BILL ANALYSIS                                                                                                                                                                                                    

                                                                  AB 117
                                                                  Page  1

          Date of Hearing:   May 9, 2001

                              Carole Migden, Chairwoman

                 AB 117 (Migden) - As Introduced:  January 22, 2001 

          Policy Committee:                              B&P  Vote:12-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:               


          This bill requires that 1% of annual General Fund revenues 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.

           FISCAL EFFECT  

          If this measure was in effect for the 2001-02 budget, about $790  
          million would be set aside for state infrastructure.  Assuming  
          average annual growth in General Fund revenues of 5 percent,  
          after 10 years, the amount earmarked for infrastructure would  
          total about $1.2 billion.


           1)Background  .  Chapter 606, Statutes of 1999 (AB 1473,  
            Hertzberg) requires the governor to annually submit a  
            statewide five-year capital outlay plan to the Legislature.   
            The plan must include identification of infrastructure  
            requested by state agencies and K-12 education and propose a  
            plan to finance the identified needs.  In addition, the  
            Legislative Analyst's Office December 1998 report,  
            "Overhauling the State's Infrastructure Planning and Financing  
            Process", discussed several reasons for the state's  
            underinvestment in infrastructure, including the lack of a  
            stable funding source, and the over-reliance on bond funding  
            and limited use of pay-as-you-go funding.

            The author states that AB 117 provides a means to increase  
            pay-as-you-go funding for infrastructure by setting aside one  
            percent of General Fund revenues each year for acquisition and  


                                                                  AB 117
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            improvement of state facilities subject to appropriation by  
            the Legislature in the annual budget act.  The author believes  
            that this proposal "will provide assurance that the state can  
            at least address the highest priority needs" identified in the  
            five-year capital outlay plan.  The author maintains that the  
            state should primarily use this ongoing source of  
            pay-as-you-go funding to improve infrastructure for which the  
            state has direct responsibility, thus the bill limits  
            eligibility for funding from the account to state-owned  

           2)Prior Legislation  .  Last year, AB 2099 (Migden), which was  
            substantially similar to this bill, was held on the Senate  
            Appropriations Committee's Suspense file.  AB 2020 (Leach),  
            which incrementally increased a General Fund set-aside to 5%  
            for state  and  local infrastructure, was held on this  
            committee's Suspense file last year.  

           3)Related Legislation  .  AB 1020 (Leach), which is similar to AB  
            2020, is in the Assembly Local Government Committee.

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916)319-2081