BILL ANALYSIS Ó
AB 1035
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Date of Hearing: May 1, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 1035 (Muratsuchi) - As Amended: April 4, 2013
Policy Committee: Local
GovernmentVote:8-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill increases forfeiture amounts for local agencies that
do not file their annual financial transaction reports with the
State Controller's Office in a timely manner and requires the
Controller to conduct an independent financial audit report for
an agency that does not file for three consecutive years.
Specifically, this bill:
1)Increases the forfeiture amounts for an officer of a local
agency, except a joint powers agency (JPA) that issues conduit
revenue bonds, who does not file within 20 days after receipt
of a written notice from the Controller.
a) Doubles the existing penalties of $1,000 to $10,000, the
penalties varying depending on the annual revenues of the
local government.
b) Requires, if a local agency does not file its report for
two consecutive years, the specified fines shall be
doubled.
c) Requires, if a local agency does not file its report for
three consecutive years, the specified fines shall be
tripled. In these cases, the Controller must also conduct
or cause to be conducted an independent financial audit
report, as specified.
1)Requires that the agency reimburse the Controller for the cost
of complying with the provisions of the bill.
2)Provides that an agency that makes a forfeiture or payment
AB 1035
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pursuant to the provisions of the bill shall still file the
financial transactions report.
FISCAL EFFECT
Negligible fiscal impact.
COMMENTS
1)Purpose . According to the author, AB 1035 helps ensure that
local agencies properly manage their finances and protect
taxpayer dollars. The author argues this bill holds local
agencies accountable for failing to report financial records
to the State Controller, and applies the same penalty
structure to all local agencies who fail to file their annual
financial transactions reports with the State Controller.
2)Support . The California Association of Firefighters, the
sponsor of the bill, argues it is important to maintain an
accurate picture of a local agency's fiscal health to better
inform budget decisions, especially given the difficult budget
decisions facing local governments. The sponsor argues local
agencies who do not file a financial transaction report or
files late, compromises the local agency's fiscal stability.
They also note that a troubled agency may slip into financial
crisis without the aid of the State Controller or other audit
experts to examine the financial condition and help the agency
manage the ongoing fiscal crisis.
3)Background . Existing law requires the officer of each local
agency, who has charge of the financial records of the agency,
to furnish to the Controller a report of all the financial
transactions of the local agency within 90 days after the
close of each fiscal year. "Local agency," for purposes of
these financial reports, includes any cities, counties,
special districts and specified community redevelopment
agencies. Under current law, the State Controller's Office
can assess penalties of up to $5,000 for local governmental
agencies that file late annual financial transactions reports
or agencies who fail to file the report at all. The
Controller's Office maintains a list of those that do not file
and those that file late, including cities and special
districts. Eleven local agencies failed to file their annual
transactions reports between 2008 and 2011 and eighteen local
agencies failed to file for fiscal year 2011-12, according to
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data supplied by the Controller's Office.
4)Related legislation . AB 941 (Rendon), among its other
provisions, contains very similar language as AB 1035.
5)Previous legislation . This bill is substantially similar to
AB 276 (Alejo, 2011), which was subsequently amended to a
different subject in the Senate.
6)There is no registered opposition to this bill.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081