LOS ANGELES -- California could issue up to $1 billion of gas-tax-backed revenue bonds beginning in July 1995 under a plan approved last week by the California Transportation Commission.
The bonds, scheduled to mature within five years of issuance, would fund new highway construction and earthquake-safety reinforcement projects.
The state highway account, funded primarily through a state gasoline tax of 18 cents per gallon, would provide the payment stream for the bonds.
Gov. Pete Wilson, who appoints the nine members who sit on the commission's board, proposed the idea for the borrowing plan following the June 7 defeat of Proposition 1A on the statewide primary ballot.
The proposition would have provided the state with authorization to issue nearly $2 billion of transportation-related general obligation bonds, including $950 million to make state bridges and overpasses more resistant to earthquakes.
In the aftermath of the proposition's defeat, Wilson placed a moratorium on highway construction projects, which he lifted last week following the commission's approval of his borrowing plan.
The proposed borrowing is authorized under a bill signed into law four years ago, but never used. The bill's authors were state Assemblyman Richard Katz, D-Sylmar, and state Sen. Lucy Killea, an independent from San Diego.
The Katz-Killea Short-Term Borrowing Act of 1990 gives the Transportation Commission power to borrow money for needed construction projects using state gas taxes as the repayment stream.
A source in the state treasurer's office who asked not to be identified said the bonds probably would require a court validation to clarify that the financing would be legal under the state constitution. Such validations are often routine procedures to allow clean opinions from legal counsel.
The proposed issuance of gas-tax revenue bonds "allows us to maximize our cash-flow efficiency," and work on highway "seismic retrofitting and new construction," said John Pimentel, assistant secretary of the state Business, Transportation and Housing Agency.
By selling bonds as early as next July, "there are a lot of hungry contractors who will be making aggressive bids," Pimentel said. "If we deferred projects into future years, we would get inflation, which makes projects more expensive."
However, "we're not entirely certain how much we will use or the schedule to sell them," Pimentel said. The amount of bonds issued "could be from zero up to $1 billion."
Among projects that could be financed with the bonds are more than 20 highway projects totaling $750 million and about $1 billion of so-called seismic retrofit work needed for the state's highways, transportation department spokesman Jim Drago said.
In a related development, the state Senate defeated a measure last Thursday to raise the state gas tax by two cents to fund seismic reinforcement. The tax would have raised $1 billion and been in effect for three and a half years.