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9A Page 5 More than 5,000 state bond-funded public works projects are waiting for PMIB funding due to the state's budget and cash flow crisis. The state's recent inability to issue either commercial paper or bonds used to repay its obligations led the PMIS, on Dec. 17,2008, to freeze lines of credit known as AS 55 Loans. According to the PMIB staff report, as of March 16, the amount of outstanding AS 55 loan expenditures from the PMIA was $6.02 billion. This amount consists of $4.83 billion for GO bond programs, $1.05 billion for State Public Works Board lease revenue bond projects and $148.4 million for two revenue bond programs. The $4.83 billion in expenditures for GO bond programs consists of approximately of $3.83 billion of expenditures that can be repaid with tax-exempt bonds and approximately $1 billion of expenditures that must be repaid with taxable bonds. The state also has $1.3 billion of outstanding short-term, GO Commercial Paper Notes that need to be paid down from the proceeds of a long-term GO bond issue. The Treasurer's Office also announced that it is exploring the possibility of issuing more bonds toward the end of April to pay down the approximately $1 billion of outstanding taxable AB 55 loan expenditures for GO bond programs. The PMIS meeting agenda and staff report can be found online at: htto:/Iwww.treasurer.ca.aov/omia-laif/PMIBmeetinas.aso. State Cash Flow Prospects Remain Difficult Recent legislative hearings and analyses reveal that the state continues to face fiscal challenges despite the recent adoption of the state budget. At the Assembly Budget Committee Informational meeting on March 11, representatives from DOF, the State Controller's Office and the State Treasurer's office elaborated on state's cash position, debt, ability to borrow, and impact on publiC projects. Revenues were significantly below what was estimated in the budget. with reductions in personal income taxes by $437 million, sales and use revenue by $334 million, and corporation tax revenues by $138 million according to the OOF. Testimony at the meeting focused on the conditions weakening California's economy. The labor markets lost nearly 80,000 jobs in January. With more than one in ten workers unemployed in January, the state registered its highest jobless rate since June 1983. New home construction is not showing any signs of improvement: single-family permits are down 51.6 percent, multi-family permits are down 61.6 percent and nonresidential buildings are down 42.1 percent from January 2008. The state's current year (FY 2008-09) deficit of $22.2 billion will be covered by borrowing $14.2 from special funds, delaying $3 billion in payments, and raising $5 billion In Revenue Anticipation Notes. A variety of state payments totaling $3 billion have been postpon$d by the controller to preserve cash for debt service, education, and other obligations. The general fund cash shortfall expected in early April 2009 will be offset with tax payments and pay the state's general fund obligations through June. However, once again, the state is expected to experience a cash flow shortfall in July and August. The Legislative Analyst's Office (LAO) report "The Fiscal Outlook Under the February Budget Package" published on March 13, forecasts relatively slow economic growth over the next five years compared to past recoveries. According to the report, further corrective budget steps totaling approximately $8 billion will have to be taken to keep the FY 2009-10 budget balanced. The LAO report can be found at htto:llwww.lao.ca.aov/2009/bud/feb overview/feb overview 031309.asox. Bipartisan Commission Studies State Revenue Reform The Commission on the 21st Century Economy held its third meeting on March 10 in Berkeley. Established by Gov. Arnold Schwarzenegger, the bipartisan commission is tasked with reviewing California's revenue laws and making modernization recommendations. 5