Subject: California Update - Urgent Please Read 5/7/01
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Date: Mon, 7 May 2001 20:19:00 -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.