Governor Schwarzenegger has decided to wade into this week’s hot button debate over stem cell research. Today, he authorized a loan to the state’s new stem cell institute of $150 million in taxpayer funds, while the billions of dollars in bonds approved by voters in 2004 remain tied up in litigation.

In a letter to his Finance Director Mike Genest, the governor directed a loan be made to the California Institute for Regenerative Medicine (CIRM), the state agency created when voters approved Proposition 71 in 2004. Prop 71 authorized the sale of $3 billion in bonds to create a new stem cell research effort, with the CIRM and a citizens oversight board leading up an effort to award grants to stem cell researchers.

But the $3 billion in bonds have never been sold, due to a lawsuit that challenged their legality under the California constitution. The plaintiffs lost the first round in court earlier this year, but have appealed that decision.

The Schwarzenegger decision, interestingly enough, is linked to a similar effort to provide a kind of ‘bridge loan’ to the CIRM by state Treasurer and gubernatorial challenger Phil Angelides. Last year, Angelides helped enact a plan to get as much as $200 million to the CIRM through the sale of bond anticipation notes.

Schwarzenegger’s letter today says that about $150 million of those notes remain up for grabs; his action apparently means that the state government will buy them itself.

Last week, Schwarzenegger wrote to President Bush asking him to not veto the stem cell legislation approved in Congress– a request Bush ignored yesterday in nixing the proposal.

“I remain committed to advancing stem cell research in California,” Schwarzenegger said in a written statement today, “in the promise it holds for millions of our citizens who suffer from chronic diseases and injuries that could be helped as a result of stem cell research.”

There’s no question that today’s loan decision is interesting as a policy matter. But it also has political ramifications, especially for a Republican governor running for re-election… and eager to remind voters that he’s more of a moderate than many in his party.