WASHINGTON -- California Treasurer Kathleen Brown has gone toe to toe with the state's powerful vendor leasing industry over a bill that would give her more authority to organize master equipment-lease financings.

With interest rates as high as 18% on some state vendor lease financings, the treasurer's office estimates that the cash-strapped state could save up to $50 million over five years using master leases that consolidate the piecemeal vendor transactions into pooled, tax-exempt offerings. A bill authorizing her to do so has passed the state Assembly and is pending in the Senate.

But the leasing industry, with hundreds of millions of dollars of business at stake, is waging an all-out war against what lobbyists describe as an unnecessary bureaucratic incursion into their turf. The industry has succeeded in burying the bill in previous legislative sessions.

"We've killed this thing 10 or 12 times in the last few years," said Clayton R. Jackson of SRJ Jackson, Barish & Assoc., A prominent lobbyist on retainer for several leasing firms. "In the last month or so, I guess they decided to make a run at it again."

"The bill has been keeping some high-paid lobbyists employed," acknowledged Steve Juarez, executive secretary of the California Debt Advisory Commission, after the legislation succumbed last year. But Gov. Pete Wilson keeps pushing for it because "Kathleen feels its is an element of good government and should be an option, a tool," he said.

The state leases about $100 million a year of equipment purchases with contracts that have interest rates averaging between 13% and 14%, according to a legislative aide to state Assemblyman Rusty Areias, author of the bill. Some small leases between $1,000 and $3,000 carry rates of 17% to 18%, she said.

Those "eye-opening" rates - which are between two and three times the tax-exempt market rates for short-term offerings - come despite the state's competitive bidding procedures for equipment purchases, the aide said.

"We're hoping to save these hidden costs" by lowering the size of deals that the treasurer can finance in the tax-exempt market from an existing threshold of $10 million to $100,000, the aide said. "We've been lucky to get support from the treasurer, but that can only go so far."

Two firms which have been prominent in the lobbying effort against the bill also have reaped the lion's share of the state's leasing business, state officials said. IBM Corp. and PacifiCorp Capital Inc. provided lease financing for 82% of contracts totaling $81 million in 1989, and 68% of $99 million of contracts in 1988, according to the state general services department.

A spokesmen for PacifiCorp was unavailable for comment. Tom Bells, a spokesman for IBM, said the current system "obviously" benefits IBM, but it also "benefits the taxpayers" because the company's "financial offerings" are competitive and could not be beat by the treasurer.

Joining PacifiCorp and IBM this year are a host of other firms opposed to the bill, whose forces are being marshaled by Mr. Jackson. He is working for the MLC Group and NCR Corp., but in a June 29 memo he also cites opposition from Ford Motor Credit and GE Credit, among others.

Mr. Jackson said yesterday that it is "only natural" for Ms. Brown to want control over the lease financings. But he questioned the treasurer's basis for claiming that a master-leasing program could save the state from $26 million to $49 million, saying that it is not derived from data or studies, but rather from "assumptions" about interest rate savings.

He also pointed out that average rate on vendor leases has dropped substantially below the rates quoted by the bill's sponsors, which prevailed before the recession brought rates down across the board.

In his memo, Mr. Jackson urges the Senate to attach amendments to the bill that would maintain the treasurer's current $10 million threshold for involvement in lease financings and give her only an advisory role in smaller financings. The Areias aide said such amendments, which "void the entire bill," served to kill it in earlier legislative sessions.

With the threat of "hostile amendments," even the support of the Senate's President Pro Tempore, David Roberti, may not be enough to ensure passage, the aide said.

Sen. Roberti has been involved in the state's critical budget negotiations, which has prevented him from having the time to drum up support for the bill, the aide said. But he has promised the Senate will act on it by the end of the session on Aug. 31.

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