SAN FRANCISCO - California has pulled its $2 billion general obligation bond sale off next week's calendar, after the state Legislature failed to approve cash-flow management legislation the State Treasurer's Office was counting on to make the deal more palatable to investors.
That legislation gives state budget and finance officials additional authority to manage the timing of payments for various state programs, through the end of fiscal 2011.
The cash-flow bill was structured to give ratings agencies and investors confidence that the state government can manage its cash-flow issues and avoid a repeat of last year, when it had to pay many creditors with IOUs.
The bill easily cleared the Senate on a 37-2 vote, but it stalled this week in the Assembly, in an apparent partisan squabble between majority Democrats and minority Republicans. As an urgency measure, it must pass with a two-thirds vote, which means some GOP votes are required.
The deal had been scheduled to price next Thursday, March 4.
The sale will be delayed at least one week, State Treasurer's Office spokesman Tom Dresslar said in an e-mail to reporters late Tuesday.
"How long the delay lasts will depend on how fast the Assembly acts on the cash management legislation," he said.
California GOs carry underlying ratings of BBB from Fitch Ratings, Baa1 from Moody's Investors Service, and A-minus from Standard & Poor's, the lowest for any state.