In cash-strapped California, you wouldn’t think it would be hard for the government to spend the money it has.

But, the state apparently left $49 million in interest on the table last year when the Department of Housing and Community Development (HCD) requested, and the California Housing Finance Agency (CalHFA) approved, bond sales to provide cash beyond its immediate spending needs.

“HCD and Finance may have contributed to the state’s financial strain by recommending that the State Treasurer sell bonds before the proceeds were needed,” the California State Auditor concluded in an October report. The bond sales came “at a time when the State’s credit rating was declining and interest-rate volatility was high.”

The auditor said that state officials felt obligated to sell the excess bonds and raise more cash than they needed to impress financial institutions that the state could repay expenses on construction projects. The auditor agreed there was merit to the argument that without the display of deep pockets, “many of the housing bond programs would have been suspended, or halted altogether.”

The housing department isn’t the only agency sitting on bond money. The state had a balance of around $7 billion of unspent funds as of June 2012, about half of which has been sitting around for two years. That compares to the $12.9 billion being held by the state when Governor Jerry Brown took over for Governor Arnold Schwarzenegger in 2010, according to The Bay Citizen.

Housing and Community Development made fifth place on the State Treasurer’s Top 10 list of agencies with unspent funds:

$2.2 billion—Department of Water Resources

$1.1 billion—Resources Agency (excluding the Department of Water Resources)

$882 million—California Department of Transportation

$798 million—Office of Public School Construction

$796 million—Housing and Community Development

$330 million—California Health Facilities Financing Authority

$200 million—State Transit Assistance

$159 million—Department of Public Health

$146 million—University of California

$97 million—Air Resources Board

–Ken Broder

To Learn More:

Slow Distribution of Bond Funds Costs California Millions (by Jennifer Gollan, The Bay Citizen)

Awards of Housing Bond Funds Are Appropriate, but Cash Balances Are High and Monitoring Continues to Need Improvement (California State Auditor) (pdf)