BILL ANALYSIS AB 117 Page 1 Date of Hearing: May 9, 2001 ASSEMBLY COMMITTEE ON APPROPRIATIONS 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: SUMMARY 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. COMMENTS 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 Page 2 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 infrastructure. 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