BILL ANALYSIS Ó
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UNFINISHED BUSINESS
Bill No: SB 181
Author: Senate Governance and Finance Committee
Amended: 5/28/13
Vote: 27 - Urgency
SENATE GOVERNANCE & FINANCE COMMITTEE : 6-0, 3/13/13
AYES: Wolk, Knight, Beall, DeSaulnier, Emmerson, Liu
NO VOTE RECORDED: Hernandez
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SENATE FLOOR : 36-0, 4/11/13 (Consent)
AYES: Anderson, Beall, Berryhill, Block, Calderon, Cannella,
Corbett, Correa, De León, Emmerson, Fuller, Gaines, Galgiani,
Hancock, Hernandez, Hill, Hueso, Huff, Jackson, Knight, Lara,
Leno, Lieu, Liu, Monning, Nielsen, Padilla, Pavley, Price,
Roth, Steinberg, Walters, Wolk, Wright, Wyland, Yee
NO VOTE RECORDED: DeSaulnier, Evans, Vacancy, Vacancy
ASSEMBLY FLOOR : 79-0, 6/20/13 (Consent) - See last page for
vote
SUBJECT : First Validating Act of 2013
SOURCE : Author
DIGEST : This bill enacts the First Validating Act of 2013
which validates the organization, boundaries, acts, and bonds of
state and local agencies.
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Assembly Amendments make technical changes.
ANALYSIS : For more than 70 years, the Legislature's annual
Validating Acts (Acts) have boosted the stability and credit
ratings of state and local bonds. The Acts cure public
officials' mistakes that might otherwise invalidate boundary
changes or bond issues. They also correct errors or omissions
by local agencies and state departments. The Acts do not
protect against fraud, corruption, or unconstitutional actions.
This bill validates the organization, boundaries, acts,
proceedings, and bonds of the state government, counties,
cities, special districts, and school districts, among other
public bodies.
Comments
The annual Acts protect investors from the chance that a minor
error might undermine the legal integrity of a public agency's
bond. Banks, pension funds, and other investors will not buy
public agencies' securities unless they are sound investments.
Investors rely on legal opinions from bond counsels to assure
the bonds' credit worthiness. Without legislative action to
cure technical errors, bond counsels are reluctant to certify
bonds as good credit risks. This bill gives legislative
protection to public agencies and private investors.
The three Acts cure typographical, grammatical, and procedural
errors. They do not forgive fraud, corruption, or
unconstitutional acts. A local official who makes a technical
error will find reassurance in the Acts, while a corrupt
official faces prosecution regardless of the Acts.
By insulating state and local bonds against harmless errors, the
Acts save taxpayers' money. Strong legal opinions from bond
counsels result in higher credit ratings for state and local
bonds. Higher credit ratings allow state and local officials to
pay lower interest rates to private investors. Lower borrowing
costs save money for taxpayers.
Starting in the mid-1920s, the Legislature passed separate
validating acts for different types of bonds, several classes of
special districts, and various local boundary changes. By the
late 1930s, the practice was to pass annual validating acts (AB
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2842 (Bennett, 1939)). The current custom and practice is to
pass three Acts that retroactively cure public officials'
mistakes. The first two measures are urgency bills that go into
effect when they are chaptered. This bill (First Validating
Act) will probably reach Governor Brown's desk this spring,
validating errors made before the date on which the bill is
chaptered. SB 182 (Second Validating Act) will reach Governor
Brown in August, validating mistakes made after this bill. The
Third Validating Act (SB 183) will take effect on January 1,
2014, covering the period between the chaptering of SB 182 and
the end of 2013.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 6/21/13)
State Controller John Chiang
State Treasurer Bill Lockyer
AFSCME, AFL-CIO
Association of California Water Agencies
California Association of County Treasurers and Tax Collectors
California Association of Local Agency Formation Commissions
California Special Districts Association
California State Association of Counties
East Bay Municipal Utility District
Rural County Representatives of California
ASSEMBLY FLOOR : 79-0, 6/20/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Chávez, 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 Hernández,
Holden, Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal,
Maienschein, Mansoor, Medina, Melendez, Mitchell, Morrell,
Mullin, Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson,
Perea, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Salas,
Skinner, Stone, Ting, Wagner, Waldron, Weber, Wieckowski,
Wilk, Williams, Yamada, John A. Pérez
NO VOTE RECORDED: Vacancy
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AB:k 6/21/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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