SAN FRANCISCO - California will receive enough federal stimulus money to avoid having to issue revenue anticipation warrants under its current budget plan, state finance officials say.
Last week, after months of negotiations and days of legislative brinksmanship, California enacted a budget to close a $40-billion-plus deficit that had been projected through June 2010.
The budget's mix of tax hikes, spending cuts, and borrowing included the issuance of $6.1 billion in revenue anticipation warrants, to be repaid in fiscal 2011. But the budget language required the state to apply available funds from the federal stimulus package to avoid having to issue the Raws. A review of the stimulus package indicates that the state will be able to forego the Raw borrowing.
"It gives us a great deal of pleasure to be able to do so," said H.D. Palmer, spokesman for the state Department of Finance.
While the budget agreement is expected to allow California to return to the market and issue general obligation bonds, it won't be immediate, according to state Treasurer Bill Lockyer.
Uncertainties over the budget and the state's cash position have kept California on the sidelines of the long-term bond market since June.
"After spending eight months shut out of the market, I will do everything I can to resume sales as soon as possible," Lockyer said in a statement.
Financing for thousands of bond-financed infrastructure projects was suspended in December to conserve the resources of the state's Pooled Money Investment Account, which provides interim financing for such projects before bonds are issued.
Staff from all three of the state's main finance organizations - the treasurer's office, the controller's office, and the Department of Finance - is working to determine how the newly enacted budget will impact the state's cash flow over the coming months.
"Once we get a better handle on the cash situation that will determine when and to what extend we unfreeze the loans on PMIA financing," said Tom Dresslar, Lockyer's spokesman.
The treasurer's office has been working with some agencies to privately place some state GO bonds, and Dresslar said those plans are proceeding.
The Bay Area Toll Authority and the Los Angeles County Metropolitan Transportation Authority were working on plans to each purchase up to $200 million in state GOs in order for the proceeds to flow to transportation projects in their respective regions, despite the freeze in the state's pooled money account.
"My orders are to get there and close the deal," BATA chief financial officer Brian Mayhew said yesterday. He said he wants to close his private placement by Friday.
"Everybody's saying we have to pull the trigger on this," he said.
California's absence from the bond market also had another impact on last week's budget agreement: it reflects $200 million in savings from debt service costs the state hasn't paid because it hasn't been able to sell bonds.
