Gov. Arnold Schwarzenegger wants to require state workers to take two mandatory, unpaid furlough days — the first and third Fridays of every month — in order to help defray a tiny fraction of the state’s whopping budget deficit. State Treasurer Bill Lockyer is having none of it.

Gubernatorial directives can’t be imposed on constitutional officers such as the Treasurer, or the agencies they head; Lockyer sent a letter Friday to Department of Personnel Administration Director David A. Gilb rejecting the governor’s request.

“(W)e believe that the Governor has not established that he has the legal authority to impose furloughs and the related salary cuts on state employees,” Lockyer wrote in the letter, adding he’s “acutely aware of the serious financial issues” the State confronts and noting his office has “worked successfully with the Department of Finance throughout the year to reduce our costs and increase our revenues.”

He and his staff will keep cutting costs wherever possible, he wrote, but “we will not comply with an Executive Order that we are convinced does not rest on solid legal grounds and which would impose such a hardship on the backs of our employees.”

And what’ll the other constitutional officers — Lieutenant Gov. John Garamendi; Attorney General Jerry Brown; Controller John Chiang; Superintendent of Public Instruction Jack O’Connell; and Insurance Commissioner Steve Poizner, practically all of whom have gubernatorial aspirations — do about Schwarzenegger’s furlough directive? Stay tuned.

UPDATE @ 1:35 P.M. MONDAY 1/12: This just in from Garamendi: “We have already cut the Lieutenant Governor’s budget by 10 percent this year and we will cut another 10 percent this year. We are public servants for the people of California so we will not be furloughing our staff.”

UPDATE @ 4:57 P.M. MONDAY 1/12: And there you have it: The Sacramento Bee’s Capitol Alert now says none of the Democratic statewide constitutional officers will go along with the furloughs.

State Controller John Chiang has announced his cash analysis found — based on projected declines in revenues coupled with shaky elements in California’s record-setting late budget — the state needs to borrow $7 billion to meet all of its obligations through the fiscal year ending June 30.

“There is no question that today’s economic uncertainties and a tight credit market may create enormous challenges to the State to borrow at one time the entire $7 billion I have determined the State will need to meet its obligations through the end of the fiscal year. The difficulty is also compounded by the short window of time between now and the final days of October, the period in which my office has projected the State will likely run out of cash,” Chiang said.

“It is critical that Congress take swift action to adopt an economic recovery plan that can calm the fears of American consumers, stabilize the market and loosen the credit stream we will need to continue to provide quality programs and services Californians expect and deserve.”

This is why Congress must act, rather than let “the free market” correct itself without any government intervention as some have so blithely suggested in recent days. It’s easy and right to argue against bailing out billionaires and for aiding those truly in need, but the bottom-line truth is that our economy, our very society relies on credit, from the short-term loans our state government takes to pay its bills to the college loans, car loans, home loans, small-business lines of credit and so forth on which ordinary citizens rely to survive.

State Treasurer Bill Lockyer spelled it out earlier today.

“For 10 days, state and local governments have been closed out of credit markets – long-term and short-term – in spite of the fact that they represent no default risk and provide a good tax-free return to investors,” he said. “The credit market is frozen because financial institutions are afraid to commit capital amid enormous uncertainty. Congress and the President need to adopt a responsible recovery plan, and get the job done quickly.”

“Without action, we will be unable to sell voter-approved bonds for highway construction, schools, housing or water projects,” he continued. “More urgently, because the State budget was so late, we have only four short weeks to complete what otherwise would be a routine revenue anticipation note sale to meet the State’s cash flow needs. Without prompt federal action to address the economic crisis, we may have no market access to conduct that short-term borrowing transaction. That means the State’s cash reserves would be exhausted near the end of October. Payments for teachers’ salaries, nursing homes, law enforcement and every other State-funded service would stop or be significantly delayed. And California’s 5,000 cities, counties, school districts and special districts would face the same fate.”

Gov. Arnold Schwarzenegger agrees. Read the letter he sent today to California’s Congressional delegation, after the jump… Read the rest of this entry »

Interesting happenings in Oakland this Saturday, Sept. 20:

Rep. Barbara Lee, D-Oakland, and former U.S. Labor Secretary Robert Reich, now a University of California, Berkeley professor, will discuss the need to craft better economic policy and how Lee’s 9th Congressional District can help end the war in Iraq from 10 a.m. to noon Saturday in the James Moore Theater at the Oakland Museum, 1000 Oak St. (Lee and Reich were early supporters of Barack Obama, so don’t be surprised if that’s where the discussion is headed.) It’s free and open to the public but seating is limited and reservations are required; if you want to go, call 510-763-0370 to provide your name, phone number and e-mail address.

