California delays bond offering completion

Treasurer Bill Lockyer took the unusual step after a lawsuit was filed to block the sale of state office buildings to pay down debt. (That includes the Ronald Reagan building downtown.) The postponement is only until tomorrow so that state officials can determine how higher the deficit would be should the building sale not go through. But it comes at an awkward time - the municipal bond market has been weakening, and there continue to be dire - and often uneducated - warnings about the state's financial condition. Up until now, "investors have been responding reasonably well" to the notes, Lockyer told Bloomberg Television. From the WSJ:

The lawsuit challenged a plan by California Gov. Arnold Schwarzenegger to close an $18 billion budget shortfall through June 2011, in part by selling 11 state-owned buildings to generate $1.2 billion. The suit said the sale was an improper waste of public money and that the state's Judicial Council didn't approve the sale of two court buildings.

[CUT]

The suit said that the deal, in which the state would sell the buildings and lease them back from the new owners, would cost the state over the long term. A report by the state's nonpartisan Legislative Analyst's Office last week estimated that over 35 years, the deal would cost the state $1.4 billion.