California Legislature—2013–14 Regular Session

Assembly Bill No. 1237

Introduced by Assembly Member Garcia

February 22, 2013

An act to add Sections 53891.2 and 53891.3 to, and to add Article 10.1 (commencing with Section 53902) to Chapter 4 of Part 1 of Division 2 of Title 5 of, the Government Code, relating to local government finance.

LEGISLATIVE COUNSEL’S DIGEST

AB 1237, as introduced, Garcia. Local government finance.

Existing law requires the Controller to prescribe uniform accounting and reporting procedures that are applicable to specified types of local agencies. Existing law excludes certain agencies from this requirement, including cities.

This bill would specifically require the Controller to prescribe uniform accounting procedures for cities, conforming to Generally Accepted Accounting Principles, and in consultation with the Committee on City Accounting Procedures, which would be created by the bill. The bill would specify the composition of the committee.

This bill would create the City Budget Act, which would be applicable to certain fiscal procedures of cities, dependent special districts, and other agencies whose affairs and finances are under the supervision and control of the city council. The bill would require the Controller to promulgate rules, regulations, and classifications as he or she deems necessary and commensurate with the accounting procedures for cities prescribed pursuant to the bill. The bill would require that the city budget process be conducted pursuant to the specified procedures, and would require a copy of the city’s audited comprehensive annual financial report for the next preceding fiscal year to be filed by the city in the office of the Controller, not later than January 15 of each year. Because it would impose new duties on cities and agencies under their supervision and control, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

Section 53891.2 is added to the Government
Code, to read:

53891.2.  

Pursuant to this division, the Controller shall prescribe
for cities uniform accounting procedures conforming to Generally
Accepted Accounting Principles (GAAP). The Controller shall
prescribe these procedures after consultation, with and approval
by, the Committee on City Accounting Procedures created by
Section 53891.3. Approval of these procedures shall be by a
majority vote of the total membership of the committee. The vote
may be conducted by mail at the discretion of the chairperson of
the committee, provided, however, that if one or more members
of the committee request a meeting for the purpose of voting, the
chairperson shall call a meeting of the committee, as provided in
Section 53891.3.

SEC. 2.  

Section 53891.3 is added to the Government Code, to
read:

53891.3.  

(a) The Committee on City Accounting Procedures,
which is hereby created, shall consist of 10 members appointed
by the Controller, who shall serve at the pleasure of the Controller.
The committee members shall have the following qualifications:

(1) Four members shall be city finance officers.

(2) Three members shall be city managers, including one each
from the northern, southern, and central California region.

(3)  One member shall be a city representative from a rural area.

(4)  One member shall be a county auditor-controller.

(5)  One member shall be a representative appointed by the
California Society of Certified Public Accountants.

(b) The members of the committee shall serve without
compensation, but shall be reimbursed for their necessary traveling
and other expenses incurred in attending meetings of the
committee. These expenses shall be paid by the city or county of
which the member is an officer. The expenses incurred in attending
meetings by the certified public accountant shall be paid by the
California Society of Public Accountants.

(c) The Controller shall designate a member of the committee
to serve as chairman. The committee shall meet at the call of the
chairman and each member shall be given written notice of any
meeting at least 10 days prior to the date of the meeting.

SEC. 3.  

Article 10.1 (commencing with Section 53902) is
added to Chapter 4 of Part 1 of Division 2 of Title 5 of the Government Code, to read:

 

Article 10.1.  City Budget Act

 

53902.  

This article shall be known, and may be cited, as the
City Budget Act. Unless the context otherwise requires or provides,
the general provisions set forth in this article, and the requirements
concerning city budget matters prescribed by the Controller under
Section 53891.2, shall govern the construction of this article.

53902.1.  

Except as otherwise defined in this section, the
meaning of terms used in this article shall be as defined in the
uniform accounting procedures for Cities prescribed by the
Controller pursuant to Section 53891.2. As used in this article, the
following terms have the following meanings:

(a) “Adopted budget” means the budget document formally
approved by the city council after the required public hearings and
deliberations on the recommended budget.

(b) “Budget year” means the fiscal year for which the budget
is being prepared.

(c) “City official” means the chief administrative officer, city
administrator, city executive, city finance officer, city manager,
or any other official employed in any of the several cities under
various titles whose duties and responsibilities are comparable to
any of the officials named in this subdivision.

(d) “Controller” means the State Controller.

(e) “Council” means the city council of the city, or the same
legislative body acting as the governing board of a special district
whose affairs and finances are under its supervision and control.

(f) “Final budget” means the adopted budget adjusted by all
revisions throughout the fiscal year as of June 30.

(g) “Fiscal year” means the current 12-month period to which
the annual operating budget applies and at the end of which a
government determines its financial position and the results of its
operations.

(h) “Obligated fund balance” means the nonspendable, restricted,
committed, and assigned fund balances.

(i) “Recommended budget” means the budget document
recommended to the city council by the designated City official.

53902.2.  

This article shall apply to cities, dependent special
districts, and other agencies whose affairs and finances are under
the supervision and control of the council.

53902.3.  

Except as otherwise specifically provided by law, a
majority vote of the total membership of the council is required
for the council to take action pursuant to this article.

53902.4.  

(a) The Controller shall promulgate any rules,
regulations, and classifications as he or she deems necessary and
commensurate with the accounting procedures for cities prescribed
pursuant to Section 53891.2, to secure standards of uniformity
among the various cities in carrying out the provisions of this
article. The rules, regulations, and classifications shall be adopted
with consultation and approval in accordance with Section 53891.2.

