BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                AB 1417
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        CONCURRENCE IN SENATE AMENDMENTS
        AB 1417 (Hall)
        As Amended  August 31, 2011
        Majority vote
         
         
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        |ASSEMBLY: |75-0 |(May 26, 2011)  |SENATE: |35-0 |(September 7, 2011)  |
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        |COMMITTEE VOTE:  |16-0 |(September 9, 2011) |RECOMMENDATION: |concur    |
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        Original Committee Reference:    G.O.  

         SUMMARY  :  Appropriates $9.1 million from the Indian Gaming Special 
        Distribution Fund (SDF) to the California Gambling Control 
        Commission (CGCC) to provide grants to local agencies for the 
        purpose of mitigating the adverse impacts of tribal gaming.

         The Senate amendments  delete the Assembly version of the bill, and 
        instead appropriate $9,100,000 from the SDF to the CGCC to provide 
        grants to local agencies, as specified.

         EXISTING LAW  :

        1)Creates the SDF in the State Treasury for the receipt of revenue 
          contributions made by tribal governments pursuant to the terms of 
          the 1999 model Tribal-State Gaming Compacts and authorizes the 
          Legislature to appropriate money from the SDF for the following 
          purposes:  a) grants for programs designed to address gambling 
          addiction; b) grants for the support of state and local 
          government agencies impacted by tribal government gaming; c) 
          compensation for regulatory costs incurred by the CGCC and the 
          Department of Justice (DOJ) in connection with the implementation 
          and administration of compacts; d) payment of shortfalls that may 
          occur in the Indian Gaming Revenue Sharing Trust Fund (RSTF); e) 
          disbursements for the purpose of implementing the terms of tribal 
          labor relations ordinances promulgated in accordance with the 
          terms of the 1999 compacts; and, f) any other purpose specified 
          by law.








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        2)Establishes a method of calculating the distribution of 
          appropriations from the SDF for grants to local government 
          agencies impacted by tribal gaming.  This method includes a 
          requirement that the State Controller, in consultation with the 
          CGCC, deposit funds into County Tribal Casino Accounts and 
          Individual Tribal Casino Accounts based upon a process that takes 
          into consideration whether the county has tribes that pay, or not 
          pay, into the SDF.  The distribution formula "sunsets" on January 
          1, 2021.

        3)3)  Establishes an Indian Gaming Local Community Benefit 
          Committee in each county in which gaming is conducted, specifies 
          the composition and responsibilities of that committee, and 
          requires that committee to make the selection of grants from the 
          casino accounts.  Among other     things, the committee is 
          responsible for establishing all application policies and 
          procedures for grants from the casino accounts.  

        4)Requires the State Auditor to conduct an audit every three years 
          and report its findings to the          Legislature regarding the 
          allocation and use of SDF grant monies.

        5)Creates in the State Treasury the RSTF for the receipt and 
          deposit of moneys derived from gaming device license fees that 
          are paid into the RSTF pursuant to the terms of specified 
          tribal-state gaming compacts for the purpose of making 
          distributions to non-compacted Tribes (e.g., federally-recognized 
          non-gaming and tribes that operate casinos with fewer than 350 
          slot machines).  Revenue in the RSTF is available to CGCC, upon 
          appropriation by the Legislature, for making distributions of 
          $1.1 million annually to non-compact tribes.  

         AS PASSED BY THE ASSEMBLY  , this bill reorganized statutes 
        pertaining to Indian gaming        compacts primarily by moving 
        them to a newly created Title 16.5 on Tribal Gaming in the 
        Government Code.  This bill also made other technical, 
        non-substantive changes.

         FISCAL EFFECT  :  According to the Senate Appropriations Committee, 
        appropriates $9.1 million from the SDF (Special fund) to the CGCC 
        to provide grants to local agencies for the purpose of mitigating 
        the adverse impacts of tribal gaming.

         COMMENTS  :  This bill was substantially amended in the Senate and 








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        the Assembly-approved provisions of this bill were deleted.

         Purpose of the bill  :  According to the author, this bill ensures a 
        statewide appropriation of $9.1 million from the Indian Gaming 
        Special Distribution Fund (SDF) for local mitigation monies for 
        fiscal year 2011-2012.  The author points out, under current law 
        this appropriation is made via a Special Fund (SDF) not the General 
        Fund.

