BILL ANALYSIS                                                                                                                                                                                                    Ó





                         SENATE COMMITTEE ON ELECTIONS 
                         AND CONSTITUTIONAL AMENDMENTS
                           Senator Lou Correa, Chair


          BILL NO:   AB 732              HEARING DATE:6/21/11
          AUTHOR:    BUCHANAN            ANALYSIS BY:Frances Tibon 
          Estoista
          AMENDED:   5/10/11
          FISCAL:    YES
          
                                     SUBJECT

           Bond measures: ballot pamphlet: Legislative Analyst: table

                                   DESCRIPTION  
          
           Existing law  establishes a process for the Attorney General 
          (AG) to prepare a title and summary for each state measure. 
            Requires  the ballot title and summary to include a summary 
          of the Legislative Analyst's estimate of the net state and 
          local government fiscal impact.

           Existing law  requires the Legislative Analyst to prepare an 
          impartial analysis of each proposed measure describing the 
          measure and including a fiscal analysis of the measure 
          showing the amount of any increase or decrease in revenue 
          or cost to state or local government.   Provides  that if a 
          proposed measure is estimated to result in increased costs 
          to the state, the estimate of those costs shall be set out 
          in boldface print in the ballot pamphlet.

           Existing law  requires the statewide ballot pamphlet to 
          include information, in a specific order, for each state 
          measure to be voted upon including, but not limited to:

          1.Upon the top portion of the first page, and not exceeding 
            one-third of the page, shall appear:

               a)     Identification of the measure by number and 
                 title; and,
               b)     The official summary prepared by the AG.
               c)     The total number of votes cast for and against 
                 the measure in both the State Senate and Assembly, 
                 if the measure was passed by the Legislature.










          1.Beginning at the top of the right page, the analysis 
            prepared by the Legislative Analyst.

          2.Arguments for and against the measure.


           This bill  requires the summary prepared by the AG for state 
          bond measures that are submitted to the voters for their 
          approval or rejection to include an explanatory table 
          summarizing the Legislative Analyst's estimate of the net 
          state and local government fiscal impact.

           This bill  provides that the space used for the explanatory 
          table in the title and summary prepared by the AG not be 
          included  when measuring  the amount of space provided for 
          the summary, thus keeping summary information within the 
          one-third of the page restriction.

                                    BACKGROUND  
          
           Say It Again  :  Current law already requires that the fiscal 
          impact of a proposed measure be analyzed and included in 
          both the circulating title and summary and in the analysis 
          printed in the state ballot pamphlet.  In addition, 
          existing law requires the state ballot pamphlet, for each 
          statewide election at which state bond measures will be 
          submitted to the voters, to include a discussion prepared 
          by the Legislative Analyst of the state's current bonded 
          indebtedness situation.

                                     COMMENTS  
          
             1.  According to the author  :  AB 732 attempts to decrease 
              California's future debt obligations by improving voter 
              clarity on bond measures and their future fiscal 
              implications.  The bill would require the Legislative 
              Analyst's Office to prepare a simple and easy to 
              understand graph, chart, or report card for each 
              statewide bond measure, illustrating the information 
              discussed in the Overview of State Bond Debt section of 
              the Voter Information Guide.  AB 732 stems from a 
              recommendation from the Little Hoover Commission's 2009 
              report, Bond Spending: Expanding and Enhancing 
              Oversight.

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            Nearly two-thirds of California voters know very little 
              or nothing about how the state pays for bond measures.  
              This makes it very difficult for a majority of voters 
              to know exactly what they are authorizing at the ballot 
              box and how it contributes to the state's General Fund 
              obligations.

            In addition to voters' limited knowledge on bond 
              financing, many organizations mislead voters to think 
              that enormous projects won't cost taxpayers.  As more 
              general obligation bond measures are enacted, the debt 
              service on bonds consumes a larger portion of the 
              General Fund. General obligation bond measures 
              typically do not have a dedicated revenue source 
              outside the General Fund.  Ads promoting the bonds 
              often tout that a measure can be implemented without 
              new taxes.  While these bond measures may not 
              specifically require new taxes, they are not without 
              cost. In the current budget climate, money to pay for a 
              bond measure may displace money for another program 
              that derives its funds from the General Fund.

