Yes, the state budget is that bad.
Exactly what happened is detailed on the blog of the California State Association of Counties. The checks are due local governments under the Williamson Act, which provides incentives to encourage land owners to preserve property for agricultural uses, instead of developing it. The program funding these incentives had been worth about $38 million -- until last summer's budget, when, as a money-saving measure, it was reduced to $1,000 via the governor's line-item veto.
Eliminating the program would have been more difficult than stripping down to virtually nothing, I'm told.
So instead of dividing up $38 million among local governments that give out the incentives, the state divided up $1,000. Twenty-two counties received checks for less than $10. And Orange County and Camarillo (which don't have much agricultural land enrolled under the Williamson Act) get their penny.
If this all sounds strange, it isn't. This is the new normal in a state of persistent budget deficits.