LOS ANGELES -- Some California public finance professionals playing the November guessing game are not speculating about election results -- they're wondering whether the trigger will be pulled.

If it is, the state will be launched on a multistep process that could lead to across-the-board spending cuts in California's general fund.

The trigger is designed to ensure repayment to investors of $4 billion of revenue anticipation warrants sold last July. The trigger was demanded by a bank consortium that provided credit enhancement for the RAWs, which mature in April 1996.

The issue was part of an unprecedented two-year, $7 billion cash management plan that the state implemented to smooth out its cash flow and to finance its running deficit. The program included the issuance of $3 billion of revenue anticipation notes due in June 1996.

Under a new state law, state Controller Gray Davis must decide on Nov. 15 whether he believes the state budget will contain a larger-than-expected cash shortfall on June 30, when the fiscal year ends.

Davis predicted last July when the state budget was adopted that California would have $4.1 billion on hand on June 30. By the mid-November date, he must reexamine the figure and decide if the estimate has slipped significantly. If he concludes that the state's yearend cash position will worsen by more than $430 million, the trigger is pulled.

From that point, the governor and the legislature would have three months to devise a method to eliminate the cash shortfall before automatic cuts would be required under the law.

When the governor presents the proposed fiscal 1996 budget to the legislature in January, the budget must provide a way to erase the cash-position deterioration. The legislature would have until Feb. 15 to enact legislation to eliminate the shortfall.

If the legislature fails to act by the mid-February deadline, the state director of finance would be required to make across-the-board spending cuts in so-called nonexempt programs to reduce the cash shortfall.

The cuts would apply to all general fund programs, except those required by the state constitution or federal law, such as school spending and debt service.

Does it look like the trigger will be pulled this year?

"I can't tell you," Dan Rabovsky, a principal analyst for the nonpartisan legislative analyst's office, said yesterday. "Frankly, it is a complicated thing."

Rabovsky said the biggest uncertainty on the expenditure side concerns the budget assumption that the state will receive $762 million in immigration-related federal funds this fiscal year.

In fact, a total of only "$33 million is what the Department of Justice has announced for California," Rabovsky said. "It might round up to $34 million."

While Congress appropriated "something like $130 million for the incarceration of illegal immigrants," California's share of those funds "will not all arrive" in the current fiscal year, Rabovsky said.

But Kevin Eckery, spokesman for the state's department of finance, said Friday that the federal immigration-related funds "is not part of the trigger mechanism issue."

"We're two weeks into the federal fiscal year" Eckery said, and routine spending bills can come out of Congress "between now and next Sept. 30."

Eckery said the department's October cash report found that general fund revenues year-to-date are $106 million above forecast.

The bank and corporation tax revenue was ahead of projections by $199 million year-to-date, and, "that is very much a good sign," Eckery said. "Does this mean we won't pull the trigger? It is too soon to tell. But things indeed are looking good."

Rabovsky of the legislative analyst's office said he agreed that "we are running a bit ahead" in receipt of bank and corporation taxes, "and that is good. It is still a marginal increase, but at least it is positive. But the loss of federal [immigration] funds is a problem, and there are a number of savings assumptions in the budget that are subject to question."

Davis spokesman Edd Fong said, "All things being equal, if revenues are coming in higher than projected, and if expenditures are coming in lower than expected, that would all be on the positive side for not having to pull the trigger."

Even if the trigger is not pulled next month, the state is still on the hook. A separate trigger mechanism will be in effect in fiscal 1996, which begins July 1, 1995.

The fiscal 1996 trigger process requires automatic spending cuts starting in early December of fiscal 1996, rather than in February.

The fiscal 1996 trigger must be pulled if the controller estimates that the cash balance on June 30, 1996, will be in the negative column by as little as $1, compared with the $430 million in-the-red margin that was allowed in the current fiscal year. The controller estimates that the state's cash position on June 30, 1996, would be $1.3 billion.

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