        As a function of the original 1999 tribal-state compacts, these 
        local mitigation funds are important to many local communities and 
        counties throughout the state, as they support critically important 
        allowable purposes such as public safety, fire and transportation.  
        In this lean budgetary year, local governments are depending on 
        this money to mitigate the costs associated with having casinos 
        within their jurisdictions.  

        This $9.1 million appropriation represents a reasonable request to 
        provide local mitigation funds to communities surrounding the 21 
        tribes who still pay into the SDF as provided by the existing 1999 
        compacts - as well as other many other communities throughout the 
        state pursuant the longstanding statutory allocation formula.

         Indian Gaming Special Distribution Fund (SDF)  :  The Indian Gaming 
        Special Distribution Fund (SDF) was created by the 1999 Tribal 
        State Compacts and is currently financed by 21 tribal governments 
        that operated more than 200 gaming devices as of September 1, 1999. 
         The California Government Code specifies that the money deposited 
        into the SDF is available for appropriation by the Legislature to 
        address four needs, prioritized as follows:  1) Supporting the RSTF 
        to ensure that it can distribute $1.1 million annually to each 
        tribe that does not have a compact or that has a compact and 
        operates fewer than 350 devices; 2) Funding problem-gambling 
        prevention programs managed by the Department of Alcohol and Drug 
        Programs; 3) Paying the operating costs for the Indian gaming 
        regulatory functions of the CGCC and the Department of Justice 
        (DOJ); and, 4) Supporting local governments impacted by tribal 
        gambling.
         
        SDF contributing tribes  :  1) Barona Band of Mission Indians; 2) Big 
        Sandy Band of Mono Indians; 3) Big Valley Rancheria; 4) Bishop 
        Paiute Tribe; 5) Cabazon Band of Mission Indians; 6) Cahuilla Band 
        of Indians;  7) Chicken Ranch Rancheria; 8) Colusa Indian 
        Community; 9) Hopland Band of Pomo Indians; 10) Jackson Rancheria 
        Band of Miwuk Indians; 11) Mooretown Rancheria; 12) Redding 








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        Rancheria; 13) Robinson Rancheria; 14) Santa Rosa Rancheria; 15) 
        Santa Ynez Band of Chumash Indians; 16) Soboba Band of Luiseno 
        Indians; 17) Sycuan Band of Kumeyaay Indians; 18) Table Mountain 
        Rancheria; 19) Tule River Indian Tribe; 20) Twenty-Nine Palms Band 
        of Mission Indians; and, 21) Tyme Maidu Tribe Berry Creek 
        Rancheria.

         Local Benefit Committees  :  Existing law establishes Indian Gaming 
        Local Community Benefit Committees with specified local government 
        and tribal representation that are responsible for establishing SDF 
        grant application policies and procedures, determining grant 
        eligibility, and         selecting grants from Individual Tribal 
        Casino Accounts or County Tribal Casino Accounts based on "nexus 
        test criteria" that mainly takes into consideration the 
        geographical proximity of an applicant local government 
        jurisdiction to the tribal casino.  

        All grants from Individual Tribal Casino Accounts are required to 
        be made only upon the affirmative sponsorship of the tribe paying 
        into the SDF from whose Individual Tribal Casino Account grants are 
        available for distribution.  Priority uses for the receipt of grant 
        money from Individual Tribal Casino Accounts are as follows:  law 
        enforcement; fire services; emergency medical services; 
        environmental impacts; water supplies; waste disposal; behavioral; 
        health; planning and adjacent land use; public health; roads; 
        recreation and youth programs; and, childcare programs.  
         
        SDF budget actions  :  Appropriations have been made from the SDF for 
        local community grants in prior years as follows:  $25 million in 
        2003-04; $30 million in 2004-05, 2005-06, 2006-07, 2007-08, 
        2008-09, and 2010-11.  In 2010, SB 856 (Senate Budget and Fiscal 
        Review Committee), appropriated $30 million from the SDF to restore 
        $30 million in funding vetoed by the Governor in the 2007-08 Budget 
        Act.   The bill required the funds be divided amongst the locals 
        based on the amounts paid into the SDF in the 2006-07 fiscal year.

