BILL ANALYSIS �
AB 1042
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1042 (Hall)
As Amended August 12, 2013
Majority vote
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|ASSEMBLY: |78-0 |(May 29, 2013) |SENATE: |39-0 |(September 9, |
| | | | | |2013) |
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Original Committee Reference: G.O.
SUMMARY : 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. In addition, the bill appropriates $13 million from the
SDF to the CGCC to provide grants to local agencies for the
2013-14 fiscal year.
The Senate amendments appropriates $13 million from the SDF to
the CGCC to provide grants to local agencies for the 2013-14
fiscal year.
EXISTING LAW :
1)Creates 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)Provides that DOF, in consultation with the CGCC, shall
calculate the total revenue in the SDF that will be available
for the current budget year for local government agencies
impacted by tribal gaming. DOF shall include this information
in the May budget revision.
3)Authorizes the Legislature to appropriate money from the SDF
for the following purposes:
a) Grants for programs designed to address gambling
addiction.
b) Grants for the support of state and local government
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agencies impacted by tribal government gaming.
c) Compensation for regulatory costs incurred by 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.
f) Any other purpose specified by law.
4)Establishes a method of calculating the distribution of
appropriations from the SDF for grants to local government
agencies impacted by tribal gaming. This method includes a
requirement that the State Controller, in consultation with
CGCC, deposit funds into County Tribal Casino Accounts and
Individual Tribal Casino Accounts based upon a process that
takes into consideration whether the county has tribes that
pay, or not pay, into the SDF. The distribution formula
"sunsets" on January 1, 2021.
5)Establishes an Indian Gaming Local Community Benefit Committee
in each county in which gaming is conducted, specifies the
composition and responsibilities of that committee, and
requires that committee to make the selection of grants from
the casino accounts. Among other things, the committee is
responsible for establishing all application policies and
procedures for grants from the casino accounts.
AS PASSED BY THE ASSEMBLY , this bill made modifications to an
existing provision of law that requires 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.
FISCAL EFFECT : According to the Senate Appropriations
Committee, $13 million appropriation from the SDF to the CGCC
(Special Fund). Other provisions of the bill are minor,
absorbable costs for DOF report (General Fund).
COMMENTS :
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Purpose of the bill : 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
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 Graton 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 Graton Tribe to
the RSTF to fund the tribal governmental programs of non-gaming
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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.
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.
The bill also contains language to follow-up on 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.
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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.
Background :
Indian Gaming Special Distribution Fund : In 1999, anticipating
voter approval of Proposition 1A, the Governor negotiated and
the Legislature approved legislation ratifying compacts with
many tribes. The state eventually entered into 61 of these
tribal-state gaming compacts (1999-model compacts). The
1999-model compacts later received final federal approval as
required by the Indian Gaming Regulatory Act (IGRA), and they
are effective until December 31, 2020. In consideration for the
state's willingness to enter into these compacts, the tribes
agreed to provide to the state, on a sovereign-to-sovereign
basis, a portion of their revenues from gaming devices in the
form of license and operation fees. These fees provide money
for two funds: the RSTF, which distributes money to tribes that
do not have compacts or that have compacts and operate fewer
than 350 gaming devices, and the SDF. Unfortunately, the fee
structure established in the 1999 compacts designed to support
the $1.1 million payments to the non-compact and limited gaming
tribes does not generate a sufficient level of funding necessary
to support this obligation, thus necessitating annual transfers
(approximately $33.5 million in 2012-13) from the SDF to address
this shortfall. The SDF funds are to be used for purposes as
stated above in the analysis.
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 Miwuk 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)
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Twenty-Nine Palms Band of Mission Indians; and, 21) Tyme Maidu
Tribe Berry Creek Rancheria.
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 (Torrico), Chapter 754,
appropriated $30 million from the SDF to counties for mitigating
Indian casino impacts. In 2010, SB 856 (Senate Budget and
Fiscal Review Committee), appropriated $30 million from the SDF
to restore $30 million in funding vetoed by the Governor in the
2007-08 Budget Act. The bill required the funds to be divided
amongst the locals based on the amounts paid into the SDF in the
2006-07 fiscal year. In 2011, AB 1417 (Hall), 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. AB 2515
(Hall), Chapter 704, Statutes of 2012, also appropriated $9.1
million from the SDF for mitigation grants.
Prior legislation : AB 2515 (Hall), Chapter 704, Statutes of
2012. Strengthens procedures governing the awarding of grants
from the SDF to ensure that the funds are properly used to
mitigate costs associated with tribal gaming. In addition,
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.
AB 1417 (Hall), 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.
SB 856 (Senate Budget and Fiscal Review Committee), 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 bill required the funds be divided
amongst the locals based on the amounts paid into the SDF in the
2006-07 fiscal year.
SB 357 (Ducheny), Chapter 181, Statutes of 2009. Extended the
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sunset date to January 1, 2021, for the law governing the method
of calculating the distribution of appropriations from the SDF
for grants to local government agencies impacted by tribal
gaming.
AB 158 (Torrico), Chapter 754, Statutes of 2008. Enacted
several recommendations proposed by the State Auditor relative
to the allowable allocation and uses of grants to local
government agencies to mitigate the impact of tribal gaming in
local jurisdictions. Appropriated $30 million from the SDF to
be allocated by the CGCC for local projects that mitigate the
impacts of tribal gaming.
SB 621 (Battin), Chapter 858, Statutes of 2003. Established
priorities and procedures for funding to local governments from
the SDF for the purpose of mitigating impacts from tribal
casinos. In addition, required DOF, in consultation with CGCC,
to calculate the total revenue in SDF that will be available for
the current budget year for local government agencies impacted
by tribal gaming. This information must be included in the May
Budget revision.
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531
FN: 0002631