Sunday, February 26, 2012

California Stem Cell Agency Waiting Until April for More Cash

The state of California plans to sell $2 billion in bonds next Thursday, but the California stem cell agency, which is entirely dependent on state borrowing, will have to wait until later this spring to see more cash.

J.T. Thomas, chairman of the stem cell agency, said he expected to see CIRM benefit from the next bond sale in April. The agency currently has sufficient funds to operate until about June, plus an arrangement with the state for continued funding if a timely bond sale is not completed.

The $3 billion stem cell agency was created in 2004 through a ballot initiative that authorized its funding through the sale of state bonds over a 10-year period. The interest on the bonds raises the total cost of the agency to taxpayers to about $6 billion. Likewise, the cost of a $20 million grant is actually more like $40 million.

Financially beleaguered California's interest costs have sharply increased in recent years as the state has borrowed $53.8 billion from 2007 to 2010. This year, interest costs will come to about $5.4 billion, nearly 6 percent of the state budget. Nine years ago, it was $2.1 billion or 2.9 percent, according a piece by Randall Jensen (no relation to this writer) of the Bond Buyer newspaper.

The expense of borrowing shrinks the amount of state money available for public schools, helping the medically indigent and other state purposes.

Next Thursday's bond sale will go to refinance debt at lower rates. This year, Gov. Jerry Brown and state Treasurer Bill Lockyer plan to sell only $5.2 billion in general obligation bonds, roughly one-fourth of what the state issued in 2009.

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