State Controller Kathleen Connell Press Conference

A report from ARM's PR firm to the ARM members.

Sue Mara
Enron Corp.
Tel: (415) 782-7802
Fax:(415) 782-7854
----- Forwarded by Susan J Mara/NA/Enron on 03/21/2001 04:12 PM -----

"Beiser, Megan" <Megan.Beiser@edelman.com<
03/21/2001 03:00 PM

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Subject: State Controller Kathleen Connell Press Conference

< State Controller Kathleen Connell held a press conference today to voice
< her concerns over electricity power purchases' effect on the State's
< general fund and in response to a letter received March 12 from Department
< of Finance Director Tim Gage and Chief Legislative Analyst Elizabeth Hill
< requesting a transfer of money from the General Fund.
<
< Connell stated that Current financial information related to the purchase
< of electricity and the general fund is as follows:
< *State's general fund surplus has dropped from $8.5 billion in January to
< a current estimated level of $3.2 billion
< *Receipt of a letter from the Department of Finance Director and the Chief
< Legislative Analyst requesting an additional transfer of $5.6 billion to
< the Special Fund for Economic Uncertainties to cover power purchases
< *To cover this transfer, Connell said the state would have to borrow $2.4
< billion
< *Connell: "We started this year with a generous budget surplus; the energy
< crisis has taken much of that away, and this transfer on top of the
< electricity purchases would put the [General] fund at risk."
< *Debt issuance has not occurred to reimburse the General Fund for power
< purchases, while disbursements from the General Fund increase daily
<
< Controller Connell sent a letter to the Governor today, calling for the
< following steps to be taken:
< 1. DWR to notify the Controller's office of any purchases made and any
< contracts negotiated to date
< 2. DWR to notify the Controller's office of any future purchases and
< contracts within 7 days, regardless of when the invoices are submitted
< 3. Information on purchases in excess of $55 million should be submitted
< within 24 hours
< 4. DWR should prepare new General Fund cash flow estimates for the next 30
< and 60 days, and for the end of the fiscal year
< 5. DWR should take action to ensure that bond sales are completed by the
< end of May 2001
<
< The Controller is also ordering an audit of the DWR resources to determine
< the amount of money being spent by the Department. Currently, Connell
< said, "I have to rely on press reports as valid to determine the amount of
< money spent in power purchases." She said she needs "acknowledgement of
< the total amount of liabilities made" by DWR.
<
< Megan Beiser
< Assistant Account Executive
< Edelman Public Relations Worldwide, Sacramento
< Phone: (916) 442-2331
< Fax: (916) 447-8509
<