Repayment to State May Take Years, Official Says

State Controller Kathleen Connell is concerned that California’s budget may not be repaid for billions spent on electricity until 2004 because of poorly worded state contracts and legislation, a claim instantly dismissed Wednesday by Gov. Gray Davis’ administration.

The Legislature recently authorized a record $13.4 billion in bonds to repay state coffers for emergency electricity purchases and to cover future power costs. The intent of lawmakers was that proceeds from the bonds would be used to immediately repay the budget when the bonds are sold, now expected to happen in mid-August.

However, the legislation, SB 31x by Senate President Pro Tem John Burton (D-San Francisco), contains language that calls for the budget to be repaid “as early as practicable,” an ambiguity Connell called troubling.

Connell, the only person in Sacramento outside of the Davis administration who has seen the power contracts the governor negotiated, says the language is especially dangerous because the contracts say generators are to be paid first.

“We need to tighten up that language,” Connell said. “That flexibility can leave the general fund unpaid for several years.”

Connell met with Burton and Assembly Speaker Bob Hertzberg (D-Sherman Oaks) on Wednesday to voice her concerns and to raise the need for possible cleanup legislation. She also requested a legal opinion from Atty. Gen. Bill Lockyer.

“According to the treasurer’s office, it doesn’t seem to be a problem,” Burton said. “But it’s worth looking at.”

Davis administration officials dismissed Connell’s claims.

“The money will be repaid to the treasury with interest, every penny,” said Davis energy advisor S. David Freeman. “The treasury is not at risk.”