Then, Assembly Speaker Karen Bass, D-Los Angeles, and San Francisco Mayor Gavin Newsom will headline while state Treasurer Bill Lockyer emcees the 38th Annual Alameda County Democratic Unity Dinner, a 6 p.m. reception and 7:30 p.m. dinner Saturday at the Oakland Airport Hilton, 1 Hegenberger Road. All interested Democrats are invited to attend; tickets cost $75 per person in advance and $125 for patrons, and tables cost $1,000 and up, all available by calling 510-263-5222. A limited number of door tickets will be available at $85 each.

That soft “whump” you might’ve heard if you were listening reallllllly hard yesterday was the sound of $205,000 being reported into Attorney General Jerry Brown’s “Jerry Brown 2010” campaign committee. All of it was raised in the second half of June, in increments of $12,000 or less, from an assortment of labor unions, attorneys and FOJs (Friends of Jerry).

The former Oakland mayor, elected to his current job in 2006, has been saying for a while that he might make a run for governor in 2010. (He can do so because the two terms he already served as governor, from 1975 to 1983, were before California’s term-limit law was enacted in 1990.) It’ll be a crowded Democratic primary field — among those confirmed or suspected to be interested in a 2010 gubernatorial run are, in no particular order, state Superintendent of Public Instruction Jack O’Connell, Treasurer Bill Lockyer, former state Controller Steve Westly, Los Angeles Mayor Antonio Villaraigosa, San Francisco Mayor Gavin Newsom and former Assembly Speaker Fabian Nunez — but many say Brown is the man to beat, given his enormous name recognition and fundraising capabilities. This sudden burst of cash could be evidence that’s true.

See a list of all the donations reported Sunday by Jerry Brown 2010, after the jump… Read the rest of this entry »

Get out your calendars and start scribbling:

Hillary Clinton presidential campaign chairman Terry McAuliffe — Democratic National Committee chairman from 2001 to 2005 and a noted FOB whom Al Gore once called “the greatest fund-raiser in the history of the universe” — will join state Treasurer Bill Lockyer and Democratic strategist Chris Lehane in headlining the 37th Annual Alameda County Democratic Unity Dinner tomorrow night (Saturday, Oct. 13) at the Oakland Airport Hilton; state Democratic Party chairman Art Torres will emcee.

Cocktails at 6 p.m., dinner at 7 p.m., all for the sum of $75 per person, $125 per patron or $750 per table in advance, though a few $85 door tickets will be in play, too; “unity” means “war chest.”

Lockyer, being from Hayward, is a fixture at Alameda County events, but McAuliffe ranks among the national party’s most effective fundraising heavy hitters. CNN has reported McAuliffe once wrestled a 280-pound alligator to collect $15,000 from Florida’s Seminole Indian tribe. Now he’s heading up a campaign for a candidate who at present is well ahead in the money race and in the polls.

And San Francisco-based Lehane — who helped the Clinton White House spin the Whitewater investigation, spoke for Al Gore on the 2000 presidential campaign trail and advised former Gov. Gray Davis during the 2001 energy crisis and 2002 gubernatorial campaign — with partner Mark Fabiani earned the sobriquet “Masters of Disaster” for an uncanny ability to spin public opinion even in the face of political crises, often by digging up dirt on embattled clients’ critics.

State Treasurer Bill Lockyer today announced that individual investors snapped up $102.8 million of $250 million in bonds during the first sale conducted under Proposition 71, the $3 billion stem cell research measure approved by voters in 2004.

The $102.8 million in purchases by individuals comprised 41.1 percent of the total, and more than tripled the amount expected by the Treasurer’s Office and its underwriting team, Lockyer’s office says. 18 institutional investors (such as mutual funds, banks or insurance companies) bought the balance of the $250 million during the sale that started Wednesday and ended today.

“The investment by individuals far exceeded our expectations and shows how strongly Californians believe in the promise of stem cell research to cure diseases and relieve suffering,” said Lockyer. “Proposition 71 paved the way for a new approach to finance biomedical research and the development of intellectual capital. This sale gets that endeavor off to a great start.”

Robert N. Klein, chairman of the California Institute for Regenerative Medicine governing board and author of Proposition 71, said he believes many of the investors are patients suffering from debilitating disease or injury. “They’re making an investment in their future — not simply their financial future, but their future quality of life.”

