The Bond Buyer

A consumer watchdog group in California is considering collecting signatures to put legislation authorizing the state’s multibillion-dollar power bond issuance to a voter referendum. If the group collects enough valid signatures, it basically creates an injunction against the sale, because the state couldn’t sell the bonds at least until voters get to vote on it.

The next regularly scheduled election is in March 2002. The governor has the ability to call a special election at an earlier date.

“We’re looking at this very closely,” Harvey Rosenfield, president of the Foundation for Taxpayer and Consumer Rights, which has been protesting the state’s power purchases for months, said earlier this week.

Rosenfield’s group would have liked to see the measure authorizing some $13.4 billion in bonds amended to limit the state’s ability to keep tapping into the general fund. But the Senate passed the bill unmodified on Wednesday and Gov. Gray Davis signed it yesterday.

The ballot referendum would allow voters to vote “yes” or “no” on the bond measure. The foundation would have 90 days from when it is given permission from the state attorney general to collect signatures of about 419,000 registered voters, Rosenfield said.

The foundation should have no problem finding that number of supporters, according to Rosenfield. “It’s just a question of if we want to use our resources that way,” he said.

The foundation has been discussing for some time an initiative to roll back electricity rate increases. That initiative, besides giving the organization more planning time, would give it some flexibility in determining the state’s role as power purchaser.

To get around the referendum, if it is called and validated, the Legislature could pass an emergency measure allowing the state to sell bonds, said Joseph Fichera, senior managing director of Saber Partners and an adviser to Davis. That would require the approval of two-thirds of both houses. The current bond bill failed to garner that much support in the House on Tuesday, because of Republican opposition to such a large bond amount.

Risks like the referendum or initiative are “one of the reasons the governor wanted Republicans to approve the bill,” Fichera said. Rating analysts also have cited potential ballot initiatives as a risk factor for the state’s bond rating as California struggles to resolve its energy crisis.