Yesterday's failure to get a two-thirds majority means that it will take at 
least 90 days before the law authorizing the bond sale become effective.  The 
bridge loan is dead, because the loan was contingent on the bond sale.---sch

Crisis: Democrats, GOP fail to agree on a $13-billion emergency bond, putting 
California at risk of running out of funds this fall. 
By MIGUEL BUSTILLO, JULIE TAMAKI, Times Staff Writers
SACRAMENTO--California will not be able to reimburse state coffers the 
billions spent buying electricity during the energy crisis until August at 
the earliest, which will leave the state perilously close to running out of 
money this fall. 
Democrats and Republicans failed to come to terms Monday on emergency 
legislation that would authorize up to $13.4 billion in bonds to repay the 
state budget, leading Democrats to push forward with a last-gasp strategy. 
The Legislature's ruling party outflanked the minority GOP by introducing an 
identical, nonemergency measure that required only majority approval, not 
two-thirds passage. It was approved by the Assembly Monday evening on a 49-29 
vote, and is expected to receive final Senate approval Thursday. 
Though it guarantees California taxpayers will eventually be repaid in full 
for electricity purchases made to supply private utilities, the Democrats' 
action carries a series of negative consequences for the state as it seeks to 
escape the energy crisis. 
The nonemergency bill will take a minimum of 90 days to become law after the 
special session ends, effectively leaving the general fund with a massive 
hole as lawmakers prepare the state budget over the next two months. 
"We can't sell the bonds as quickly, and will probably need a contingency 
budget," said Assemblyman Speaker Pro Tem Fred Keeley (D-Boulder Creek). 
Keeley said lawmakers will probably have to prepare a spending plan with 
different levels of funding--one from July, the time the next fiscal year 
begins, to whenever the bonds are eventually sold. Lawmakers may also have to 
consider a worst-case scenario: the possibility that the bonds will not sell. 
"If [investors] don't buy the bonds," Keeley said, "the situation we're in is 
very, very dire because the general fund would be repaid very, very slowly." 
State Treasurer Phil Angelides had hoped to borrow $4.13 billion to partially 
repay the budget until bonds could be issued, but lawmakers said the new 
legislation will make that impossible. Angelides' tentative deal to borrow 
the money from several Wall Street firms expires today. The deal required 
authorization on the bonds, because bond proceeds were to be used to repay 
the loan. 
"The Assembly Republicans' refusal to support emergency legislation puts the 
state's fiscal integrity at great and continuing risk, and does serious harm 
to essential services from education to public safety to health care," 
Angelides said in a statement. 
The delay also means that Gov. Gray Davis will fail to keep his promise to 
repay the budget and take the state out of the energy buying business by the 
end of June. That is crucial, because many of the contracts to purchase 
electricity that the Davis administration signed contain language that may 
make them void if financing is not secured by July 1. If the contracts 
evaporate, the state will be forced to buy even more power on the expensive 
spot market to avoid blackouts. 
Davis plans to replenish state coffers and stop using taxpayer money on power 
purchases by floating a record bond issue, which would be repaid by utility 
ratepayers out of their monthly bills. But the bonds cannot be issued until 
the bill in question takes effect. 
In a statement, Davis also accused Republicans of "obstructing the solution" 
to the state's electricity problems, saying "their decision to play partisan 
politics with the energy crisis seriously complicates the budget process and 
could ultimately threaten our economy." 
So far this year, California has spent more than $5 billion from the budget 
buying power for the private utilities that were too financially strapped to 
continue doing so. 
Most critically, the measure will leave a dangerously narrow window of time 
for the bond to be issued so the budget could be reimbursed before state 
coffers begin to run dry in early fall. The $12.5-billion bond is expected to 
be the largest in American history, and experts say it will require a 
significant sales effort. The Democrats' bill authorizes a slightly larger 
amount in case the bond issue needs to grow. 
Assembly Speaker Bob Hertzberg (D--Sherman Oaks) said he will continue 
working with Republicans in hopes of passing legislation to authorize the 
bonds sooner. 
"I'm still holding out an olive branch to Republicans," Hertzberg said. 
Lastly, the bill's final passage will kill, temporarily at least, hundreds of 
energy-related bills now winding their way through the Legislature. That is 
because, for the bill to become law as quickly as possible, Democrats would 
have to adjourn the current special legislative session on the energy crisis. 
Democrats are vowing to quickly approve a host of important bills this week 
before the session is closed down. And Davis is expected to immediately call 
another special session, said spokesman Steve Maviglio, so most of the 
remaining bills could be reintroduced. 
Nonetheless, the process would slow down passage of numerous 
measures--especially for Republicans, who may have a harder time getting 
their bills through both houses a second time. Republicans hold only 30 of 
the Assembly's 80 seats, and 14 of the Senate's 40 seats, making them a 
distinct minority. 
Without question, the Democrats' move represents a ratcheting up of partisan 
politics on the energy crisis. 
Republicans held up the initial legislation in hopes of forcing Davis and his 
Democratic colleagues to alter their financial plan to get the state out of 
the crisis--even if it meant scaling back the next state budget. 
Davis has proposed borrowing the $12.5 billion to repay the budget and cover 
future power purchases over the next two years, which would allow his next 
state budget to move forward unimpeded by the crisis. 
GOP lawmakers, who are convinced that the size of the bond will need to be 
increased to finance Davis' plan, countered last week with a proposal to 
essentially gobble up most of the state's projected surplus by writing off $5 
billion in electricity purchases and borrowing less in bonds for future power 
buys. 
But Democrats balked at the Republican proposal, saying California had far 
too many needs in education, law enforcement, transportation and health care 
to permanently spend $5 billion on electricity. Furthermore, they said, using 
taxpayer money instead of electric rates to cover power purchases would favor 
big business. 
"Today, we take a bitter pill to fix a problem we all know needs to be 
fixed," Assemblyman Dennis Cardoza (D-Merced) said. 
* * *
Times staff writers Carl Ingram and Dan Morain contributed to this story.