BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 2515 (Hall) - Indian Gaming
Amended: March 29, 2012 Policy Vote: GO 13-0
Urgency: No Mandate: No
Hearing Date: August 16, 2012
Consultant: Maureen Ortiz
SUSPENSE FILE.
Bill Summary: AB 2515 requires each Indian Gaming Local
Community Benefit Committee in each county in which gaming is
conducted to expand on the information required on the grant
application, and to adopt a Conflict of Interest Code that
complies with the Political Reform Act (PRA).
Fiscal Impact:
Unknown, potentially over $130,000 for reimbursable
mandate. (General)
Appropriations of $9.1 million from the Special
Distribution Fund. (Special)
There are 26 counties that were eligible to receive local
mitigation grants from the Special Distribution Fund. If each
county incurred costs of $5,000 to adopt a Conflict of Interest
Code, one-time reimbursable state costs could be $130,000.
Background: Existing law establishes the Indian Gaming Special
Distribution Fund (SDF) for receipt of revenue contributions
made by tribal governments pursuant to the terms of the 1999
model Tribal-State Gaming Compacts. The Legislature is
authorized to appropriate money from the SDF as follows: (1)
Grants for programs designed to address gambling addiction; (2)
Grants for the support of state and local government agencies
impacted by tribal government gaming; (3) Compensation for
regulatory costs incurred by the California Gambling Control
Commission (CGCC) and the Department of Justice (DOJ) in
connection with the implementation and administration of
compacts; (4) Payment of shortfalls that may occur in the Indian
Gaming Revenue Sharing Trust Fund (RSTF); (5) Disbursements for
the purpose of implementing the terms of tribal labor relations
ordinances promulgated in accordance with the terms of the 1999
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compacts; and, (6) Any other purpose specified by law.
Existing law provides that the priority for funding from the SDF
is in the following descending order: (1) To make payments of
any shortfalls that may occur in the RSTF; (2) Grants for
programs designed to address gambling addiction; (3)
Compensation to the CGCC and DOJ for regulatory functions that
directly relate to Indian gaming; and, (4) Grants for the
support of local government agencies impacted by tribal gaming.
Existing law 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.
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.
Conflict of Interest Code : Existing law specifies that every
agency promulgate and adopt a Conflict of Interest Code which
will have the force of law and any violation is deemed a
violation of state law. Such a "code" shall require that each
designated employee file statements disclosing reportable
investments, business positions, interests in real property and
income. It also sets forth specific circumstances under which
designated employees or categories of designated employees must
disqualify themselves from making, participating in the making,
or using their official position to influence the making of any
decision.
Bureau of State Audits (BSA): In July 2007, the BSA released an
audit of the local mitigation grants funded by the SDF. The
auditors reviewed 30 local grants made to six counties totaling
$12.1 million. BSA found five instances totaling $505,000 where
grants were not used to offset the adverse effects of casinos.
In addition, they found 10 successful applications totaling $2.3
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million where the rationale for the grants as stated in the
application appeared to primarily address unrelated needs in the
communities. The auditor also found that in some communities, a
significant amount of the distribution fund money was deposited
in local government accounts that earned interest used to pay
general county operational costs rather than for mitigation
projects.
In February of 2011, BSA conducted a follow-up audit and found
that local benefit committees still had 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.
Proposed Law: AB 2515 will require each grant applicant to
clearly show how the grant will mitigate the impact of the
casino on the grant application. The bill also requires the
Indian Gaming Local Community Benefit Committee to adopt and
approve a Conflict of Interest Code and provides that any
existing conflict of interest code must be reviewed and amended
as necessary to bring it into compliance.
Staff Comments: AB 2515 is intended to address several Bureau
of State Audits (BSA) recommendations stemming from its 2011
review of the SDF and the benefit committees, including more
rigorously reviewing applications for grants that are to be
administered and spent by an entity other than the local
government that applies for the funds, and ensuring that benefit
committees' conflict-of-interest codes comply with the Political
Reform Act by reviewing the act and their codes, and changing
the codes as necessary to meet the act's requirements.
The BSA report revealed that members of benefit committees do
not always make the financial disclosures required by state law.
Although each member is required to file a statement of
economic interest that helps to identify conflicts of interest
that he or she might have, the review found that 12 of the 49
committee members in four of the seven counties whose grants
were reviewed failed to file their statements. Further, two
members filed statements more than a year late. Several factors
contributed to these omissions, including the failure of some
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benefit committees to establish conflict-of-interest codes that
include each of the elements required by state law as well as
the failure of filing officers who collect such forms to follow
guidelines for administering the process.
Proposed amendments: Appropriate $9.1 million from the Special
Distribution Fund for local mitigation grants.