BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 104| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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 CONTINUED AB 104 Page 2 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 CONTINUED AB 104 Page 3 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 CONTINUED AB 104 Page 4 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 CONTINUED AB 104 Page 5 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 CONTINUED AB 104 Page 6 DLW:mw 3/15/11 Senate Floor Analyses SUPPORT/OPPOSITION: NONE RECEIVED **** END **** CONTINUED