Subject: California Update - Urgent Please Read 5/7/01
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Date: Mon, 7 May 2001 10:19:00 -0700 (PDT)

Sources report that the bond authorization will be put to a vote today

The bridge loan financing bill will put to a vote today in the California 
Assembly.  The Republicans are currently in caucus until 3:30 PST and then 
will go to the floor for a vote.  The current situation is very fluid, but 
sources now indicate that the bill would pass with a simple majority vote, 
lacking the two-thirds needed for an immediate bond issuance.  If this is the 
case, the bill would not take effect for 90 days and the state would be 
forced to abandon its proposed bridge loan plans.  Absent of last minute 
financial rescues by Davis or a new longer bridge loan package (unlikely) 
Socal could seek voluntary bankruptcy.  The main problem would then be the 
waiting period for financial relief from the state through the transmission 
line purchase or other assistance.

There is an outside chance that Republican defectors could precipitate from 
the current caucus.  There is extreme pressure on the Republicans from Davis 
and Angelides.  If the bill failed due to lack of Republican support, it 
would provide Davis the opportunity to blame Republicans for on-going 
expenditures of $70M/day (power purchases), and a possible bankruptcy by 
Socal.  The last Republican who gave support to a democratic bill (AB 1X), 
Representative Bill Campbell, lost his job.  Sources also confirm that 
Democrats have not met with Republicans on the bond issuance since last week.