BILL ANALYSIS �
AB 1042
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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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|COMMITTEE VOTE: |12-0 |(September 11, |RECOMMENDATION: |concur |
|(G.O.) | |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 appropriate $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 IGSDF 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 the Department of Finance (DOF), in consultation
with the CGCC, shall calculate the total revenue in the IGSDF
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 IGSDF
for the following purposes:
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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 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 IGSDF for grants to local government
agencies impacted by tribal gaming. This method includes a
requirement that the State Controller, in consultation with the
Commission, 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).
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Other provisions of the bill are minor, absorbable costs for DOF
report (General Fund).
COMMENTS :
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 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
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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.
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
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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.
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 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 IGRSTF, 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.
ISDF 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) Twenty-Nine Palms Band
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of Mission Indians; and, 21) Tyme Maidu Tribe Berry Creek
Rancheria.
ISDF 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), 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.
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531
FN: 0002780