Thursday, March 06, 2014

$145 Million Bond Sale Next Month for California Stem Cell Agency

The state of California will offer up $1.6 billion in general obligation bonds next week but none will be for the state stem cell agency.

The next round of bond funding involving the agency is scheduled for April 22 with $145 million slated to go for stem cell financing, Tom Dresslar of the state treasurer's office told the California Stem Cell Report.

The $3 billion agency is financed through state borrowing (bonds), which roughly doubles the cost of its activities because of the interest expense on the bonds. The state currently provides cash to the agency via short-term debt (commercial paper). Then the state sells taxable bonds to repay the short-term debt.

During the 2004 ballot campaign for Prop. 71, the public was led to believe that the agency would be financed with non-taxable bonds, which would have meant lower borrowing costs for the state to the tune of hundreds of millions of dollars.

In 2007, Bernadette Tansey, then of the San Francisco Chronicle, reported that Robert Klein, head of the Prop. 71 campaign and first chairman of the stem cell agency, knew that taxable bonds were likely to be required but did not disclose that fact to the public.
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