State: IOU's Won't Halt Construction Projects
The IOUs the state could start sending out this week will hit local governments, state vendors and anyone owed income tax refunds. But unlike the last time California had a cash crunch, state-funded construction projects are NOT at risk of stalling.
Monday, June 29, 2009
What kind of projects are we talking about here?
Palmer: “The highway construction, the school construction projects, the levee repair projects, the water projects.”
In short, says H.D. Palmer with the Department of Finance, all the projects funded by the bonds voters approved back in 2006 -- 5,700 of them.
Palmer: “Because they are being funded not by the general fund, but by the proceeds of the bond sales that the state treasurer successfully negotiated in the spring of this year.”
That wasn’t the case this past February. Back then, California hadn’t sold the bonds, because of its fiscal crisis. So the state was loaning money from its general fund to keep the projects moving. And when cash ran short, construction all across the state stalled. Now, says Palmer:
Palmer: “All of those things that were financed by those bonds in 2006 will continue to go forward, even if we’re in an IOU situation.”
Which could happen as soon as Thursday, unless lawmakers and the governor agree on a budget deal.