Nigh Voices Opposition to Cash-Flow Financing / to Run State Government

Article excerpt

Gov. George Nigh said Wednesday he is opposed to "creative financing" or "cash-flow financing" for the state, which would inv olve the sale of low-interest bonds to provide more income to run state government.

"I'm not in favor of cash-flow financing," Nigh said in a state Capitol news conference.

"I would not in any way want to get the state of Oklahoma involved in anything that would be interpreted as a debt or as creative book-keeping that would create a financial problem for the state," Nigh said.

A bond sale reportedly is being considered as a substitute for the state's "cash-flow" or reserve fund, which totaled about $242 million at the start of this fiscal year, state Capitol sources havetold The Journal Record.

Such a plan was mentioned last week by Sen. Lee Cate, D-Norman, chairman of the Senate Appropriations Committee.

However, Cate made it clear Wednesday that he is not advocating a bond sale.

"It makes me nervous," Cate said.

If the state did issue bonds to finance general appropriations, about $50 million might be freed from the reserve fund for spending, Cate had said.

This would be the first time the state had ever undertaken a general bond sale.

There are some questions whether such a bond sale would be legal, because the Oklahoma Constitution prohibits deficit financing.

Legislators are scrambling for funding solutions because the state will have about $258 million less to spend in fiscal 1987, according to the most recent estimate certified by the Board of Equalization. That estimated shortage is based on projections that general state revenues will be $197 million less than this year's income. Another $61 million in one-time funds for capital expenditures also will not be available next year.

Stifel Nicolaus & Co., the bond brokerage firm, and Fagin, Brown, Bush, Tinney & Kiser, a law firm that specializes in bond sales, gave a presentation for the Senate leadership about six months agoon a bond sale to shore up state revenues. …