BILL ANALYSIS �
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THIRD READING
Bill No: AB 1042
Author: Hall (D)
Amended: 8/12/13 in Senate
Vote: 21
SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 11-0, 6/25/13
AYES: Wright, Nielsen, Berryhill, Calderon, Cannella, Correa,
De Le�n, Galgiani, Hernandez, Lieu, Padilla
SENATE APPROPRIATIONS COMMITTEE : 7-0, 8/30/13
AYES: De Le�n, Walters, Gaines, Hill, Lara, Padilla, Steinberg
ASSEMBLY FLOOR : 78-0, 5/29/13 - See last page for vote
SUBJECT : Indian Gaming Special Distribution Fund
SOURCE : Author
DIGEST : This bill makes modifications to an existing
provision of law that requires the Department of Finance (DOF),
in consultation with the California Gambling Control Commission
(CGCC) to calculate the total revenue in the Indian Gaming
Special Distribution Fund (SDF) that will be available for the
current budget year for local government agencies impacted by
tribal gaming. Appropriates $13 million from the SDF to the
CGCC to provide grants to local agencies for the 2013-14 fiscal
year.
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ANALYSIS :
Existing law:
1.Establishes the SDF 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.
2.Authorizes the Legislature to appropriate money from the SDF
as follows: (a) grants for programs designed to address
gambling addiction; (b) grants for the support of state and
local government agencies impacted by tribal government
gaming; (c) compensation for regulatory costs incurred by the
CGCC and the Department of Justice (DOJ) in connection with
the implementation and administration of compacts; (d) payment
of shortfalls that may occur in the Indian Gaming Revenue
Sharing Trust Fund (RSTF); (e) disbursements for the purpose
of implementing the terms of tribal labor relations ordinances
promulgated in accordance with the terms of the 1999 Compacts;
and (f) any other purpose specified by law.
3.Provides that the priority for funding from the SDF is in the
following descending order: (a) to make payments of any
shortfalls that may occur in the RSTF; (b) grants for programs
designed to address gambling addiction; (c) compensation to
the CGCC and DOJ for regulatory functions that directly
relates to Indian gaming; and (d) grants for the support of
local government agencies impacted by tribal gaming.
4.Requires the DOF, in consultation with the CGCC, to calculate
the total revenue in the SDF that will be available for the
current budget year for local government agencies impacted by
tribal gaming. The DOF is also required to include this
information in the May Budget revision.
5.Establishes the RSTF in the State Treasury for the receipt and
deposit of monies derived from gaming device license fees paid
by Indian tribes with 1999 compacts. Money in the RSTF is
available to the CGCC, upon appropriation by the Legislature,
for distribution to non-compact tribes, according to the terms
of the compacts.
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6.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.
This bill makes the following modifications to an existing
provision of law requiring the Department of Finance (DOF), in
consultation with the CGCC to calculate the total revenue in the
SDF that will be available for the current budget year for local
government agencies impacted by tribal gaming:
1.Requires DOF to provide a "recommendation" regarding the total
revenue in the SDF and to consider any anticipated revenue
from additional tribal gaming operations.
2.Requires DOF to include the following information within its
recommendation:
A. The total amount of payments projected to be received
into the SDF during the current budget years.
B. The total amount of payments received into the SDF
during the prior budget years.
C. The total number of tribes and the name of each tribe
that make payments into the SDF.
D. The amount of appropriations made each budget year in
the previous ten years from the SDF for local government
agencies impacted by tribal gaming.
1.Requires DOF to include the information, as specified, in the
May budget revision.
2.Appropriates $13 million from the SDF to the CGCC to provide
grants to local agencies for the 2013-14 fiscal year.
Background
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2013-14 Budget Bill . The Budget Bill 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 $6.7 million, which represents
approximately one-quarter of budgeted support expenditures.
Recent compact revisions have increased tribal payments into the
SDF and the RSTF significantly improving 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
have a $16.2 million balance (including a prudent reserve of
$6.7 million), fall below the recommended reserve level in
2014-15, and have a negative fund balance in 2015-16.
SDF contributing Tribes : (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 opens its new tribal
gaming casino in Fall 2013, it will become the 22nd tribe to pay
annually into the SDF.
Comments
According to the author's office, this bill appropriates $13
million from the SDF to provide grants to local agencies for the
purpose of mitigating the adverse impacts of tribal gaming in
defined communities throughout California. This appropriation
represents a reasonable request to provide local mitigation
funds to communities surrounding the 21 tribes who still pay
into the SDF as provided by the existing 1999 Compacts - as well
as other many other communities throughout the state pursuant to
a longstanding statutory allocation formula.
As a function of the original 1999 Tribal-State Compacts, these
local mitigation funds are vital to many local communities and
counties throughout the state, as they support critically
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important allowable purposes such as public safety, wastewater,
fire, and transportation. These funds are even more vital
during difficult budget and economic times and could be used to
stimulate economic activity as a result of the investing the
money in infrastructure mitigation projects.
