CALIFORNIA: AG's office questions legality of Assembly budget borrowing

SacBee: Capitol Alert ^ | 6/17/10 | Jim Sanders

[SmithL]

In 2004, Gov. Arnold Schwarzenegger barnstormed around the state for Proposition 58, using an oversized credit card as a prop and vowing that it was time for the state to "tear up its credit card."

Now Attorney General Jerry Brown has concluded that Assembly Democrats' plan to borrow billions to help ease the state's $19.1 billion deficit could be deemed illegal under that ballot measure if challenged in court.

"We conclude that a court could reasonably determine that the proposed transaction violates Proposition 58," the attorney general's office said in a letter to Schwarzenegger's legal affairs secretary.

Assembly Speaker John A. Perez, through his chief of staff, said in a letter to Assembly Democrats Thursday that he remains confident of the legality of their plan.

"Of course, with even the threat of litigation meaning potential delays and uncertainties, we are crossing ever 't' and dotting every 'i' to ensure that (the plan) conforms with Proposition 58," Perez said.

Schwarzenegger's office had asked the AG for a legal opinion on the validity of Assembly Democrats' plan to borrow $8 billion to $9 billion. Debt payments would come from the state's beverage recycling program, which would be back-filled by imposing a tax on oil production.

Brown's office noted that Proposition 58, which voters approved in March 2004, prohibits various kinds of borrowing to fund year-end budget deficits, including options that rely solely on a "designated source of revenue" for repayment.

"In the case of the proposed securitization, the bonds would be repaid solely from the future revenue stream produced by the regulatory fees," said the legal opinion, signed by Constance L. LeLouis, supervising deputy attorney general.

[samadams2000]

Criminal government.

[gunsequalfreedom]

Proof that nobody is all bad. Brown is calling it like it is.

[Uncle Ike]

” borrow billions to help ease the state’s $19.1 billion deficit “

Huh?????????

[tubebender]

Tapped out your credit card? Just raise taxes again... and again... and again

[dragnet2]

The entire California state government should be seized, investigated and heavily audited by an independent 3rd party. (Not by the Feds)

All of it's business should be halted, contracts frozen etc... Prosecute for failure to perform and balance simple government budgets, in addition to all criminal charges discovered....Severe criminal penalties should follow for the guilty, regardless of how many involved.

Immediately start offering rewards of upwards of 1 million dollars for innocent whistle blowers with evidence, double the rewards for evidence involving the legislature, the governor, and top government insiders/agents.

[Opinionated Blowhard]

Gov. Arnold Schwarzenegger barnstormed around the state for Proposition 58, using an oversized credit card as a prop and vowing that it was time for the state to "tear up its credit card."

Too little, too late, Arnie. You're a huge disappointment. Crawl off and hopefully CA will get a real fiscal conservative in office before it completely swirls down the toilet.

[SmithL]

Yes, Brown is calling it like it is. However it would be far worse for his campaign if he blessed these shenanigans, the legislature then implemented them, and a judge immediately declared them illegal.

[repubpub]

Moonbeam is merely campaigning, nothing more, nothing less.