SOUTH LAKE TAHOE — Numerous South Shore projects were put on indefinite hold last week following a suspension of critical payments by California officials due to the state budget crisis.

On Dec. 17, the three-member Pooled Money Investment Board voted 3 - 0 to suspend approximately $4 billion in state funds for an estimated 2,000 infrastructure projects throughout California.

“The PMIB took this action to preserve necessary cash resources to pay the day-to-day operational needs of the state for the balance of the fiscal year pending further PMIB action in January,” according to a letter to state agencies from Department of Finance Director Michael Genest. “If loan reimbursement continues at the current pace, the state’s portion of the Pooled Money Invested Account is projected to run out of liquid cash before the end of the current fiscal year.”

The 56-acre project, Sawmill Bike Path, Upper Truckee River Restoration Project, Bijou Area Erosion Control Project, Sierra Tract Erosion Control Project, the Tahoe Regional Planning Agency’s best management practices program and numerous erosion-control projects along state highways are among the Lake Tahoe projects that depend on bond funding suspended by the board’s decision, according to Lake Tahoe Basin officials.

Future funds will only be approved once the state budget crisis is resolved, according to the letter.

The sudden suspension caused anxiety at basin agencies.

About 90 percent of the approximately $20 million the California Tahoe Conservancy has invested annually in the basin during recent years comes from bond funding that’s now suspended, said Conservancy Deputy Director Ray Lacey.

Lacey remains hopeful the funding will return, but said unknowns about the national and global economy persist, and it is “difficult if not impossible” to sell bonds at this time.

“It’s a little frustrating right now for us. We were given a halt order without any follow-up,” said Cindy Wise, a grant coordinator for the Lahontan Regional Water Quality Control Board, adding details from the state about how affected agencies should proceed is lacking.

“I’m sure we’ll get that direction, but we haven’t gotten that right now,” she said.

The suspension affected nine projects administered by the water board, including seven projects in the Lake Tahoe and Truckee River watersheds totaling $20 million, Wise said.

Groups like the Tahoe Resource Conservation District and the Sierra Nevada Alliance — a South Lake Tahoe-based network of conservation groups throughout the Sierra Nevada range — implement the projects, Wise said.

Alliance Executive Director Joan Clayburgh said she was forced to lay off several employees because of the suspension of payments.

“It basically just dissolved our watershed program,” Clayburgh said.

The program included various programs to protect water quality, including volunteer water-quality monitoring days and native landscaping programs at Lake Tahoe.

While Clayburgh hoped the program could eventually be rebuilt, she said she was “devastated” by the board’s decision.

Clayburgh said the suspension of payments comes at a particularly bad time, since stimulating the economy through the development of green jobs has been discussed by government officials.

“We just laid off the base structure that would build those green jobs,” Clayburgh said. “We just sent all those folk off to look for other careers.”

The board’s decision will also hold up $150,000 in reimbursement for programs already completely by the Alliance through state bonds, Clayburgh said.

South Lake Tahoe will also have to wait on $2.5 million in reimbursements from state bond-funded projects, said city Finance Director Christine Vuletich.

“It will come to us. They have to fix their budget situation first and nobody knows when that is going to happen,” Vuletich said.

Measure G funding is also included under the suspended state payments, but Lake Tahoe Unified School District Superintendent Jim Tarwater said he expects to continue with projects scheduled to start this summer, including the construction of an autoshop building and the replacement of 16 portable classrooms and the boiler at South Tahoe High School.

“We think it’s a hurdle, but we think we have enough backup to continue with our timeline,” Tarwater said.

Still, leaders of other agencies are less optimistic about a resolution to the California budget crisis.

“The sooner they do that, the sooner we can start to pick up the pieces,” Clayburgh said.

California Gov. Schwarzenegger said he wants to work with Democratic leaders to close a $42 billion shortfall projected through mid-2010.

Schwarzenegger says he and lawmakers are making progress on an $18 billion proposal that was passed without Republican support.

— The Associated Press contributed to this report.