LOS ANGELES--California finance officials have agreed to sell up to $750 million of governmental warrants by competitive bid on June 23, but have not decided yet how to pay the borrowing costs.

In an attempt to show a united front after weeks of wrangling over the size and maturity date for the warrants, the controller, the state's Treasurer Kathleen Brown, and Finance Director Thomas W. Hayes sent out a joint letter late Wednesday, detailing the state's plan to investors and rating officials.

In the letter, officials reveal issuance and maturity dates, the state's cash-flow situation and security for the warrants.

The reimbursement warrants, sold like a traditional short-term note issue, will provide the fiscally strapped state enough cash to pay its bills for the fiscal year ending June 30. State Controller Gray Davis said the warrants are necessary because of a $600 million cash shortfall. The warrants will be sold to an underwriting syndicate and will mature on July 24.

While Gov. Pete Wilson has approved the financing, officials yesterday afternoon were still negotiating on the state's payment of an estimated $1.5 million in borrowing costs.

State sources have said the governor is reluctant to appropriate the special funds needed to cover issuance costs, which could include credit enhancement, bond counsel, and financial adviser fees. It is unclear why the governor has not appropriated the money.

Finance officials were confident a borrowing cost plan would be agreed on shortly, however, and possibly even by Friday, said Michael Reese, a spokesman for the treasurer's office. Mr. Reese said he could not detail proposals for how the borrowing costs would be paid.

State officials are expected to select a financial adviser and bond counsel for the financing within the next two weeks. The warrants will be sold to an underwriting syndicate and will mature on July 24.

In their letter detailing the plan, the three state officials stated that they hope to avoid the issuance of registered warrants, which are small individual IOUs, with the reimbursement warrant plan.

If the governor and the legislature pass a budget prior to June 30, the state treasurer will sell a revenue anticipation note in early July to pay state bills. But if a budget is not passed, the state controller "is taking the necessary steps" to issue registered warrants, the letter stated.

California has traditionally met general fund cash shortages with in-house borrowing from other 'funds. This year the state does not have sufficient funds from which to borrow to cover an estimated $600 million shortfall, according to the controller. As a result, state officials must take some type of borrowing action to meet pending state obligations, such as debt service and school funding requirements.

Steven Zimmermann, managing director with Standard & Poor's Corp., said rating officials are "closely monitoring" how the state handles its cash flow situation and the sale of the reimbursement warrants.

Standard & Poor's placed the state on CreditWatch last month.

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