BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 856|
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UNFINISHED BUSINESS
Bill No: SB 856
Author: Senate Budget and Fiscal Review Committee
Amended: 10/6/10
Vote: 27 - Urgency
PRIOR VOTES NOT RELEVANT
ASSEMBLY FLOOR : Not available
SUBJECT : General Government Budget Trailer Bill
SOURCE : Author
DIGEST : Assembly Amendments delete the prior version of
the bill which expressed the intent of the Legislature to
enact statutory changes relating to the Budget Act of 2010,
and add the current content relating to state government.
This bill is now the General Government Budget Trailer Bill
which contains provisions necessary to implement the
2010-11 Budget.
ANALYSIS : This bill includes the following key changes
to implement the 2010-11 State Budget:
1. Consumer Protection Initiative . Makes technical changes
to allow for the implementation of increased consumer
protection investigations. Specifically, allows the
director of the Department of Consumer Affairs (DCA) to
place sworn officers into the various healing arts
CONTINUED
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boards, and allows the Medical Board of California and
the Dental Board of California to hire non-peace
officers to assist with investigations.
2. BreEZe Electronic Licensing System . Requires DCA to
submit the final BreEZe vendor contract for Joint
Legislative Budget Committee (JLBC) review. Also,
requires a report after the BreEZe system is completed
analyzing the workload need for licensing personnel
employed at DCA.
3. Alcohol and Beverage Control Catering and Event Fee
Increase . Increases this fee from $10 to $25. The
catering fee has not been adjusted since 1979, and the
event fee has not been adjusted since its inception in
1997. Projected to increase revenues to the Alcoholic
Beverages Control Fund by approximately $128,000 in
2010-11.
4. Alcohol and Beverage Control Liquor License Fee
Increase . Increases the original fee for a general
liquor license by 15 percent, from $12,000 to $13,800 in
2010-11, as well as index the fee to inflation in future
years. This fee was last adjusted in 1995. Projected
to increase revenues to the Alcoholic Beverages Control
Fund by approximately $394,000 in 2010-11.
5. Bond Redemption . Streamlines the redemption of past-due
bonds by allowing the State Treasurer to redeem matured
bonds and coupons that are ten years or more past their
call date. Under current law, the State Treasurer
redeems matured bonds and coupons that are within 10
years of their call date, but claimants must go through
the Victims' Compensation and Government Claims Board
(VCGCB) to redeem older bonds. The Administration
indicates this change will result in General Fund cost
avoidance of $665,000 annually, because the State
Treasurer will absorb the VCGCB workload.
6. Private Postsecondary: Flight Schools . Exempts
California's flight schools from Bureau for Private
Postsecondary Education (BPPE) regulations and fees
until July 1, 2011. Also requires that all flight
schools operating in California inform BPPE of their
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operations prior to July 1, 2011. The Federal Aviation
Administration regulates most aspects of flight schools.
7. Private Postsecondary Audit of Staffing Levels . Current
law requires the Bureau of State Audits to analyze
various aspects of the BPPE operations by August 2013.
This section adds to the existing statutory audit the
BPPE staffing levels as an audit issue.
8. Prompt Payment Act . Standardizes the timeline for the
Prompt Payment Act by conforming the deadline for
undisputed refunds to the deadline for undisputed
invoices. Hence, the deadline for undisputed refunds
would increase from 30 days to 45 days. Additionally,
this bill reduces the state's penalty costs for late
payment of bills to certain small and nonprofit business
to ten percent above the United States Prime Rate on
June 30 of the prior year. The current penalty is 0.25
percent of the amount due, per calendar day, which
equates to 90 percent annual interest.
9. Increase the Enterprise Program Voucher Application Fee .
Increases the Enterprise Zone Program Voucher
Application fee by $5, to $15 per application, to fully
cover the Department of Housing and Community
Development's administrative costs related to the
program. This avoids a $510,000 General Fund
expenditure in 2010-11 and ongoing. Enterprise Zone
companies are eligible for tax credits and benefits
including $37,440 or more in state tax credits over a
five-year period for each qualified employee hired.
10. Forgive Olympic Training Center Loan . Removes the
repayment requirement for a loan authorized to construct
a California Olympic Training Center and requires that,
in lieu of repayment, revenues deposited in the
California Olympic Training Account, which are derived
from special fees related to sales of special Olympic
license plates, be transferred to the General Fund. The
loan was authorized in 1989, to be paid in full no later
than 20 years from the date of receipt. The
Administration has determined that there are no funds
available for repayment and indicates that forgiving the
loan would properly reflect a debt that is not
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collectible and therefore not overstate accounts
receivable.
