The state Treasurer's Office came down hard this afternoon on a prediction from California Lutheran University economists that the state could default on some of its debt, calling the warning "balderdash" that is "nothing more than irresponsible fear-mongering with no basis in reality, only roots in ignorance."
Here's what Tom Dresslar, spokesman for Treasurer Bill Lockyer, had to say in a statement about the forecast released today by Cal Lutheran's Center for Economic Research and Forecasting.
"Since it issued its first bond, California has never, not once, defaulted on a bond payment. There's good reason for that perfect record. Debt service has second call on General Fund revenues, after schools. After paying for education, the General Fund has tens of billions of dollars left to pay debt service. Even at historically high levels, debt service does not come remotely close to needing all the funds left over after schools get paid. More to the point -- since (CERF Executive Director Bill) Watkins made his ludicrous comment based on his prediction the Governor and Legislature may not be able to solve the budget problem next year -- debt service is subject to continuous appropriation. That means we don't even need a budget to make debt service payments.
"To be crystal clear: The State faces absolutely no danger of defaulting on its bond payments."
Click here to read the original post about the analysis.
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