Affirming a trial court decision, the California 3 rd District Court of Appeals snubbed the state’s argument that the bonds were exempt from the constitutional debt requirement. The state’s debt requirement prohibits the legislature from borrowing more than $300,000 without a two-thirds vote in each house, plus the approval of a majority of voters, the Sacramento Bee reports.
The bonds were authorized by Governor Arnold Schwarzenegger and the state legislature in 2004 to pay some of the state’s quarterly payments to the California Public Employees’ Retirement System (CalPERS). However, the state’s Pension Obligation Board Committee’s was met with resistance from an Orange County business group when it sought legal approval for the action.
Particularly, the argument by the Pension Obligation Committee in favor of the bond float hinged on the legality of Resolution No. 2004-1, which authorizes the issuance of $960 million in bonds to pay a portion of the state’s employer contribution to CalPERS for fiscal year 2004 – 2005.
The appeals court, like the trial court, sided with the business group – the Fullerton Association of Concerned Tax Payers (FACT) – in finding that Schwarzenegger’s proposal violated the debt requirement act.
According to news report, the state said it will not appeal the ruling.
For the full opinion, visit http://www.courtinfo.ca.gov/opinions/documents/C051749.PDF .