New Jersey Guy. Christine Todd Whitman is continuing to review. an advisory panel's recommendations on competitive bidding for rex-exempt bonds, and she is expected m announce a decision on the issue in about six weeks state government and Wall Street sources say.
The governor, these sources say, appears to accept the broad outlines of the panel's recommendations. namely that the state should be given an expanded list of circumstances for issuing bonds through negotiated sales rather than competitive bidding.
Current law generally forces the state to sell bonds through competitive bidding
The governor has been focused on a variety of other firings," said one state government source. "Hopefully, she will make a formal announcement during the next month to six weeks."
The source said Whitman may also "beef up" some of the panel's recommendations on when the state should use competitive sales, but the source could not be specific. This source, as well as others, said Whitman may want to amend various parts of the panel's suggestions, but she has yet to decide where and when she will act.
"We're definitely going in the right direction," the state government source said.
Lisa Kruse, a spokeswoman for the state treasurer's office, also said that Whitman is likely to approve the panel's recommendations. State Treasurer Brian Clymer sat on the panel, along with attorney general Deborah Poritz, and Peter Verniero. Whitman's chief counsel. "As far as I know, she's planning on signing it," Kruse said.
In July, the panel recommended a series of changes in the state's debt issuance policy. In a 21-page report, the panel, which was appointed by Whitman,s aid the state could use negotiated issues for "complex or poor credits" and when markerts are volatile.
The panel also gave the state the option of using negotiated sales when the size of the issue exceeds $300 million, and for financing techniques that are new to investors.
As part of the panel's recommendations, state bonding authorities would have greater flexibility in choosing their underewriters and bond counsel for all bonds not secured with revenues from the state's general fund.
The recommendations, municipal market officials said, appeared to signal a reversal of the debt-selling program implemented by Whitman's pre- decessor, former Gove. Jim Florio.
In 1993, Florida banned most negotiated sales following a federal investigation into a number of New Jersey bond deals and dealers. One of the dealers under scrutiny Armacon Securities, was partially owned by Florio's chief of staff, Joseph Salema.
In a competitive sale, issuers sell bonds to underwriters following a public bidding process. The underwriter that will pay the highest price wins the bond issue.
Under a negotiated sale, issuers privately select bond underwriters following a request for proposal process, or some other selection process. that takes into account a number of factors --not just price. Critics charge that underwriters in negotiated deals are often chosen because of their political connections and fund-raising ability. and not on the merits.
For its part, the Public Securities Association, a trade organization, has lobbied hard against the Florio rules, and applauded the panel's recommendations.