11. Continued Implementation of Governor's Reorganization
Plan (GRP) No. 1 of 2009 (Information Technology
Reorganization and Consolidation) . Consistent with the
terms of GRP No. 1 of 2009: (a) authorizes the
Technology Services Revolving Fund (TSRF) to receive
revenues for services rendered by the Office of the
Chief Information Officer (OCIO); (b) authorizes the
OCIO to collect payments from public agencies for
services requested from, rather than contracted for, the
OCIO; and (c) revises the conditions used to determine
whether a balance remains in the TSRF at the end of a
fiscal year to limit the amount that is used to
determine a reduction in billing rates.
12. Office of the Chief Information Officer (OCIO) Service
Contract Oversight . Expands the existing information
technology (IT) statutory review, approval, and
oversight authority of the OCIO to include service
contract procurements, if the proposed contract contains
an IT component that would be subject to oversight by
the OCIO if it were a separate IT project.
13. Manufacturing Technology Program . Cleans up statute by
deleting the Manufacturing Technology Program. This
program was part of the Technology Trade and Commerce
Agency that was abolished in 2003-04. The program lost
its funding at that time. When funded, the program
provided competitive grants to encourage manufacturing
investment in California.
14. Local Agency Investment Fund Reimbursement Cap . Adjusts
the limitation on administrative cost recovery for the
Local Agency Investment Fund (LAIF) - from 0.5 percent
of investment earnings to 5.0 percent. The LAIF is a
voluntary investment option for local governments
managed by the State Treasurer. The adjustment is
necessary to cover state costs due to decreased
investment amounts and lower earnings.
15. Mandate Redetermination . Establishes a process for the
Commission on State Mandates to redetermine a mandate in
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the case of a relevant change in state law, court
decision, or ballot proposition. This bill is
responsive to issues raised by a 2009 Third Appellate
District Court ruling in California School Boards
Association v. State of California where the court found
the Legislature's practice of referring mandates back to
the Commission for redetermination was unconstitutional.
This bill establishes a constitutional process for
mandate redetermination.
16. Automated Collection Enhancement System (ACES)
Improvements . Authorizes the Employment Development
Department (EDD) to collect penalties and back-wages
that are due to the Department of Industrial Relations
(DIR) (which are currently collected by the Franchise
Tax Board) and eliminates the requirement that employers
file an annual contribution reconciliation form and
instead modifies the quarterly contribution return of
taxable wage information filed by all employers to
instead reconcile taxes paid with taxes due each
quarter. The latter change operationalizes a key
component of the ACES project; i.e., the ability to
establish non-audit related liabilities prior to
year-end reconciliation. The ACES project, when it
comes on-line in January 2011, will provide a fully
integrated and automated tax processing solution
utilizing state-of-the-art employer tax collection,
storage, audit and account management, and data
retrieval technologies.
17. Clean-up Related to Public Works Compliance Monitoring .
Provides technical clean-up to SB 9 X2 (Padilla),
Chapter 7, Statutes of 2009-10, Second Extraordinary
Session, including provisions to streamline the
collection of monies due to DIR to reduce state
departmental administrative costs. Chapter 7 overhauled
existing law related to the payment of prevailing wages
and the monitoring and enforcement thereof. In lieu of
monitoring and enforcement by a Labor Compliance
Program, Chapter 7 instead requires awarding agencies to
pay a capped fee, not to exceed 1/4 of one percent of
the bond award, to DIR for compliance monitoring and
enforcement on projects that are subject to the fee.
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18. Eliminate Continuous Appropriation for Apprenticeship
Training Contribution Fund (ATCF) . Eliminates the
continuous appropriation for the ATCF, which has never
been continuously appropriated and because it now
supports the Division of Apprenticeship Standards within
DIR, it is no longer appropriate for the ATCF to have
this authority.
19. Tax Credit Allocation Fee Account Borrowing . Clarifies
that the Tax Credit Allocation Fee Account may be used
by the State Controller for daily cash flow loans to the
General Fund. The average daily balance of this Account
is approximately $4.0 million.
20. Western States Information Network (WSIN) . Makes
technical changes designed to allow the WSIN, a
multi-state criminal justice data sharing technology
system operated by the Department of Justice, to collect
and disseminate state criminal justice information in
light of the reorganization of WSIN to make it a
non-profit entity.
