Finance Chief Denies Delay in Marketing State Bonds

State Finance Director Jesse R. Huff hotly disputed published report Tuesday that the Deukmejian Administration has postponed selling more than $4 billion in newlyapproved bond issues Ting that bond sales are “proceeding on schedule.”

“We are not delaying any bond sales. We are not stopping any projects for which voters approved bonds,” Huff said.

Manuel M. Mateo, chief of the trust services division in the treasurer’s office, agreed with that view, asserting that the Administration has not asked for a delay in bond sales. “We will sell bonds just as fast as we legally can,” Mateo said.

Newspaper Report

The disclaimers followed a report in the Sacramento Bee that $4 billion in bonds approved by voters last year are being delayed because the state would not have enough money to make the principal or interest payments.

Huff projected that the Deukmejian Administration probably will spend $54.5 million less over the next 18 months on principal and interest payments than has been estimated by the state treasurer’s office.

Huff predicts the state will sell $800 million in general obligation bonds during each of the current and upcoming budget years, while the treasurer’s office expects to be able to sell $1.2 billion worth of bonds this year and $1.1 billion next. Huff’s figures are based on bond sales for previous years. The treasurer’s office believes it can top its previous sale records.

Huff defended his lower figures, citing the likelihood of paperwork holdups and other technical problems that are routinely reassociated with underwriting bond issues.

In all, voters last year approved the sale of a record $5.5 billion in education, prison, housing, water and other bonds.

Pressure on Market

Financial experts inside and outside the Administration say it would be impossible to sell that many bonds in any one year because it would flood the market and cause a rise in interest rates. Even before the issues went for a vote, officials in the treasurer’s office and the Department of Finance had anticipated that it would take three to seven years, even longer in some cases, to sell all the bonds.

Huff said if bond sales do in fact match estimates by the treasurer’s office, money to make interest and principal payments will be found even if it means cutting other government programs. The California Constitution says that bond holders have second call on state funds after schools.

With Deukmejian’s budget showing that the state will end the current fiscal year with a scant $3.2 million reserve, any miscalculation could leave the state with a deficit.

Deukmejian is already under fire from Controller Gray Davis for refusing to acknowledge what the controller claims was a $343 million deficit run up in the 1987-88 fiscal year.