Turmoil in capital markets and the state’s lengthy budget crisis have kept California out of the bond market since June 2008. On December 17, 2008, the Pooled Money Investment Board (PMIB) voted to suspend all funding for infrastructure bond projects in order to preserve cash in the general fund.
The PMIB administers the Pooled Money Investment Account (PMIA). The PMIA loans money to finance bond-funded infrastructure projects. It also provides loans to the state’s general fund to help manage cash flow. The PMIA is reimbursed for infrastructure project loans when the state sells bonds. Since the state could not sell bonds, it could not reimburse the PMIA for infrastructure loans. And since the infrastructure loan money could not be replenished, the PMIA had less and less money to provide the general fund.
Invoices sent by districts for work done on infrastructure bond projects before the project freeze have not been paid because of the lack of funds available from the state’s inability to sell bonds. Having a state budget in place was the first step to reestablishing investor’s confidence in the bond market. Once California can reenter the bond market and sell bonds, payment on existing invoices for infrastructure bond projects can be paid and limited existing projects may resume.
Last Friday, State Treasurer Bill Lockyer, keynote speaker at this year’s Special Districts Legislative Days, announced that the state will reenter the bond market by the end of this month with a $4 billion deal.
More information will be revealed this Wednesday, March 18 at 2 p.m. when the PMIB meets to discuss the infrastructure bond project freeze. This meeting may shed light on when districts may expect to receive payment on invoices sent last year for infrastructure bond projects.