21. Mandates: Local Recreation Background Checks . As an
alternative to the Governor's proposed suspension of
this mandate that requires background screening of
employees or volunteers at locally operated parks,
playgrounds, recreational centers, or beaches used for
recreational purposes, enacts fee authority for local
governments to charge staff or volunteers a fee for the
cost of the background checks. This fee is optional for
local governments, but by having this authority, the
state's obligation to fund this $3.0 million annual cost
is eliminated.
22. Vehicle License Fee (VLF) Trailer Fee Backfill
Elimination . Eliminates the annual General Fund
backfill of $11.9 million to local governments for the
trailer vehicle license fee that was lost when the State
converted from an un-laden weight system to a gross
vehicle weight system for purposes of assessing VLF for
commercial vehicles.
23. CalPERS' Administration of Savings from Federal Early
Retiree Reinsurance Program: Franchise Tax Board (FTB)
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Data Sharing . Authorizes the provision of key data from
the FTB to CalPERS in order for CalPERS to receive
federal funds that have been included in the 2010-11
Budget. CalPERS has been approved by the federal
Department of Health and Human Services to receive
federal reimbursement funds to assist in offsetting the
cost of early retirees and their dependents per the
federal Early Retiree Reinsurance Program. However, for
CalPERS to begin receiving these federal funds on behalf
of their members, CalPERS needs to have social security
numbers for the actual members, their spouses, and their
dependents. For the spouses and dependents of these
members, CalPERS is short approximately 2,500 social
security numbers.
24. Extend Statutory Deadline for Completion of Alternate
Base Period (ABP) Subproject . Provides a five-month
extension of the current statutory deadline of April 3,
2011, to September 3, 2011, for the ABP subproject. The
ABP subproject will implement programming changes to
provide an ABP for individuals who do not monetarily
qualify for a Unemployment Insurance (UI) claim using
the standard/current base period year by allowing
workers to qualify for a UI claim by using an ABP that
is based on the most recent four completed calendar
quarters at the time of filing a claim. The project is
five months behind schedule due to unrelated federal
unemployment insurance benefit extensions that required
the temporary redirection of programming resources away
from the subproject. The statutory deadline was
legislatively-created; a five-month extension will still
allow the ABP subproject to be completed well in advance
of the federal implementation deadline of September
2012.
25. Continued Legislative Oversight of Proposition
11-related Implementation Costs . Requires notification
to JLBC to ensure continued legislative oversight of the
expenditure of the $2.5 million General Fund remaining
from the 2009-10 appropriation, as well as should there
be a new appropriation in 2010-11, for the Citizens
Redistricting Commission, the Secretary of State's
Office, and the Bureau of State Audits, for Proposition
11-related implementation costs.
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26. Indian Gaming Special Distribution Fund (IGSDF) .
Appropriates $30 million on a one-time basis from the
Special Distribution Fund for the purpose of funding
local mitigation grants. Funding for this program has
not been provided in recent years.
27. Department of Justice Reversion Item Related to DNA ID
Fund Shift . Makes a technical change that allows the
state to offset General Fund expenditures in 2009-10 to
account for revenues generated from the increase in DNA
penalty assessment included in AB 3 X8 (Assembly Budget
Committee), Chapter 3, Statutes of 2009-10, Eighth
Extraordinary Session.
28. Mandates: Brown Act . Makes the reimbursable components
of the Brown Act and Open Meeting mandates best
practices to fulfill the requirements of Proposition 59
of 2004. By providing local governments best practices
for meeting constitutional open meeting requirements,
this bill encourages local governments to continue to
post agendas 72 hours in advance of public meetings and
to disclose the contents and actions of closed sessions,
but also saves the state approximately $20 million in
annual General Fund costs for mandate reimbursements.
29. I-Bank Loan Guarantee . Identifies the amount
(approximately $24 million) in the Imperial Irrigation
District (IID) Infrastructure Guarantee Trust Account at
the California Infrastructure and Economic Development
Bank (I-Bank) as meeting the reserve account requirement
for the obligations of the IID for the purposes of
obtaining an I-Bank loan guarantee. The loan guarantee
would enable the IID to issue revenue bonds (in an
amount not to exceed $150 million) for the purposes of
financing water conservation measures necessary to
ensure the parties to the Quantification Settlement
Agreement receive their anticipated share of water from
the Colorado River. Additionally, specifies that the
I-Bank's obligation to pay any loan guarantee benefit is
a limited obligation of the bank, payable solely from
amounts deposited in the IID Infrastructure Guarantee
Trust Account, and neither the faith and credit nor the
taxing power of the State of California is pledged to
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the payment of the principal of, or interest on, the
guarantee.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: Yes
TSM:mw 10/6/10 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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