California Governor Jerry Brown released his revised State
budget earlier this month. Under the proposal, Governor Brown plans
to reduce general obligation bond sales by approximately 60%. Some
municipal finance analysts argue that the Governor's efforts to
mitigate the State's mounting debt and to raise the State's
credit rating through curtailing California bond sales may further
tighten yield spreads for California securities, but also prompt
investors to search for alternative investments in an already
supply-constrained market. The Governor's original budget, delivered in January of this
year, projected a $25.4 billion deficit for fiscal year 2011-12,
and proposed a combination of spending cuts and tax extensions as a
remedy. Many of the Governor's proposed spending cuts have been
adopted by the California Legislature, and additional tax receipts
of $2.5 billion are expected, thus leaving a revised budget deficit
of $9.6 billion. Balancing of the budget, however, still remains
dependant on the Governor obtaining legislative and voter approval
to extend several expiring taxes. According to the Governor,
without the tax extensions, additional cuts to State spending must
occur.
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,
Bruce J. Graham ,
Robert M. Haight, Jr. ,
R. Jeffrey Lyman ,
Edward Matson Sibble ,
Douglas A. Praw ,
Jung W. Han
Jessica M. Gill 
and
Lauren M. Borella .
Governor's Revised Budget No Help To California's Shrinking Bond Market
Goodwin Procter LLP
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California Governor Jerry Brown released his revised State budget earlier this month. Under the proposal, Governor Brown plans to reduce general obligation bond sales by approximately 60%.