With Budget Secured, California Lawmakers Turn to Bond Plans

SAN FRANCISCO — Now that ­California has a budget in place after a 100-day delay, finance officials in ­Sacramento are turning their attention to putting long- and short-term borrowing plans into place.

Lawmakers ended months of wrangling in the early hours Friday morning, voting to enact an $87.5 billion general fund spending plan.

Gov. Arnold Schwarzenegger said Friday that he would sign the budget as soon as possible after making $965 million in line-item vetoes.

The state’s next step is to address its weak cash position.

The State Treasurer’s Office plans to bring revenue anticipation notes to the market by the end of November, after taking out an interim bridge loan from Wall Street banks by early November.

Preliminary projections call for an interim borrowing of up to $5 billion, to be taken out with the public Ran sale of up to $10 billion.

“What we’ll be doing now, or once the budget is signed, is sit down and work with the Controller’s Office and the Department of Finance to evaluate our cash flows and assess our borrowing needs,” Joe DeAnda, spokesman for Treasurer Bill Lockyer, said Friday morning.

“We’ll move as quickly as we can,” said Hallye Jordan, spokesman for the State Controller’s Office.

After Rans are sold, the treasurer will try to sell general obligation bonds — another deal measured in billions — before the end of the year, to keep ongoing ­public works projects from running out of cash.

“The key thing is that we want to sell the bonds so that we can get the money appropriated,” Schwarzenegger said Friday morning after the budget passed.

Standard & Poor’s issued a report Friday morning saying the new budget does not change its A-minus rating and negative outlook on California GOs.

California’s other GO ratings are A-minus from Fitch Ratings and A1 from Moody’s Investors Service.

California routinely misses its budget deadlines, but the fiscal 2011 spending plan set a record for tardiness, as legislative leaders and the governor stalemated over plans to close an $18 billion general fund gap.

They finally got a deal done after agreeing to use increased revenue assumptions and to defer some obligations into fiscal 2012.

At Schwarzenegger’s insistence, the budget deal also includes a lower pension benefit tier for future state employees, and sends voters a 2012 ballot measure to establish a stronger rainy-day budget reserve.

The Legislature’s budget authorized $87.5 billion in general fund spending, with more than $94 billion in revenues, according to a report from the Legislative Analyst’s Office.

Because California’s general fund started the fiscal year in the red, the Legislature’s budget only has a $364 million reserve, though Schwarzenegger said he would boost it to $1.3 billion with line-item vetoes.

The pension system changes won’t have any impact on this year’s budget, but Schwarzenegger said the reforms are necessary for the future.

The Republican governor leaves office after the November election because of term limits.

“The sad story is that the reforms we put in place will not have any effect on our administration because they came too late,” he said. “The next governor is going to go and benefit from this.”

Other items in the budget include the assumption that California will net $1 billion in one-time funds from selling a set of state office buildings, then leasing them back.

Schwarzenegger said the state has seen strong interest from potential buyers.

The budget package also included a trailer bill that increases the bonding capacity of the Centre City Redevelopment Project in San Diego.

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