It is important to note that the SDF is a fund that is distinct
from the General Fund and the monies included in the SDF may not
be used for purposes other than specified tribal gaming-related
purposes - and the allocation of these funds would not have an
impact on the General Fund this year.
Moreover, while there has been concern regarding the
sustainability of the SDF in the past, the SDF's condition is
set to improve tremendously given recent Compacts (Graton,
Rincon, and North Fork) approved by the Legislature, which
direct millions of dollars into the SDF - and similar such
compacts will likely further improve the SDF's condition.
It has been reported that the recently approved Federated
Indians of Graton Rancheria Compact (AB 517, Hall, Chapter 12,
Statutes of 2012) will generate significant revenue to the SDF
and RSTF when the casino opens this year. This Compact requires
payments into the SDF, by the Tribe, of $1.4 million per year
during the first seven years of the Compact and 3% of the net
win from all gaming devices thereafter, to reimburse the state
for the costs of regulating gaming activities and to provide
programs for education and treatment of problem gamblers. The
Compact requires payments by the Tribe to the RSTF to fund the
tribal governmental programs of non-gaming and limited-gaming
tribes. The RSTF provides payments of $1.1 million per year to
non-gaming tribes, which are defined as those tribes that do not
operate more than 350 gaming devices. If the Tribe operates the
maximum number of gaming devices authorized under the compact,
the Tribe would pay the following amounts to fund such programs:
(1) $8.9 million (at 3,000 slots) annually for years 1-7; and
(2) $12.1 million (at 3,000 slots) annually for years 8-20.
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.
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In addition, the recently approved North Fork Rancheria Band of
Mono Indians of California Compact (AB 277, Hall, Chapter 51,
Statutes of 2013) will also generate significant revenues to the
benefit of the RSTF and the SDF. According to the Tribe, it is
projected that the North Fork Rancheria project will contribute
between $250 million and $300 million to the RSTF or Tribal
Nation Grant Fund (TNGF) for nongaming tribes during the life of
the Compact.
Should the gaming facility's financial performance far exceed
reasonable projections, the Tribe, in furtherance of the Tribe's
and the state's goal to ensure that all California tribes
benefit from tribal gaming, has agreed to make additional
payments to the state (RSTF and TNGF) for revenue sharing with
non-gaming tribes and limited-gaming tribes.
The goal of the bill is to ensure solvency within the SDF while
allowing for a reasonable mitigation appropriation each year to
the communities surrounding the 21 tribes who continue to pay
into the SDF, as mandated in the existing 1999 Compacts.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
$13 million appropriation from the SDF to the CGCC (Special
Fund).
Minor, absorbable costs for DOF report (General Fund).
SUPPORT : (Verified 8/30/13)
Barona Band of Mission Indians
Butte County Sheriff, Jerry W. Smith
California State Sheriffs' Association
Cities of Jackson and Sutter Creek
Counties of Santa Barbara and Shasta
League of California Cities
Rural County Representatives of California
San Bernardino County Sheriff, John McMahon
San Diego County Board of Supervisors
San Diego County District Attorney, Bonnie M. Dumanis
San Diego County Sheriff's Department
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Santa Ynez Band of Chumash Indians
Sycuan Band of Kumeyaay Indians
Table Mountain Rancheria
Tribal Alliance of Sovereign Indian Nations
Yolo County Sheriff, E.G. Prieto
ARGUMENTS IN SUPPORT : According to the author's office, this
bill is a follow-up to a California State Auditor's report from
February 2011, titled "The Indian Gaming Special Distribution
Fund" (Report 2010-036). In general, the State Auditor found a
need for increased oversight over the use of the local
mitigation grants that are provided to certain local governments
in order to mitigate the impact of an Indian casino. The
author's office states that this bill is intended to provide
more detail during the budget process so that the Legislature is
better informed to determine the funding level for local
mitigation grants.
The author's office points out that existing law does not
require DOF to provide a specific recommendation as to how the
funds should be spent - it merely requires a calculation of the
total revenue in the SDF. It is the author's belief that the
SDF would be better served if a specific recommendation was put
forth by DOF, in consultation with the CGCC. Such a
recommendation would assist in providing a long term
sustainability of the SDF and a baseline allocation to work
from.
ASSEMBLY FLOOR : 78-0, 5/29/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Ch�vez, Chesbro, Conway,
Cooley, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,
Gorell, Gray, Grove, Hagman, Hall, Harkey, Roger Hern�ndez,
Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal,
Maienschein, Mansoor, Medina, Melendez, Mitchell, Morrell,
Mullin, Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson,
Perea, V. Manuel P�rez, Quirk, Quirk-Silva, Rendon, Salas,
Skinner, Stone, Ting, Wagner, Waldron, Weber, Wieckowski,
Wilk, Williams, Yamada, John A. P�rez
NO VOTE RECORDED: Holden, Vacancy
MW:ej 8/30/13 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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