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<br />San Francisco Chronicle' ,,;6/69
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<br />~ Interest Ceiling Hike Needed
<br />~ I State Bonds Crisis Looms
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<br />
<br />~iner capitol Bureau
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<br />'SACRAMENTO -A legis, to the desire of banks to in, 'forstale Income tax prepay-
<br />live committee has been vest In heretofore ,exempt I ments and extending the re-
<br />lij'IIed, that state govern- bonds of publicagencies, qulrement for prepayment to
<br />ent 'faces a ltU)IIumental DIsinterest, 'I' a million additional taxpay-
<br />seal crisis if the Villers re- He said the "market has ,ers,
<br />t ,8 JIiiIlI, 1970; :primary suffered from investor disin- I: These measures, Post em.
<br />ectioll'b$ot ptopo&ition up- terest" and banks therefore:: phasized, would lIfford only
<br />, g the arterlist ceiling on are likely to invest owy peri. : temporary relief until Janu.
<br />Ie' bondI;fnt m5 to 7,!i"i', pberal funds in bonds whicb ary, 1971, wben the legisla-
<br />nt. ' cannot be resold, ture would bave to raise an
<br />TesUf.1lnl lltIforll, the All. If the b a II 0 t proposition additional $300 million to pay
<br />~JDblY revenUe I\IIdluallon fw, Pest Slid, the state will off outstanding loa n s and
<br />::a&ollllllittee. ~ti:Ve ... conlrotlt these necessities, provide new revenue sources
<br />Iyst A, Alan Posti'eportet! .b' would virtually wipe to fmance needed capital out-
<br />the market for m u n i oi p a lout any prospects of signifi. lay,
<br />bonds "bas. :almost 'entirely cant tax relief next year:
<br />deteriOfatedl' and the state . Loaning another $150
<br />will face a i:ritical situation million from the general fund
<br />even if the ml!llllure paBJeS, ,(rnaJWtg a total of $250 mil-
<br />Franklin Stockbridge, a 'I lion) to keep the water pro-
<br />Southern California banker, gram going during the last
<br />supported Postl,li assessment hal,( of 1970,
<br />with testimony ~at the tight . Accelerating collection
<br />money situation "is going' to ot some source of revenue by
<br />!aIt far longer than we antici. September, 1970, to avoid a
<br />pet.clGdlbe,fed\!ral tax1llll cash flow crisis, He suggest-
<br />qould dt tlaIIificatlt damage" , ed changing the October date,
<br />
<br />Failure to repay the loans'
<br />would cause a serious cash
<br />shortage in the fall of 1970,
<br />be said, and added:
<br />"During good market con.
<br />d i tl 0 n s, the maximum
<br />amount of state bonds we
<br />,bave been able to sell In a
<br />six.month period bas been
<br />about $300 million, Since this
<br />is the magnitude we will
<br />need to sell in the second balf
<br />,of 1970, to keep the water
<br />'program alive and avoid a
<br />i casl/;; flow crisis, we really
<br />80.. Sale ,see;llo relief during 1970 for
<br />
<br />If the voten approve the ,,~th~r Ilond ~rograms.
<br />higher Interest rate, he said,Pt'obablllty
<br />,the state will have to, sell ~ "It also is highly probable
<br />bonds to repay $115 million in that we will not be able to
<br />loans to the water and scbool marKet $300 million in bonds
<br />construction bond funds, 'and during the six month time
<br />market anothe~ $150 million I period," : '
<br />to ,keep the water project I Even if the market 1m.
<br />alive during the second half I pro v e s, other government
<br />of 1970, I' entities "will start dumping
<br />their bondshy that time,"
<br />, Post said, , ' "
<br />
<br />San Francisco Chronicle 12/6/69
<br />
<br />Warning on Stat~
<br />Bond Rate Vote
<br />
<br />CWRA
<br />12/16/69
<br />jr
<br />
<br />Sacramento POBt .aId IIIe DIOIIeJ wo1lld would be resubmitted at the
<br />The Reagan admInlstra- have to be raised If IIIe YOt- November general election,
<br />tlon and Ieglalatunl would 8l'lI reject a June 19'1O ballot ,"We are also preparing de.
<br />have to come up with $300 pro po. a I to Increase IIIe tailed plans to meet this COli-
<br />milliOll, In new money - state's Hmit on boad interest Ii n g e n c y, which will be
<br />pre s i1 m a b 11 from IIl!W from 5 to 7 per cent The presented to the legislalure
<br />taxes-It the Stat.. falls 'to'. tb arise H Bell
<br />sell S tat e water project State basn t been able to sell ~d e need ,
<br />bonds in 1970, the 1eglsla- its bondsat 5:Jl8!" cent sald. , '
<br />ture's fiscal expert said lteagan's FInance Depart. Earlier, the committe.
<br />yesterday ment said it will bave to bar., beard a California Farm Blt-
<br />" row $100 mIDlon from U1e' reau Federation JI1'IIposal for
<br />'l'I!-e s~tement came frOm state's Geoeral F1md to keep i a $2 billion boost in State per-
<br />LegISlatiVe Analyst A, Alan b $1 biI1IoD State Water: sonal Income and business
<br />,~:: ::m ~~m~~: PnlSectconsln!ction going taxes in orderrtyto abolish thf e
<br />tee bellriDg into the State's thnIugh June. use of prope taxes or
<br />bond C!I:iais, ereal8d by I1igb If the June proposal fails, ! lIChool support.
<br />imerest. rates oa' \lie open Assistant Finance Director Ii .4..........d ,.....
<br />lI10IIey IIllI1'ket . Roy ,Bell said!.tt. probably,
<br />
<br />(over)
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