BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 1042 (Hall) - Indian Gaming Special Distribution Fund
Amended: August 12, 2013 Policy Vote: GO 11-0
Urgency: No Mandate: No
Hearing Date: August 19, 2013
Consultant: Maureen Ortiz
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 1042 requires the Department of Finance (DOF)
to include anticipated revenues from Indian gaming when
developing its annual Notification of Available Fund Balance for
the Indian Gaming Special Distribution Fund, and to make
recommendations in the May Revision of money that will be
available for local government mitigation grants. Further, AB
1042 appropriates $13 million from the Indian Gaming Special
Distribution Fund (SDF) to the California Gambling Control
Commission (CGCC) for the 2013-14 fiscal year to provide grants
to local agencies intended to offset the impacts of tribal
gaming.
Fiscal Impact:
$13 million appropriation from the SDF to the CGCC (Special
Fund)
Minor, absorbable costs for DOF report (General Fund)
Background: The Indian Gaming Special Distribution Fund is
established 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. Existing law
requires the Department of Finance to calculate the total
revenue in the Indian Gaming Special Distribution Fund (SDF)
that will be available in the current budget year for local
government agencies impacted by tribal gaming. Released in May
of each year, the department prepares a fund condition statement
that shows revenue and expenditure projections of the SDF
through the next eight fiscal years.
Existing law authorizes the Legislature to appropriate money
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from the SDF for the following purposes: (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 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
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 relates to Indian gaming; and, (4) Grants for the
support of local government agencies impacted by tribal gaming.
Existing law establishes the Revenue Sharing Trust Fund in the
State Treasury for the receipt and deposit of moneys derived
from gaming device license fees paid by Indian tribes with 1999
compacts. Money in that fund is available to the CGCC, upon
appropriation by the Legislature, for distribution of quarterly
payments in the amount of $275,000 to each non-gaming or limited
gaming tribe.
Existing law requires the CGCC to annually determine the
aggregate amount necessary to make up the difference between
$1.1 million and the actual amount paid to each eligible
recipient Indian tribe during the Fiscal Year from the RSTF.
The CGCC must report the amount of the deficiency to the Budget
Committees in each house of the Legislature. Upon appropriation
by the Legislature, the CGCC shall make payments to eligible
recipient tribes, as specified.
The 2013-14 Budget Act does not include funding for mitigation
grants to local government agencies impacted by tribal gaming.
According to DOF, the SDF condition statement reflects a reserve
of approximately $6.7 million, which represents approximately
one-quarter of budgeted support expenditures. Recent compact
revisions will result in increased tribal payments into the SDF
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and the RSTF that is expected to significantly improve the
long-term solvency of the SDF. Unfortunately, the structural
imbalance persists. According to DOF, at the end of 2013-14,
the SDF is projected to: (a) have a $16.2 million balance
(including a prudent reserve of $6.7 million), (b) fall below
the recommended reserve level in 2014-15, and (c) have a
negative fund balance in 2015-16.
The following tribes make annual contributions to the Special
Distribution Fund: (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 Me-Wuk Indians; (11) Mooretown
Rancheria; (12) Redding 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. When the
Federated Indians of Graton Rancheria open its new tribal
gaming casino later this fall, it will become the 22nd tribe to
pay annually into the SDF.
Prior SDF Budget Actions : The Budget Act of 2003-04
appropriated $25 million from the SDF to local jurisdictions
impacted by Indian gaming. The Budget Acts of 2004-05, 2005-06,
and 2006-07, each appropriated $30 million from the SDF to local
governments impacted by Indian gaming. The Budget Act of 2007-08
included a $30 million appropriation from the SDF to local
governments impacted by Indian gaming; however, the Governor
blue-penciled that appropriation. In 2008, AB 158 - Chapter
754, Statutes of 2008, appropriated $30 million from the SDF to
counties for mitigating Indian casino impacts. In 2010, SB 856
- Chapter 719, Statutes of 2010, appropriated $30 million from
the SDF to restore $30 million in funding vetoed by the Governor
in the 2007-08 Budget Act. The legislation required the funds
to be divided among the counties based on the amounts paid into
the SDF in the 2006-07 fiscal year. In 2011, AB 1417 - Chapter
736, Statutes of 2011, appropriated $9.1 million from the SDF to
the CGCC to provide grants to local agencies for the purpose of
mitigating the adverse impacts of tribal gaming. Lastly, AB
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2515 (Hall, Chapter 704, Statutes of 2012) appropriated $9.1
million for grants to local agencies.
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.
Proposed Law: AB 1042 requires the DOF to provide a
recommendation on the amount of money available for local
mitigation grants, and to include the following information in
the May Revision annually:
a) The total amount of payments projected to be received into
the SDF during the current budget year, and the amounts received
during the previous budget year.
b) The total number of tribes that make payments into the SDF
and the names of those tribes.
c) The amount of appropriations made each budget year in the
previous 10 years from the SDF to local government agencies.
Additionally, AB 1042 appropriates $13 million from the Special
Distribution Fund to the California Gambling Control Commission
to provide grants to local agencies in order to mitigate the
effects of tribal gaming.
Staff Comments: The fund condition statement dated May 16, 2013
prepared by the Department of Finance showing the available fund
balance for the Indian Gaming Special Distribution Fund
indicates that the SDF will have a proposed budget balance of
$9.5 million for 2013-14, a deficit in 2014-15 of $3 million, a
deficit in 2015-16 of $15 million, increasing to a deficit of
$78 million in FY 2020-21. These figures include a reserve of
approximately $6.7 million annually.
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Federated Indians of Graton Rancheria negotiated a compact with
the State of California on March 27, 2012 and is expected to
open a new casino in Rohnert Park later this fall. The terms of
that compact include quarterly payments to the Special
Distribution Fund totaling $1.4 million annually for the first
seven years. Graton is authorized to operate up to 3,000 gaming
devices and according to the terms of the compact will make the
following payments prior to making the $1.4 million payment to
the SDF: a) the tribe will make payments to tribal members
starting at $11.6 million during the first year, increasing to
$27.5 million by Year 7; and b) payments for the debt incurred
for predevelopment costs of $17 million during the first year,
decreasing to $2.9 million at Year 7.
In addition to the above noted payments, Graton Rancheria will
pay into the Revenue Sharing Trust Fund (RSTF) computed on a
formula that is based on the number of gaming devices in
operation and a dollar amount per gaming device. Once the
casino is at full capacity at 3,000 devices, the payment to the
RSTF will total approximately $13 million annually. The tribe
will also pay into the RSTF an amount based on net win. Since
the casino has not yet opened, it is not known exactly what
those payments to each of the funds will total, however it is
expected that the Graton Casino will be a huge success.
When Graton begins paying into the RSTF, the amount of funds
that will need to be transferred from the SDF to backfill
shortfalls in the RSTF will decrease substantially and will
result in a larger fund balance available in the SDF that can be
distributed for purposes deemed by the Legislature such as those
being used for grants to local communities to mitigate the
impact of tribal gaming.
Other compact negotiations including a recent agreement to allow
the Rincon Band of Luise�o Indians to operate an additional 250
gaming devices will result in increased revenue to the Special
Distribution Fund in future years.