LOS ANGELES -- Gov. Pete Wilson of California on Saturday vetoed a bill that would establish an annual review of the state's general obligation bond issuance, calling the legislation duplicative and unnecessary.
Assembly Bill 48, introduced on behalf of the state treasurer, Kathleen Brown, directed a state debt commission to advise both the governor and the Legislature on the amount of bonds that could be prudently sold and placed before voters each year.
"This bill is duplicative at worst and unnecessary at best," the governor's veto statement says. "There is no demonstrable reason to alter the current responsibilities of the state Department of Finance and the state Treasurer for the administration of the state's general obligation bond program."
Gov. Wilson's concern echoed complaints aired previously by a fellow Republican, Thomas W. Hayes, former state treasurer and now director of finance.
A.B. 48 initially called for creating the state's first Bond Efficiency Commission, a platform favored by Ms. Brown in her campaign for state treasurer last fall. Mr. Hayes, Ms. Brown's opponent in the election, said during the race that he opposed the creation of a new layer of government to oversee GO bond issuance. Ms. Brown, a Democrat, defeated Mr. Hayes last November.
Ms. Brown has argued that the state needs a coherent and systematic process for placing GO bonds on the ballot and for linking capital outlay and infrastructure needs with the amount of GO that can be prudently authorized and sold.
Ms. Brown could not be reached for comment.
An Assembly committee revised A.B. 48 earlier this summer to forgo a new commission. The amended bill proposed to incorporate the GO review process under the jurisdiction of the California Debt Advisory Commission. Arguments against creating another layer of government, coupled with cutbacks associated with a $14.3 billion budget shoftfall, helped prompt the bill's revision.
The debt advisory commission has historically performed an informational role in debt management. The commission collects, researches, and provides information through various publications and seminars about the status of public debt issuance in California.
"I am disappointed," said Steve Juarez, executive director of the commission. "We didn't think [the bill] was a slam dunk, but we were hopeful. We'll have to discuss this with the state treasurer to see what she wants to do."
Mr. Juarez, who was appointed by Ms. Brown, added that if the bill is revisited, his office would help "lay out clearly what is and isn't being done in terms of debt management" in an attempt to refute the governor's duplication charge.
The appropriate process for managing and reviewing the state's GO bond issuance became a hot topic in recent years, especially after voters approved billions of dollars of bonds in the late 1980s to address California's huge infrastructure needs.
In an Oct. 9 editorial, The Los Angeles Times picked A.B., out of 650 bills spending on the governor's desk, as one of five key bills the governor should sign. The newspaper called for the creation of a "much-needed annual review of the state's bond picture."
A.B. 48 would have directed the debt advisory commission to forecast the level of GO debt that can be issued on an annual basis. The commission would also study related issues, including providing an estimated range of new GO debt that may -- in the commission's opinion -- be prudently approved by voters. The commission would have considered various criteria, including the impact of GO bond policies on California's triple-A credit rating.
Rating agency officials could not be reached for comment about the governor's veto. They have said previously that California must manage its debt prudently as the state relies on much heavier issuance. California already is selling about $3 billion of GO bonds annually, but the state's debt burden remains moderate compared to many other states.