BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 276
                                                                  Page  1

          Date of Hearing:   May 11, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                     AB 276 (Alejo) - As Amended:  April 4, 2011 

          Policy Committee:                              Local 
          GovernmentVote:8-0

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:              No

           SUMMARY  

          This bill increases penalties for local agencies, including 
          specified joint powers agencies, that fail to file their annual 
          financial transaction reports with the State Controller's 
          Officer in a timely manner, and makes other specified changes to 
          local agency financial reporting requirements.  Specifically, 
          this bill:

          1)Requires the State Controller to compile and publish reports 
            of the financial transactions of each joint powers agency 
            (JPA) that issues conduit revenue bonds and is formed pursuant 
            to the Joint Exercise of Powers Act.

          2)Increases fines for an officer of a local agency, including a 
            community redevelopment agencies and a JPA, who fails or 
            refuses to make and file his or her report within 20 days 
            after receipt of a written notice of the failure from the 
            Controller.  The fines depend on the size of the jurisdiction. 
            For example, the bill increases penalties from $1,000 to 
            $2,500, in the case of a local agency with total revenue, in 
            the prior year, of less than $100,000, as reported in the 
            Controller's annual financial reports, with steeper fines for 
            larger jurisdictions.  The bill also increases fines for 
            jurisdictions that miss deadlines for two and three 
            consecutive years. 

          3)Prohibits a community redevelopment agency from using any of 
            the funds in the Low and Moderate Income Housing Fund to fund 
            any forfeiture or fine assessed because of the provision of 
            the bill.









                                                                  AB 276
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          4)Makes other conforming changes by repealing outdated sections 
            of law related to financial reporting of schools, and deletes 
            findings and declarations language related to JPAs that issue 
            conduit revenue bonds.

           FISCAL EFFECT  

          The State Controller's office estimates that there will 
          administrative costs of approximately $30,000 to implement this 
          bill.  

           COMMENTS  

           1)Purpose.   The State Controller's office asserts that currently 
            there is very limited oversight of the activities of JPAs, 
            which provide conduit financing that annually provides 
            billions of dollars of tax-exempt financing to the private 
            sector.  By requiring JPAs to file these financial reports, 
            the Controller's Office will be better able to determine that 
            conduit financing providers are complying with audit, annual 
            financial reporting and other public accountability 
            requirements.

           2)Fines.   According to the sponsor, the State Controller's 
            Office, in some cases local agencies have been content to pay 
            the fines rather than file the required reports.  This bill 
            aims to stop that sort of behavior by increasing penalties to 
            a more meaningful level.  In addition to increasing the amount 
            of fines in existing law, this bill also doubles these fines 
            if the agency fails to submit the report to the SCO for two 
            consecutive years, and triples the fines if the agency fails 
            to report after three consecutive years.  After the third 
            violation, this bill gives the Controller the authority to 
            conduct an independent financial audit report of that agency. 
            The increased penalties apply to cities, counties, special 
            districts, JPAs and community redevelopment agencies.

           3)Background.   Existing law requires the officer of each local 
            agency, who has charge of the financial records of the agency, 
            to furnish to the Controller a report of all the financial 
            transactions of the local agency during the next preceding 
            fiscal year, within 90 days of the close of each fiscal year.  
            "Local agency," for purposes of these financial reports 
            includes any city, county, district, and specified community 
            redevelopment agencies.








                                                                  AB 276
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           Analysis Prepared by  :    Roger Dunstan / APPR. / (916) 319-2081