weeks ago by agreeing on an $85 billion state budget revision, Chiang said he cannot halt IOUs until early September because the state must make large payments to schools and creditors on the first two days of that month.