        Government Code Section 12713 provides that the Department of 
        Finance, in consultation with the GCCC, shall calculate the total 
        revenue in the Indian Gaming Special Distribution Fund that will be 
        available for the current budget year for local government agencies 
        impacted by tribal gaming.  The Department of Finance then includes 
        the information in the May Revision of the state budget.  The 
        projected balance of the SDF as of June 30, 2012 is estimated to be 
        $43.7 million and due to the structural imbalance with expenditures 
        exceeding revenues, the fund is expected to have a negative balance 








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        by FY 2013-14.  Therefore, no money was appropriated in the May 
        Revision for local government mitigation grants this year.  In 
        addition, under current law, the General Fund is obligated to cover 
        the RSTF annual shortfall if the SDF cannot.
         
        Bureau of State Audits (BSA)  :   In July 2007, the Bureau of State 
        Audits reported instances where the grant funds provided to local 
        governments to mitigate the effects of gaming were used 
        inappropriately or for entirely unrelated purposes.  

        In February of 2011, BSA conducted a follow-up audit and found that 
        local benefit committees still have trouble complying with the 
        distribution requirements.  The audit found that in 2008-09, of the 
        $30 million appropriated by the Legislature for local mitigation 
        grants, local governments could not provide evidence that $3.2 
        million in grant funding was used to mitigate the impact of a 
        casino.  The auditor further concluded that nearly 25% of the 
        benefit committee members in the seven counties reviewed failed to 
        provide a statement of economic interest.

         Legislative Analyst's concerns  :  The Legislative Analyst Office, in 
        its review of the 2009-10 budget, concluded that local grants have 
        outlived their usefulness due to the major changes in the revenue 
        stream to the SDF.  As a result of several compact renegotiations 
        by the previous administration, many tribes no longer contribute to 
        the SDF.   These tribes instead have separate obligations under 
        their new compacts to enter into enforceable agreements with local 
        jurisdictions to mitigate the effects of their casinos on nearby 
        counties.  It is the LAO's conclusion, therefore, that the current 
        allocation formula is inappropriate and outdated.
                   
        Prior legislation  :  SB 856 (Budget and Fiscal Review Committee), 
        Chapter 719, Statutes of 2010.  Among other things, appropriated 
        $30 million from the SDF to restore funding deleted from the Budget 
        Act of 2007 for grants to mitigate the impact of tribal gaming on 
        local governments. 

        AB 158 (Torrico), Chapter 754, Statutes of 2008.  Enacted several 
        recommendations proposed by the California State Auditor relative 
        to the allocation and uses of proceeds from the SDF. 

        SB 288 (Battin), Chapter 13, Statutes of 2006.  Appropriated $20 
        million from the SDF for grants to local jurisdictions impacted by 
        tribal gaming.  Also made a statement of intent that this 
        appropriation be used for workload associated with specified Indian 








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        gaming compacts.

        SB 621 (Battin), Chapter 858, Statutes of 2003.  Among other 
        things, established, until 1/1/2009, priorities and procedures for 
        specified funding to local governments from the SDF for mitigating 
        impacts from tribal casinos.  Also, appropriated $25 million from 
        the SDF to mitigate the impact of tribal gaming on local 
        governments.  

        AB 673 (J. Horton), Chapter 210, Statutes of 2003.  Specified that 
        money in the SDF may be used to make payment of shortfalls that may 
        occur in the RSTF and specified that payment for those shortfalls 
        in the RSTF shall be the priority use of moneys in the SDF.  Also, 
        established a          mechanism by which funds may be transferred 
        from the SDF to the RSTF pursuant to specified provisions of the 
        tribal-state compacts and appropriated the sum of $50,568,787.99 
        for the purpose of making payments to eligible Indian tribes for 
        the preceding fiscal year.  In addition, established and provided 
        for the funding of the Office of Problem and Pathological Gambling 
        in the Department of Alcohol and Drug Programs. 

        AB 1385 (Battin), Chapter 874, Statutes of 1999.  Among other 
        things, ratified 57 tribal-state gaming compacts and created two 
        special funds in the State Treasury (SDF and RSTF) for the deposit 
        of revenues derived from Indian gaming and gaming device licensing 
        fees.  Also, designated the Governor as the state officer 
        responsible for negotiating and executing compacts between the 
        State and federally recognized Indian tribes located in the State.  



         Analysis Prepared by  :    Eric Johnson / G. O. / (916) 319-2531

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