SAN FRANCISCO (Reuters) - Details of the California state budget agreement struck last week between Governor Arnold Schwarzenegger and top lawmakers may be made public on Tuesday, according to legislative aides.
Full details of the agreement will be disclosed on Wednesday during a legislative hearing in the state capital of Sacramento, the aides added, and a plan for a Thursday vote by the full legislature on the budget deal is still on track.
Schwarzenegger and top lawmakers hammered out a deal on a spending plan, which requires closing a $19.1 billion deficit, on Friday night -- 93 days after the start of California’s current fiscal year, setting a record for a late budget deal.
Lawmakers briefed on the agreement say it proposes more than $7 billion in spending cuts, some $3 billion in internal borrowing from state funds, more than $1 billion from the sale of state buildings and more than $1 billion in revenue by delaying a corporate tax break.
The agreement is also said to include better-than-expected state revenue of more than $1 billion, the expectation of $5 billion in federal money and $10 billion in proceeds from the sale of bonds for the state government’s cash-flow purposes and for more than $8 billion in unpaid bills.
IOUs UP IN THE AIR
The leaders of the most populous U.S. state’s government notched their spending plan agreement amid increasing voter unease about the state’s finances in a volatile election year, underscored by abysmal job-performance survey results for Schwarzenegger and lawmakers, and by State Controller John Chiang’s warning that he may have to issue IOUs if a budget is not enacted soon.
Last year, Chiang issued IOUs during a lengthy budget impasse to preserve cash for the state’s priority payments, which include payments to investors holding state debt. It was only the second time since the Great Depression that California resorted to the controversial financial tactic.
Chiang’s office is waiting on its revenue report later this week as well as on cash-flow figures in an enacted budget and word from State Treasurer Bill Lockyer’s office on how quickly it could borrow money on short-term basis in the municipal debt market before deciding on whether or not to issue IOUs this month.
Lockyer’s office needs an enacted budget to move forward with its bond plans for raising cash for the state government’s immediate needs.
The treasurer’s office is mulling two short-term debt deals -- a privately placed “interim” revenue anticipation note transaction worth $5 billion followed by up to $10 billion in routine revenue anticipation notes to sold to retail and institutional investors.
Lockyer’s office would need three to six weeks after Schwarzenegger signs a budget to prepare and execute the deals.
Reporting by Jim Christie; Editing by Jan Paschal