Updated to reflect Brown's comments and Department of Finance spreadsheet.
Gov. Jerry Brown will drop California's sale of 11 office properties that state leaders previously pursued to raise $1.2 billion in immediate cash for the state budget, he announced this morning at a Capitol press conference.
The Democratic governor said he plans to plug the hole in part by accessing prison construction money and Medi-Cal funds. But the bulk of the money - $915.5 million - would come from undefined "additional loans, transfers and loan repayment extensions," according to a Department of Finance spreadsheet.
The state would repay the borrowed money by 2014, Brown said.
"Selling state buildings is the ultimate in kicking the can down the road," he said. "... What we're doing is borrowing from internal funds, and we'll pay those back because we will generate a surplus in three years if all the budget solutions are adopted as I proposed."
The controversial deal would have had the state sell prominent office buildings, including Sacramento's East End complex, to private investors and then lease them back over at least 20 years. The nonpartisan Legislative Analyst's Office warned that the deal would prove costly for the state and said it is equivalent to borrowing at 10.2 percent interest over 35 years
The plan was pushed by Gov. Arnold Schwarzenegger and agreed upon by Democratic leaders, who sought to avoid further cuts to social service and health programs. Schwarzenegger tried to fast-track the sale so that it would conclude by the end of his term, but former state building authority members filed suit to block the deal, and the issue has been tied up in litigation over the last three months.
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