Monday, April 06, 2009

Cash Crunch Coming to an End at CIRM?

No official word is out yet, but the financial woes of the California stem cell agency are likely all but over.

According to a report late today by Tom Petruno on the Los Angeles Times website, within the next two weeks state Treasurer Bill Lockyer will try to raise up to $4 billion in a taxable bond sale that would bail out CIRM.

Petruno wrote,

"Part of the offering will be used to finance projects that don’t qualify for tax-free funding -- such as the stem-cell research measure that California voters approved in 2004."

The California stem cell agency is dependent on California bonds for its grants and operations. But bond sales dried up last year. And CIRM will run out of cash by next fall unless it receives more funding from bonds.

Petruno explained that the proposed $4 billion bond sale is unusual. He wrote,

"(State Treasurer Bill) Lockyer will use taxable bonds instead because the U.S. Treasury will pick up part of the interest cost of the securities.

"Under the Build America Bond program, states and other municipal issuers can choose to sell taxable bonds for public-works projects and have the federal government pick up 35% of the annual interest expense on the securities."

If bond funds are coming to CIRM, that could mean that it will give up its plan to market taxable state bonds privately, which would be an unusual and difficult chore.

No announcements have been made by CIRM or the treasurer, but Petruno sourced his story to a spokesman for the state treasurer's office, Tom Dresslar. We are querying the agencies concerning the Times report.

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