LOS ANGELES - California's proposed deficit borrowing might not occur until near the end of the year at the earliest, some state officials said Friday.

For now, the state's "first order of business" is getting ready for its annual revenue anticipation note sale this summer, said Edd Fong, a spokesman for controller Gray Davis.

But a spokesman for California Treasurer Kathleen Brown cautioned Friday that a separate deficit borrowing toward the end of the year "is only one scenario." Officials should have a better handle by this week on the potential timing, he added.

The deficit borrowing, included in the state's budget agreement that was approved by legislators last week, permits paying off $1.2 billion of an accumulated deficit in fiscal 1995, which begins a year from this Thursday. The $1.2 billion balance must be retired by the midpoint of fiscal 1995.

California just closed last week on a $2 billion revenue anticipation warrant issue. The proceeds from that sale, plus the state's planned Ran issue in mid-summer, might delay the need for the deficit borrowing until around December at the earliest, according to one scenario.

The existing warrants do not mature until Dec. 23, 1993, though they are subject to redemption on or after Aug. 10 at the state's option. The size of this summer's Ran sale is not set, though some sources suggested that $2.5 billion - give or take $200 million - may be in the ballpark.

The state is expected to set up a deficit retirement fund, which will be established under Senate Bill 271, to secure the planned deficit borrowing. The borrowing is expected to be structured as a warrant issue.

In other developments, the state Senate met until the early hours of Friday to pass many of the trailer bills that actually implement the $38.5 billion general fund spending plan. The Assembly has already passed the bills.

Among major trailer bills, the Senate approved the $2.6 billion transfer of local property tax revenues to schools from counties, cities, special districts, and redevelopment agencies, in a move that helps balance the state's budget.

The Senate plans to resume meeting today to complete the remaining trailer bills, including one that determines how revenues will be allocated among cities and counties from the extension of a sales tax surcharge.

"We're almost home, but we're not there yet," H. D. Palmer, an assistant director in the state Department of Finance, said Friday.

State officials anticipate that Gov. Pete Wilson will sign the budget legislation and related bills by Wednesday. He has declined to sign the budget agreement until the entire legislative package is on his desk.

County officials last week continued their bitter criticism of the state's diversion of local property tax revenues.

Many counties have passed resolutions in support of withholding the disputed tax revenues, and litigation is expected. Many county officials argue the state lacks authority to divert the property taxes to schools, though state officials counter that the move is constitutional.

A group of special districts in Ventura County and the city of Alhambra in recent months launched legal challenges over the constitutionality of the tax shift. The state's higher courts earlier this year declined to hear those cases directly, thereby pushing them back to county superior courts for hearings.

In his weekly radio address made available on Friday, Assembly Speaker Willie Brown acknowledged that the new budget requires painful cuts, and "for local governments, it was a difficult pill to swallow."

But once state leaders decided to protect public education and prison funding, "everything else was at risk," Brown said, adding that "we did the best job we could" to distribute limited resources.

The state's economy is unlikely to help ease governmental funding pressures anytime soon, economists said last week.

David Hensley, director of the business forecasting project at the University of California at Los Angeles, said in a presentation Wednesday that the state is unlikely to emerge from a recession this year.

Housing starts and other indicators of a recovery have generally remained flat, Hensley said.

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