The minimum buy-in for individual investors was $5,000, and interest earned on the bonds will be subject to federal income tax but not state income tax.The interest rate on the bonds will be 5.168 percent, which is 1.15 percentage points above today’s rate on three-year U.S. Treasury notes. The $250 million sale will provide the nation’s largest-ever State investment in human embryonic stem cell research –Lockyer noted the National Institutes of Health since FY 2002 has funded only $131 million worth of this research.

During her big rally this evening in downtown Oakland, Democratic presidential frontrunner Hillary Clinton was talking about the progressive values she’d like to see California export to the rest of the nation when she praised the work of “Governor Newsom.”

“Uh, Mayor Newsom,” she corrected herself, as San Francisco’s mayor blushed and bobbed and the crowd… went… WILD. “That’s what he told me to say, and I guess I can see why,” Clinton quipped.

Newsom is, of course, among rumored Democratic gubernatorial contenders for 2010. Among the others is state Treasurer Bill Lockyer, who was onstage for Clinton’s slip of the tongue and just smiled dutifully.

“Treasurer Lockyer Announces Fundraising Drive to Benefit Bay Area Schools” said today’s news release, in which state Treasurer Bill Lockyer‘s office announced that the ScholarShare Investment Board -– which oversees ScholarShare, the state’s 529 college savings plan — and the San Francisco Giants have partnered to sponsor 12 games at AT&T Park during the 2007 season, with proceeds from each benefiting a Bay Area school district.

“The California State Treasurer’s Office is fully committed to helping California schools and students,” said Lockyer. “This program gives school districts needed funds and lets students experience the thrill of professional baseball in one of the nation’s premier ball parks. I commend the Giants for teaming with ScholarShare, to give back to the community and invest in education.”

Here’s how it works: Each school district will buy a block of tickets from the Giants and then sell them at a discounted rate. For every ticket sold, Fidelity Investments, ScholarShare’s manager, will donate $5 to the district’s education foundation, up to a maximum of 300 tickets.

$5 by 300 tickets, let’s see, that’s… a maximum of $1,500 per district.

For context, consider that a first-year Oakland Unified School District teacher with no prior experience earned a salary of $38,777.60 in the school year ending now. $1,500 is better than nothing, but it’s not exactly going to move any mountains.

ScholarShare, by the way, lets Californians save for college by making after-tax contributions; the earnings grow tax-deferred, and the disbursements — when used for tuition and other qualified expenses — are federal and state tax-free, which is a pretty good idea whether or not America’s pastime is involved.

State Treasurer Bill Lockyer today launched a new Web site to help convince Californians to buy voter-approved bonds to build schools, housing, transportation systems, parks and flood control projects.

“This is a first-of-its-kind Web site and that’s part of an unprecedented campaign to invest in California, to help individual investors make a difference by investing in our state’s future,” Lockyer told reporters a few minutes ago.

Yep, we’re fixing up the state retail now.

Managed by Lockyer’s office, Buycaliforniabonds.com provides information on how individual California residents can get a head start over institutional investors by buying in special early-order periods; it has links to more than 70 broker-dealers who can place the buyers’ orders.

Remember, state voters in November approved $42.7 billion in bonds to improve the state’s infrastructure, quality of life and economy. Add that to $23 billion in general obligation bonds OK’ed in earlier votes, and $7 billion authorized last month for prison construction, and suddenly we’ve got an enormous wad of bonds to sell in the next few years, far in excess of what we’ve tried to move in the past.

This site’s launch comes in time to help Californians buy bonds during the early-order period — June 18-19 — for a $2.5 billion general obligation bond sale set for June 20. Investors can contact their brokers now and place orders to buy bonds within that two-day, pre-sale period. Institutional investors won’t get a shot at them until June 20.

“We’re expecting a very successful sale next week,” Mike Gomez of Citigroup’s public finance division, this sale’s lead underwriter, said this morning.

California sells bonds in $5,000 increments, as do most states. (If you’re counting, $63 billion divided by $5,000 equals 12.6 million.)

Deputy Treasurer Paul Rosenstiel said there’s no specific target the state aims to meet in terms of individual sales, but there are some benchmarks to help determine whether this campaign is working. In the state’s last bond sale, he said, about 7 percent went to about 1,000 individual buyers; in New York City, where officials run radio ads to drum up interest, about 25 to 30 percent of bond sales are to individual buyers.

And so Lockyer also today launches a $250,000 radio and newspaper ad campaign in the Bay Area and Central Coast to direct people to the new Web site.