            As our state's deficit continues to grow and the 
              Legislature is being forced to cut funding to school 
              districts and public safety organizations, Californians 
              must do something to control future debt obligations.  
              In 2007, the Legislative Analyst's Office reported that 
              General Fund debt payments for already authorized 
              general obligation and lease-revenue bonds for 
              infrastructure-related purposes will total about $4.7 
              billion in 2007-08, rising to a peak of $7.5 billion in 
              2014-15.  Unless the state does more to educate voters 
              on the impacts of ballot-box budgeting, California's 
              debt obligations could take up an even greater portion 
              of the General Fund and fiscally impact the state for 
              years to come.

             2.  Little Hoover Report  :  In 2009, the Little Hoover 
              Commission (LHC) released a report entitled, "Bond 
              Spending:  Expanding and Enhancing Oversight."  In the 
              report, the LHC made several recommendations to the 
              Legislature aimed at increasing the oversight and 
              accountability of bond measures that have already 
              passed, as well as increasing the clarity and 
              transparency for bond measures that will be proposed to 
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              voters in the future.  One of the recommendations 
              included in the report was for the state to establish 
              fundamental criteria for ballot measures and to have 
              the criteria evaluated and included as a simple and 
              easy-to-understand report card in the voter guide for 
              all bond measures placed on the ballot.  In the 
              discussion for this recommendation, the LHC described a 
              comprehensive report that reflected established 
              standards or fundamental criteria for bond measures.  
              However, given that the Legislative Analyst is required 
              by law to be impartial in their analysis, and that 
              creation of a report card based on established 
              standards would create a new mandate on the Legislative 
              Analyst, this bill requires that the fiscal summary, 
              already required under current law, be displayed in a 
              table form.

             3.  Bond Spending Only  :  The requirement in this bill is 
              only applicable to state bond measures, and will not 
              change the title and summary for measures that do not 
              include bonds.  This is likely because, as noted by the 
              author, the bill is based on the LHC report which 
              focused solely on bonds.  The LHC report noted that, 
              "As Californians cast their ballots for bond measures, 
              they set priorities that tie the hands of lawmakers 
              when it comes time to trim the budget."  However, since 
              the implementation of the initiative process, there 
              have been a number of approved non-bond measures which 
              have required a certain portion of General Fund 
              spending be dedicated to a specific purpose.  These 
              measures also restrict the Legislature's ability to 
              alter the relative shares of General Fund spending 
              provided to program areas in any given year.  For 
              instance, Proposition 98 of 1988, provided for a 
              minimum level of total spending (General Fund and local 
              property taxes combined) on K-14 education in any given 
              year.  Proposition 98 accounts for over 40 percent of 
              annual state General Fund spending.  Proposition 49 of 
              2002, requires that the state spend a certain amount on 
              after-school programs, which exceeded $540 million in 
              the 2009-10 Fiscal Year.

            Given that the money to repay state general obligation 
              bonds comes from the General Fund, this committee and 
              the author may wish to consider if the information 
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              required by this bill would be beneficial for all 
              statewide measures with a fiscal impact, rather than 
              focusing on bond measures only.



             4.  Related and Previous Legislation  :  AB 1021 (Gordon) 
              requires additional fiscal information to be included 
              in the circulating title and summary prepared by the AG 
              and the summary statements prepared by the Legislative 
              Analyst for a proposed initiative measure.  AB 1021 is 
              also on today's agenda.
                
                                    PRIOR ACTION
           
          Assembly Elections and Redistricting Committee:  7-0
          Assembly Appropriations Committee:       17-0
          Assembly Floor:                          75-0
                                         
                                   POSITIONS  

          Sponsor: Author

          Support: CalTax 
                   Little Hoover Commission
                   State Controller
                   
          Oppose:  None received
















          AB 732 (BUCHANAN)                                      Page 
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