BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                   AB 104|
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                                 THIRD READING


          Bill No:  AB 104
          Author:   Assembly Budget Committee 
          Amended:  3/14/11 in Senate 
          Vote:     27 - Urgency

           
          PRIOR VOTES NOT RELEVANT


           SUBJECT  :    Budget Act of 2011:  General Government 
          provisions

           SOURCE  :     Author


           DIGEST  :    This bill implements the General Government 
          portion of the 2011 State Budget.  This bill makes changes 
          to the law concerning the Accountancy Fund, Small Business 
          Loan Guarantee Program, Government Claims notification, the 
          Oil Spill Response Trust Fund, tribal gaming, Williamson 
          Act Open Space Subvention, budgetary loans, the CalPERS 
          Health Benefit Program, federal extended unemployment 
          benefits, and the Consolidated Work Program Fund.  It also 
          adopts uncodified language to authorize the Director of the 
          Department of Finance to reduce appropriations in 2010-11 
          to reflect a reduction in building rental rates charged to 
          the Department of General Services.

           Senate Floor Amendments  of 3/14/11 delete the prior version 
          of the bill and insert the current provisions concerning 
          general government.

           ANALYSIS  :    This is the General Government Budget Trailer 
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          Bill.  It contains provisions necessary to implement the 
          2011-12 budget, including these key changes:

          1.  Accountancy Fund  .  Deletes the statutory provision that 
             requires the California Board of Accountancy to set 
             renewal fee levels so that the reserve balance in the 
             Board's contingent fund is equal to approximately nine 
             months of annual authorized expenditures.  Outstanding 
             loans to the General Fund can be repaid as necessary for 
             Board operations, so a lesser reserve can be maintained 
             without a need to increase fees.  

          2.  Small Business Loan Guarantee Program  .  Requires that 
             upon notification that the State has received an award 
             from the federal government to support the Small 
             Business Loan Guarantee Program, $20 million in General 
             Fund dollars that support that program be reverted to 
             the General Fund, and that the program prioritizes the 
             use of federal funds over State funds as allowable.  A 
             federal grant totaling $84.4 million is anticipated 
             under the federal Small Business Jobs Act of 2010 (15 
             U.S.C. Sec. 631 et seq.).  The $20 million General Fund 
             to be reverted was provided to the program by AB 1632, 
             which was a budget trailer bill to the 2010 Budget Act.  
             That legislation was enacted prior to notification from 
             the federal government that an $84.4 million grant that 
             is available for the same purpose.  The program provides 
             loan guarantees to assist small business obtain loans 
             from private lenders.

          3.  Government Claims - Legislative Notification  .  Requires 
             that the Victims Compensation and Government Claims 
             Board notify the Legislature prior to approval of any 
             prior-year claim in excess of $500,000 that is requested 
             to be paid from a current-year appropriation.

          4.  Oil Spill Response Trust Fund  .   Adds a provision that 
             specifies a loan to the General Fund that reduces the 
             balance of the Oil Spill Response Trust Fund below a 
             statutory threshold, does not obligate the administrator 
             to resume collection of the oil spill response fee.  
             Outstanding loans to the General Fund can be repaid as 
             necessary to repay the Oil Spill Response Trust Fund, so 
             a lesser reserve can be maintained without a need to 

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             resume fees.

          5.  Special Distribution Fund - Reporting Extension  .  
             Includes language providing an extension of the time 
             counties have to submit a statutorily mandated report in 
             order to ensure that those counties remain eligible to 
             receive funding authorized from the Indian Gaming 
             Special Distribution Funds (SDF) for 2010-11.  The 
             extension would provide counties until the end of the 
             current fiscal year to submit their reports.

          6.  Williamson Act Open Space Subventions  .  Deletes the 
             statutory appropriation of $10 million from the General 
             Fund for Williamson Act open space subventions to 
             counties in 2010-11.  Repeals the alternative Williamson 
             Act program which was added by AB 2530, and modified by 
             SB 863, both Statutes of 2010.  Under the alternative 
             program, counties can enter into shorter contracts, nine 
             years instead of 10, or 19 years instead of 20, as 
             applicable.  With the shorter contracts, the property 
             tax loss to the county is reduced.

          7.  Budgetary Loans - Conditions and Reporting .  Adds 
             more-recent budgetary loans to the language in statute 
             that defines conditions and reporting for budgetary 
             loans made in 2001-02, 2002-03, and 2003-04.  The loans 
             primarily involve special fund transfers to the General 
             Fund.  Among the conditions are a requirement that the 
             loans be repaid if the originating fund is in need of 
             repayment, and the requirement that the loans be repaid 
             if no longer needed for the receiving fund.  Broadens 
             the existing reporting language to include all 
             outstanding budgetary loans, and not just those from 
             2001-02, 2002-03, and 2003-04, and clarifies that the 
             August 1 and February1 reports on outstanding loans be 
             based on updated information.

