BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                AB 113
                                                                Page  1

        Date of Hearing:   March 18, 2013

                            ASSEMBLY COMMITTEE ON BUDGET
                               Bob Blumenfield, Chair
               AB 113 ( Budget Committee) - As Amended:  March 14, 2013
         
        SUBJECT  :   Budget Act: Secretary of State Business Entity Filings

         SUMMARY :   Amends the Budget Act of 2012 to increase the  
        appropriation for the Secretary of State by $2 million to address  
        the business filing backlog.  Specifically,  this bill  :  

        1)Appropriates $2 million of business filing fees to the Secretary  
          of State only to be used for overtime pay and temporary staffing  
          to reduce business filing processing times by amending the 2012-13  
          Budget Act.

        2)Requires the Secretary of State to report monthly to the Joint  
          Legislative Budget Committee to ensure progress is being made to  
          decrease business filing return times. 

         FISCAL EFFECT  :  $2 million appropriation from fee revenues.  To the  
        extent additional filings are processed, additional fees will be  
        collected potentially offsetting all, if not more, of this cost.   
        (According to the Secretary of State's Office, an earlier effort to  
        accelerate the business filings process time frame resulted in $5  
        collected for every $1 spent).  Unspent fee revenues ultimately are  
        transferred to the General Fund.

         COMMENTS  :  California businesses are unnecessarily delayed by the  
        Secretary of State's business filings processing time.   
        Historically, the Secretary of State took 20 days to process  
        business filings.  Last year, budget cuts and insufficient staff  
        pushed processing times to an all-time high of 85 days. 

        Currently, there is a backlog of 122,000 documents and a 65 calendar  
        day wait time for Business Entity Documents to be processed.  As a  
        result, businesses cannot hire employees, begin paying entity taxes,  
        or officially open their doors for two months.  This is detrimental  
        to business owners, workers, and the California economy.

        On March 12, 2013, Assembly Budget Subcommittee #4 took action to  
        immediately begin reducing the time for processing business filings  
        and to ultimately bring the processing time frame to within five  
        days.  This bill implements the current year component of that  








                                                                AB 113
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        action by appropriating $2 million to the Secretary of State to  
        begin addressing the business filing backlog through overtime and  
        temporary staffing.  This bill compliments measures that will be  
        included in the 2013-14 Budget Act package, including establishing a  
        statutory five day standard for document processing, strong  
        reporting requirements, and ongoing resources necessary to  
        permanently reduce the time frame to five days by November 2013.

         REGISTERED SUPPORT / OPPOSITION  :   

         Support 
         California Business Roundtable

         Opposition 
         None on file. 
         
        Analysis Prepared by  :    Zoe Adler / BUDGET / (916) 319-2099