After a press conference Friday afternoon where Gov. Charles Turnbull kept details of a proposed $100 million bond issuance to a minimum, a Government House release later in the evening explained the rationale for taking on more debt.
The proposed bond financing will go toward repaying a $35 million short-term loan given to the government earlier this year by Banco Popular.
The balance of the bond proceeds will provide working capital that will be melded with "various cost-reduction and revenue-enhancement initiatives" aimed at producing a balanced budget, the Government House release stated.
At his press conference, Turnbull didn’t give a specific date of when he would submit his recommendations for fiscal year 2000, but did say "we will send a balanced budget."
On Aug. 4, after the legislative post auditor found that Turnbull’s budget contained some $200 million in unsubstantiated revenue projections, the governor’s financial team was granted an extension to revise the budget. The Senate Finance Committee, chaired by Sen. Lorraine Berry, rescheduled the start of hearings for Aug. 24.
The revised FY 2000 budget was to have been delivered Tuesday to the Legislature, allowing senators and post-audit officials a week to review it before twice-delayed hearings before the Finance Committee begin next week.
Berry has said there is no way the budget will be in place by Oct. 1, the start of the new fiscal year. With the three-week delay, she said, final approval by the full Senate should come in late October. Then the budget bill goes to the governor.
Meanwhile, Turnbull and Rudolph Krigger Sr., the governor’s assistant for fiscal policy and economic affairs, were in New York last week meeting with financial analysts from PaineWebber Inc. about the bond issue. The next step will be to submit authorizing legislation for the bond deal to the Senate for approval.
If the proposal is approved, the bonds will be marketed and then sold to investors. Government House said the whole process has approximately two months until it is completed.
"The bonds cannot and will not be presented to potential investors until such time as we have legislative approval of the financing," Turnbull said. "It is up to me and my financing team to convince the Legislature, and the general public, that this financing is not only necessary, but the required first step in getting some breathing room as other initiatives are implemented."
The Government House "fact sheet" gave the following information:
— Government's financial team — Finance commissioner, director of Management and Budget, director of finance and administration for the Public Finance Authority, assistant to the governor for fiscal policy and financial affairs.
— Financial adviser to the government — First Union Capital Markets.
— Legal counsel to the government — Harris, Beach and Wilcox.
— Lead Bond underwriter — PaineWebber Inc.
Others on the underwrting team, there "to ensure the widest distribution in the marketing of the bonds," are Morgan Stanley in association with Banco Popular and Roosevelt & Cross.