BILL ANALYSIS
AB 117
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Date of Hearing: April 24, 2001
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Lou Correa, Chair
AB 117 (Migden) - As Introduced: January 22, 2001
SUBJECT : State infrastructure.
SUMMARY : Requires that 1% of General Fund revenues shall be
used, upon appropriation in the annual Budget Act, for the
acquisition, construction, rehabilitation, modernization, or
renovation of infrastructure that is owned by the state.
EXISTING LAW , AB 1473 (Hertzberg), Chapter 606, Statutes of
1999, requires that, commencing in 2002, the Governor shall
submit annually a five-year infrastructure plan to the
Legislature. The plan must include identification of
infrastructure requested by agencies, aggregate funding for
transportation, infrastructure needs for K-12, and instructional
facility needs for UC, CSU, and the Community Colleges.
Additionally, the plan must detail the cost of providing the
needed infrastructure, identify sources of funding, and estimate
the impact of funding the infrastructure on California's debt
position.
FISCAL EFFECT : Potentially significant annual diversion of
funding from the General Fund to support state infrastructure.
COMMENTS :
1)Purpose of bill . The bill would increase pay-as-you-go
funding for infrastructure by setting aside 1% of annual
General Fund revenues to be used for the acquisition, building
and rehabilitation of state-owned infrastructure, such as
universities, highways, correctional facilities, office
buildings, state hospitals, and parks. All monies would be
appropriated by the Legislative in the annual budget act.
2)Report of Legislative Analyst's Office (LAO) . As discussed in
the LAO's December 1998 report, "Overhauling the State's
Infrastructure Planning and Financing Process," the state owns
almost 2.5 million acres of land, 180 million square feet of
building space, and 15,000 miles of highways. Much of the
state's existing infrastructure is aging and in need of repair
and renovation, and accommodating the state's growing
AB 117
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population will require a vast array of new infrastructure.
Addressing the issues of growth and aging infrastructure poses
a significant challenge to the state.
The LAO indicated that adequately funding the state's
infrastructure has been a problem for a number of reasons,
including:
a) Infrastructure investment has not been treated as a
program.
b) There is no stable funding source for infrastructure.
c) There is an over-reliance on bond funding with little
pay-as-you-go funding from the General Fund. (For example,
from 1994-95 through 1998-99, General Fund debt service on
bonds totaled $11.5 billion while direct General Fund
appropriations totaled only $735 million. Three-fourths of
those direct General Fund appropriations occurred in
1998-99.)
3)Rationale Behind Diverting 1% of General Fund for
Infrastructure . The bill diverts 1% of annual General Fund
revenues for infrastructure. The case for increasing state
resources for infrastructure building and improvement has been
made by entities such as the Department of Finance, California
Business Roundtable and many others, with an estimated need in
the range of $80 to $100 billion over the next decade.
The Governor's January budget proposes approximately $760
million from the General Fund for state infrastructure in
2001-02. A 1% diversion of General Fund revenues (based on
estimates by the LAO in February) would be approximately $790
million, or $30 million more than the January budget proposal
for infrastructure.
4)Related Legislation . AB 1020 (Leach), set for hearing in this
committee on April 24, 2001, similarly creates an
infrastructure account funded through the diversion of General
Fund revenues. AB 1020 uses a sliding scale to gradually
increase the percentage of General Fund revenues placed into
the infrastructure account, peaking and maintaining at 5% in
fiscal year 2017-2018.
REGISTERED SUPPORT / OPPOSITION :
Support
AB 117
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California Chamber of Commerce
Opposition
None on file.
Analysis Prepared by : Jay Greenwood / B. & P. / (916)
319-3301