SAN FRANCISCO The California treasurer's office is warning lawmakers that Gov. Arnold Schwarzenegger's proposal to raise money by bonding against the state lottery could make the state's already-challenging upcoming cash borrowing even trickier.

The governor's lottery bond proposal which would require voter approval in November and could potentially face court challenges might make investors uncomfortable with the short-term notes or warrants the state expects to issue by September, said deputy treasurer Paul Rosenstiel.

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