California Needs $7.5 Bln in Notes to Cover Shortfall (Update1)
By Michael B. Marois
Sacramento, California, April 24 (Bloomberg) -- California must sell as much as a record $7.5 billion in short-term debt to pay its bills in June and July, the state controller said.
The sale, which would surpass the record $5.7 billion worth of tax-exempt notes California sold last year, may be offered as soon as June, Controller Kathleen Connell said at a Sacramento, California, press conference. Governor Gray Davis must approve the sale, she said.
``The last thing I want to do is have the state in a panic because we didn't think ahead,'' Connell said. She said the state needs at least $5.4 billion in June and July.
California last year experienced its worst one-year decline in tax revenue since World War II as the U.S. economy slowed and a declining stock market cut into capital gains tax revenue. The deficit may exceed $17 billion and could reach $20 billion, or one- quarter of California's general fund budget, in fiscal 2003, state officials said. The new fiscal year begins July 1.
States are struggling to eliminate a combined $27 billion shortfall in the current fiscal year, the National Conference of State Legislatures has reported. Municipal bond analysts expect the amount of notes issued this year to match or exceed last year's record of $56.2 billion.
Governor's Plan
Davis has proposed erasing the fiscal 2003 deficit by shifting funds among budget accounts, borrowing, lowering spending, and getting help from the federal government. He said Tuesday that a tax increase isn't needed because the improving economy will fill the gap.
Davis next month will announce revised revenue estimates and a new spending plan. His fiscal 2003 budget, first proposed in January, anticipated a $12.4 billion deficit.
Connell proposed selling revenue anticipation warrants, which would be repaid by future tax receipts. California law requires the state to pay off notes in the same fiscal year they are sold. Warrants aren't subject to the same restriction and can be repaid in a future fiscal year.
The $7.5 billion estimate assumes that state lawmakers will pass a budget on time and permit the sale of bonds to cover the costs of power the state bought during last year's energy crisis, Connell said. She recommended Davis authorize $3.5 billion of additional warrants in case budget negotiations stall or the energy bonds are delayed. State Treasurer Philip Angelides said yesterday that the $11.1 billion worth of power bonds may be offered by September.
California last sold warrants in 1994, when a recession produced a $14 billion deficit, equal at the time to a third of the state's general fund budget.
<center>
<HR>
</center> |
Thread-Ansicht
Mix-Ansicht
Reihenfolge
Thread gesperrt
