Stool Pigeons Wire Message Board: New CA borrowing costing state $$$ - Stool Pigeons Wire Message Board

$275 million tab on state budget fix
$84 million would go to 7 banks for payment guarantee

Christian Berthelsen, Chronicle Staff Writer Thursday, June 5, 2003

Sacramento -- California, struggling with a gaping budget deficit and dubious fiscal credibility, put the finishing touches on a short-term borrowing package Wednesday that could cost taxpayers as much as $275 million in interest and fees.

The state's finances are so dire that $84 million of that cost will go to seven Wall Street banks for agreeing to pay investors if California can't repay the debt that comes due in a year. That amount is about what the state plans to spend next year on a highly touted program to provide medical insurance to children of the working poor.

The $11 billion deal is just the first of four debt issues totaling $27 billion the state expects to issue in the coming months that will generate a bonanza of as much as $960 million in fees and interest to Wall Street banks and debt investors. That is more than what the state will spend next year on child development, summer school, after-school and child nutrition programs combined.

To make matters worse, officials in Gov. Gray Davis' administration say that the Legislature's failure to make deep spending cuts back in January is creating even more pain now. The money for borrowing costs will come from the state's general fund, meaning there will be less money for the very programs Democratic lawmakers wanted to save....


Full SF Gate Article

I love how the governor's office is now trying to blame the legislature!