California's pension obligation bond plan violates the state constitution, according to a Sacramento County judge's ruling.
The Pacific Legal Foundation had contested Gov. Arnold Schwarzenegger's proposal late last year to raise $929 million through a POB to help plug a hole in the state budget. The size of the bond was reduced to $550 million after the foundation, acting on behalf of the Fullerton Association of Concerned Taxpayers, challenged the bond plan in court.
Judge Raymond M. Cadei ruled the POB violates the state constitution, which requires that state debt issues exceeding $300,000 be approved by voters.
"This decision is a victory for all Californians against spendthrift practices in the state Legislature," said Pacific Legal Foundation attorney Harold Johnson in a press release. "Today's court ruling should make it clear to lawmakers that they can't run California on credit cards," he added.
H.D. Palmer, state finance department spokesman, did not return calls for comment by press time.