State unfreezes $500 million in construction bonds
The state board that closed the spigot on funding for thousands of transportation and school projects in December reopened the tap Wednesday, saying California’s recently adopted budget will allow it to resume selling bonds for construction work.
The state’s Pooled Money Investment Board lifted a freeze on $500 million in loan disbursements that could go to road, levee, school and housing construction projects that had been put on hold because of the recent budget crisis.
“The freeze has harmed thousands of businesses, nonprofits and workers across California,” said State Treasurer Bill Lockyer, the board chairman. “If we’re going to get our economy humming again, we will need a fully functioning infrastructure program. Release of these funds will start us down the road toward that goal.”
However, the state still owes $2.1 billion more for projects committed to but not fully funded, and two dozen contractors, bankers and housing agency heads told the board they will face hardship unless they are paid soon.
“We’re all feeling equally damaged by the freeze,” said Roxanne Miller, a representative of the city of San Jose.
The board asked state finance officials to develop a list of the top-priority projects to be funded with the $500 million. The release of funds is contingent on the state being able to sell $4 billion in general obligation bonds next week, said Tom Dresslar, a spokesman for the treasurer’s office.
Projects had been halted because the state was unable to sell bonds to fund them while facing a severe cash shortage.
Last month, the Legislature approved a package of tax increases and spending cuts that covered a budget shortfall expected to total $42 billion by the middle of next year. Lockyer said the recent budget action means California once again has money in the bank and therefore can borrow again.
Hours before the board action, Gov. Arnold Schwarzenegger announced that the first $625 million of federal stimulus money was being allocated to dozens of highway projects statewide. The federal cash allows the state to begin work on 57 transportation projects, including a $75-million job to repave three miles of rough pavement on the 710 in Los Angeles, one of the nation’s busiest freeways for goods movement.
Other projects include $16.8 million to construct two new lanes on the 805 in Chula Vista to ease traffic congestion and $50 million to help reconstruct Doyle Drive, the southern access to the Golden Gate Bridge.
“This is the first wave of money and all together this will create a lot of jobs,” Schwarzenegger said at a news conference in Merced, where an overpass is being built with federal funds.
Overall, 11,000 new jobs are expected to be generated with the federal money, the governor said.
The $625 million is the first installment from Washington.
State officials estimate that California will receive $2.57 billion for highways, local streets and roads, and rail and port projects from the American Recovery and Reinvestment Act signed by President Obama on Feb. 17.