(b) The Controller shall prescribe the forms required to be used
in presenting the required information in the budget document
after consultation with the Committee on City Accounting
Procedures established in Section 53891.3. Any city may add to
the information required, or display it in more detail, provided that
the financial information and the classifications or items required
to be included in the budget are clearly and completely set forth.
Any change proposed by a city in the arrangement of the
information required on the forms shall be subject to review and
approval by the Controller.

53903.  

For the adopted budget, the various forms, as prescribed
by the Controller pursuant to Section 53902.4, shall provide for
the presentation of data and information to include, at a minimum,
estimated or actual amounts of the following items, by fund:

(a) Fund balances, including the following.

(1) Nonspendable.

(2) Restricted.

(3) Committed.

(4) Assigned.

(5) Unassigned.

(b) Additional financing sources shall be classified by source,
in accordance with the accounting procedures for cities as
prescribed by the Controller pursuant to Section 53891.2. For
comparative purposes, the amounts of financing sources shall be
shown as follows:

(1) On an actual basis for the fiscal year two years prior to the
budget year.

(2) On an actual basis, except for those sources that can only
be estimated, for the fiscal year prior to the budget year.

(3) On an estimated basis for the budget year, as submitted by
the city official.

(4) On an estimated basis for the budget year, as approved, or
as adopted, by the council.

(c) Financing uses for each budget unit, classified by the fund
or funds from which financed, by the objects of expenditure, other
financing uses, intrafund transfers, and transfers out, in accordance
with the accounting procedures for cities and by any further
classifications or requirements pertaining to city budget matters
as prescribed by the Controller pursuant to Section 53891.2. For
comparative purposes, the amounts of financing uses shall be
shown as follows:

(1) On an actual basis for the fiscal year two years prior to the
budget year.

(2) On an actual basis, except for those uses that can only be
estimated, for the fiscal year prior to the budget year.

(3) On an estimated basis for the budget year, as submitted by
the city official.

(4) On an estimated basis for the budget year, as approved, or
as adopted, by the council.

(d) Appropriations for contingencies.

(e) Provisions for nonspendable, restricted, committed, and
assigned fund balances.

(f) The appropriations limit and the total annual appropriations
subject to limitation as determined pursuant to Division 9
(commencing with Section 7900) of Title 1.

53903.1.  

There shall be a schedule in, or supporting, the
adopted budget document or separate ordinance or resolution,
setting forth for each budget unit the following data for each
position classification:

(a) Salary rate or range, as applicable.

(b) Total allocated positions approved by the council.

53903.2.  

At a minimum, within the object of capital assets, the
budget amounts for the following shall be reported, as specified:

(a) Land shall be reported in total amounts, except when
included as a component of a project.

(b) Structures and improvements shall be reported separately
for each project, except that minor improvement projects may be
reported in totals.

(c) Equipment shall be reported in total amounts, by budget
unit.

(d) Infrastructure shall be reported in total amounts, by budget
unit.

(e) Intangible assets may be reported in total amounts, by budget
unit.

53903.3.  

Funding sources shall equal the financing uses, in
both the adopted budget and the final budget.

53903.4.  

The budget may contain one or more appropriations,
for contingencies, in an amount or amounts as the council deems
sufficient.

53903.5.  

The resolution of adoption of the budget of the city,
each dependent special district, and each other agency, as defined
in Section 53902.2, shall specify the following:

(a) Appropriations, by objects of expenditure within each budget
unit, except for capital assets that are appropriated at the subobject
level pursuant to Section 53903.2.

(b) Other financing uses, by budget unit.

(c) Intrafund transfers, by budget unit.

(d) Transfers out, by fund.

(e) Appropriations for contingencies, by fund.

(f) Provisions for nonspendable, restricted, committed, and
assigned fund balances, by fund and purpose.

(g) The means of financing the budget requirements.

53904.  

The adoption of the budget may be accomplished by a
resolution in which the adoption is effectuated by reference to the
financing uses in the budget as finally determined, provided that
the minimum requirements set forth in Section 53903.5 are met
in the budget document. If adopted by reference, the budget shall
have the same effect, and be subject to the same provisions of law,
as if the resolution of adoption had been accomplished by specific
designation.

53904.1.  

The council may set forth appropriations in greater
detail than required in Section 53903.5, and may authorize any
additional controls for the administration of the budget as it deems
necessary. The council may designate a city official to exercise
these administrative controls.

53905.  

(a) A copy of the adopted budget in the format
prescribed by the Controller shall be filed by the city official in
the office of the clerk of the board and the office of the Controller
not later than December 1 of each year.

(b) (1) If the city official, after receipt of written notice from
the Controller, fails to transmit a copy of the adopted budget within
20 days, the city shall forfeit to the state one thousand dollars
($1,000), to be recovered in an action brought by the Attorney
General, in the name of the Controller.

(2) Upon a satisfactory showing of good cause, the Controller
may waive the penalty for late filing provided in paragraph (1).

53906.  

The adopted budget shall include a schedule showing
the managerial budget of each service activity financed by a
proprietary fund. The schedule shall set forth expected operations
of the activity in that detail for revenues, expenses, and reserves
as will adequately display the nature and the approximate size of
its operations. Comparative data, as prescribed in Section 53903,
shall be provided.

53907.  

A copy of the audited comprehensive annual financial
report for the next preceding fiscal year shall be filed by the
appropriate city official in the office of the Controller not later
than January 15 of each year.

SEC. 4.  

If the Commission on State Mandates determines that
this act contains costs mandated by the state, reimbursement to
local agencies and school districts for those costs shall be made
pursuant to Part 7 (commencing with Section 17500) of Division
4 of Title 2 of the Government Code.