State borrows $1.1 billion for public works projects

California sold $1.1 billion of general obligation bonds Wednesday, the first of a two-part sale this week to raise money for public works and housing programs.

Brokerage Lehman Bros. bought the securities in a competitive bidding process and plans to resell them to investors.

The bonds were issued in various maturities, with the longest coming due in 2036.

Treasurer Bill Lockyer said the state’s overall interest rate on the securities was 4.44%. For bond investors, interest on the debt is exempt from federal and state income taxes.

California plans to sell another series of bonds today. This deal, expected to raise $625 million, would be exempt from state but not federal income tax.

The state has a backlog of about $70 billion of bonds authorized by voters but not yet issued.

Also Wednesday, Lockyer’s office said it hoped to sell up to $4.5 billion of tobacco-settlement bonds March 7 to refinance previously issued debt.

Those bonds would be backed by California’s share of payments under a 1998 agreement between cigarette makers and 46 states over alleged smoking damages.