          8.  CalPERS Health Benefit Program Savings  .  Beginning in 
             2012-13, requires the California Public Employees' 
             Retirement System (CalPERS) to negotiate with health 
             benefit plans to add a core health care plan option to 
             the existing portfolio of health plans and/or implement 
             other measures to achieve ongoing savings in the Health 
             Benefit Program beginning in 2012-13.   This statutory 

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             change is necessary to implement Control Section 4.21 in 
             the 2011 Budget Act which requires CalPERS to achieve 
             savings totaling $80 million GF and $35.7 million other 
             funds in the 2011-12 Health Benefits Program and, 
             beginning in 2012-13, achieve an equivalent amount of 
             ongoing savings in the Health Benefits Program based on 
             the core health care option and/or other cost saving 
             measures.  

          9.  Tribal Gaming Revenue Shift  .  Directs $101 million 
             annually in 2011-12 through 2015-16 to the General Fund 
             from a specified portion of tribal-gaming revenues.  
             Similar shifts have been approved in the annual budgets 
             since 2008-09.  Existing law directs these tribal-gaming 
             revenues to transportation special funds as an 
             alternative repayment method for loans from 
             transportation special funds to the General Fund in 
             2001-02 and 2002-03.  The existing statute associated 
             with this revenue includes provisions that the stream of 
             revenue could be securitized for early repayment of the 
             transportation-fund loans; however, litigation and other 
             factors delayed such securitization and it is no longer 
             being pursued.

          10.  Three-Year Look Back Trigger for Federal Extended 
             Unemployment Benefits  .  Adopts in state statute the 
             federal option of a three-year look-back related to 
             determination of state eligibility for FedEd extended 
             unemployment benefits (FedEd), a federally-funded 
             emergency benefits program for states experiencing high 
             unemployment such as California.  In providing the 
             three-year look-back option to states, the federal 
             government acknowledged that while many states' 
             unemployment rates are no longer increasing, their 
             unemployment rates are also not decreasing markedly.  
             Prior to December 2010, the look-back compared current 
             unemployment rates to rates in the previous two years.  
             However, in December 2010, Congress adopted legislation 
             that, through the end of 2011, allows states to make 
             determinations of whether there is a FedEd "on" or "off" 
             indicator by comparing current unemployment rates to the 
             rates for the corresponding period in the three 
             preceding years.  This modification will enable many 
             states experiencing sustained levels of high 

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             unemployment, including California, to remain on FedEd 
             longer thereby providing an additional cushion for 
             unemployment insurance (UI) claimants.  Unless the 
             three-year look-back modification is authorized, it is 
             estimated that California will trigger "off" FedEd in 
             spring 2011.  The impact of such an action on UI 
             claimants would be significant; the Employment 
             Development Department estimates that between 263,000 
             and 500,000 claimants would potentially be impacted with 
             a loss of their FedEd benefits.  This figure does not 
             include the claimants currently collecting regular 
             California UI benefits who could be potentially eligible 
             to file a FedEd extension if California's trigger 
             remained "on" through the end of 2011.  A rough estimate 
             of the benefit to unemployed Californians of adopting 
             the three-year look-back totals between $1.0 billion to 
             $2.6 billion.  The range is large because UI claimants 
             could be anywhere within the benefit tiers and therefore 
             does not clearly equate to 20 additional weeks of 
             benefits.

          11.  Reestablishes Consolidated Work Program Fund in Statute  . 
              The Consolidated Work Program Fund was inadvertently 
             eliminated in 2006 with the enactment of Chapter 630, 
             Statutes of 2006.  The Consolidated Work Program Fund is 
             necessary to administer the federal Workforce Investment 
             Act funds the state annually receives.

          12.  2010-11 Department of General Services' (DGS) Building 
             Rental Rate Reductions  .  Adopts uncodified language to 
             authorize the Director of the Department of Finance to 
             reduce appropriations in 2010-11 to reflect a reduction 
             in building rental rates (from $1.80/square foot to 
             $1.40/square foot) charged to departments by DGS.  The 
             2011-12 building rental rate reduction (from 
             $1.40/square foot to $1.12/square foot) savings will be 
             captured via Control Section 3.91 contained in the 2011 
             Budget Act.  The estimated savings in 2010-11 are $26.7 
             million (all funds); the estimated savings in 2011-12 
             are $31.7 million (all funds).

           FISCAL EFFECT  :    Appropriation:  Yes   Fiscal Com.:  Yes   
          Local:  No


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          DLW:mw  3/15/11   Senate Floor Analyses 

                       SUPPORT/OPPOSITION:  NONE RECEIVED

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