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County to sell bonds to make up lost funds

Posted: August 4, 2009 10:00 p.m.
Updated: August 5, 2009 4:55 a.m.
 
Los Angeles County is conjuring up its own $360 million credit scheme to balance the books in the face of the state’s raid on local tax coffers, officials said Tuesday.

“We can bond that money to replace what the state is taking,” said Sharon Harper, chief deputy for Los Angeles County Chief Executive Officer William Fujioka.

On July 28, Gov. Arnold Schwarzenegger signed a state budget that borrows $2 billion from cities and counties.

The state will raid Los Angeles County reserves to the tune of $360 million, Harper said. The county has decided to sell $360 million in municipal bonds to offset the loss, she said.

Under the proposal in the works, the county will sell the bonds and the state will bear the burden of interest payments on the bonds, said Lori Glasgow, assistant chief deputy for county Supervisor Michael Antonovich.

Glasgow simplified the county’s borrowing plan: “It’s as if I (the state) took $100 from you (the county) and told you to get a loan that I would pay the interest on,” she said.

Local officials said the county won’t get stuck holding the check even if the state financial woes worsen. “The state must repay us our money, Glasgow said. “The state can’t file for bankruptcy.”

Under Proposition 1A, the money must be repaid within three years.

“If the state doesn’t pay us, the county will sue for violation of Proposition 1A,” Glasgow said.

County officials are hashing out the details of issuing the bonds, including a deal in which the state picks up the tab for the issuance of the bonds, Harper said. County officials have not announced a time table for issuing the bonds, she added.

Previously, the county had threatened to sue the state over its money grab, particularly if it took highway utility taxes, which go to local infrastructure.

State legislators subsequently agreed not to do so, though they did balance the state budget with redevelopment money that previously went to municipal governments.

“The impact on the county is not immediate and the transportation tax (highway user tax) isn’t impacted,” Harper said.

It wasn’t the amount of the redevelopment tax raid, but the timing that calmed concerns at the county, Harper said.

“The county wouldn’t be impacted until 2019, when its redevelopment agency expires,” she said.

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