BILL ANALYSIS �
AB 554
Page 1
Date of Hearing: May 1, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 554 (Mullin) - As Amended: April 9, 2013
Policy Committee:
AccountabilityVote:13-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill changes accounting procedures for the Secretary of
State's (SOS's) Business Fees Fund and establishes a new account
for deposit of a portion of funds from the existing corporate
disclosure fee. Specifically, this bill:
1)Deposits revenues from expedited business fees filings into
the Business Fees Fund rather than accounting for these
revenues as reimbursements to the SOS.
2)Deposits one-half of the existing $5 disclosure fee into the
newly created Business Programs Modernization Fund.
FISCAL EFFECT
Minor absorbable costs to the SOS.
COMMENTS
1)Background . The SOS's Business Programs Division processes
business filings and is authorized to collect fees, including
those for expedited filings. Businesses have the option of
paying expedited filing fees (ranging from $350 to $750) so
their documents are processed more quickly. According to the
SOS, budget cuts resulted in the processing time for business
filings increasing from less than 15 days in May 2009 to more
than 120 days in January 2012. The SOS indicates that its
business filing system is largely paper based and needs to be
modernized. Business filing fees generate more than $70
million per year and plans to use a portion of these revenues
to implement its California Business Connect project, which
AB 554
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will automate the paper-based filing process and allow for
more extensive online filings and records requests.
2)Accounting Change . Business filing fees that undergo standard
processing are currently accounted for differently than the
filing fees for expedited filings. Standard process fees are
paid to SOS's Business Fees Fund, while expedited filing fees
are classified as reimbursements to the SOS, which the SOS
contends obscures the presentation of the total amount of
business fees collected. Depositing all business fees to the
same fund would more accurately show how much businesses are
paying for filings.
3)New Fund . Current law imposes a $5 annual disclosure fee on
corporations for filing their articles of incorporation. Half
of this fee is deposited in the Victims of Corporate Fraud
Compensation Fund and half is used for the SOS's
administrative costs, including maintaining an online business
database. This rather limited online database contains a
search function allowing users to view basic business
information like the name, address, and status of entities.
Under the bill, this half of the fee would instead be
deposited to the Business Programs Modernization Fund, and,
upon appropriation by the Legislature, could be used for
modernizing the filing system, including the further
development of the online database. According to SOS, the
approximate $1.6 million per year that would be deposited in
the new fund would create a dependable stream of funding to
assist with the California Business Connect modernization
project and to prevent the business filing systems from again
becoming antiquated.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081