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Sacramento's problems, some of which we discussed yesterday, aren't going away easily, and this is leaving us with the impression that our Governator and our state legislators have been decidedly naughty with our state's finances this past year. Elected officials beware: Santa's got a good memory.
The state's inability to fund its short- and long-term debt because of the Great Credit Freeze of 2008 made the New York Times yesterday. The NYT carried an article about states (not just California) having to suspend a variety of highway and infrastructure projects, and the article explained some of California's unique problems:
Last month, when the state tried to restructure existing debt with an additional $523 million offering, it had to reduce the offering by two-thirds, said Tom Dresslar, the spokesman for Bill Lockyer, the California treasurer.
“The institutional investor interest was nil,” Mr. Dresslar said.
Further, the State Legislature’s inability, with the governor, to figure out a way to deal with the state’s $15 billion budget gap has weakened the market’s confidence in California, something other states could face if the fiscal situation deteriorates.
This month, Standard & Poor’s downgraded the $5 billion in revenue bonds issued by California last month and put more than $50 billion of debt on watch for a downgrade.
“The bottom line is we are not viewed as a quality investment,” Mr. Dresslar said, adding that California is not in position to offer the sort of fat interest rates needed to get offerings off the ground.
It turns out that the financial crisis is rippling through all parts of the state. On Sunday, we wrote about the potential problems facing the city of Claremont in its quest for grant money to fund the Sycamore Canyon Park restoration.
And back on December 18th, the San Gabriel Valley Tribune had an article about the San Gabriel and Los Angeles Rivers and Mountains Conservancy (RMC) having to suspend all its projects (including ones for which funding had been approved) because the state has stopped selling the bonds that generate the RMC's grant monies.
The SGV Tribune article explained the RMC's dilemma:
The area's biggest habitat restoration agency has asked all of its partner cities to halt all new construction. "These projects literally had shovels in the ground, or at least they used to be in the ground until we told them to stop today," said Belinda Faustinos, executive director of the San Gabriel & Lower Los Angeles Rivers and Mountains Conservancy (RMC).
A project to beautify and clean up 26 acres of land near the Canyon Inn in the San Gabriel Mountains was put on hold after a planning agency lost $20,000, said Jane Beesley, also of the RMC.
Below we've posted an image of the letter the RMC sent out to its grantee cities advising them of the cutoff of funds for projects that had been previously approved. (Thanks to the reader who forwarded this to us.)
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Item #2 in the letter should be of some concern to the City of Claremont with regards to Padua Ave. Park, which is dependent on an $850,000 grant from the RMC to complete its combined Phases 1 and 1A. Item #2 states that effective 12/18/08 all state entities having expenditure control and oversight of General Obligation bond and lease revenue bond programs shall "Suspend all projects, excluding those for which the Department of Finance (DOF) authorizes an exemption based on criteria described unless the contracting entity can continue with non-state funding sources (private, local, or federal funds)."
In other words, Claremont may be on the hook for the RMC's $850,000 share of the Padua Park construction costs unless the City has an out written into their contract with the company building the park. As the latest sign at the Padua Ave. Park site explains, a good chunk of the project is supposed to be built with RMC dollars:
A funding well runs dry....The RMC's and the state's money problems may be the reason that the other new sign at the park site incorrectly states that construction began on November 4, 2008. In fact, no construction (other than a ceremonial ground breaking in October) seems to have occurred. Here's that other sign:
City at work?What all this means is that the city of Claremont may have to retouch that photo of the City Council taken on October 14th showing the Council receiving a ceremonial banner-sized check from Belinda Faustinos, the RMC's executive officer. It's a shame the city didn't cash that big check before the state closed the account.
If the RMC and the City of Claremont want to practice truth in advertising, they might want to use the following photo:
October 14, 2008, Claremont City Councilproudly receives $850,000 rubber check from RMC
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