Are New Revenue Streams Needed for California Deficit Bonds?

Finestone, Deborah
May 2003
Bond Buyer;5/5/2003, Vol. 344 Issue 31628, p3
Trade Publication
As California lawmakers ponder issuing up to 10 billion dollars in deficit bonds to close part of the state's 35 billion dollar fiscal 2004 budget deficit, some municipal market participants say the state could complete the deal without the support of a new revenue stream, as Republicans contend. However, others say the sale would be more successful with new revenue dedicated to bond repayment � possibly a higher sales tax � because it would show the state is addressing its long-term challenges. All this comes as California plans to issue revenue anticipation warrants to pay its bills as well as outstanding revenue anticipation notes. Some bankers from the top underwriting firms in California said investors may purchase the debt as long as there is a dedicated revenue stream, regardless of whether that source is new or existing taxes.


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