BILL ANALYSIS Ó AB 2728 Page 1 GOVERNOR'S VETO AB 2728 (Atkins) As Enrolled September 9, 2016 2/3 vote -------------------------------------------------------------------- |ASSEMBLY: |80-0 |(May 31, 2016) |SENATE: |39-0 |(August 25, | | | | | | |2016) | | | | | | | | | | | | | | | -------------------------------------------------------------------- -------------------------------------------------------------------- |ASSEMBLY: |80-0 |(August 30, | | | | | | |2016) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | -------------------------------------------------------------------- Original Committee Reference: INS. SUMMARY: Extends the sunset date on the tax credit allowed for AB 2728 Page 2 defined community development investments until 2018, and declares Legislative intent that the authority of the Department of Insurance (DOI) to issue a data call to insurers will be extended. The Senate amendments 1)Delete a sunset extension provision that would have extended the statutory authorization for the California Organized Investment Network (COIN) Advisory Board from 2017 to 2022. 2)Shorten the sunset extension for the tax credit from 2022 to 2018. EXISTING LAW: 1)Establishes a COIN Advisory Board to consult with and advise the DOI with respect to issues associated with the COIN program. 2)Sunsets the Advisory Board on January 1, 2020. 3)Requires any admitted insurer that writes at least $100 million in California premium to file, by July 1, 2016, data with DOI detailing its investment activity for the past three years with respect to community development investments. 4)Requires the DOI, by December 31, 2016, to provide information on its Internet Web site: AB 2728 Page 3 a) Concerning the community development investments made by insurers, specifically noting information concerning investments that are innovative, responsive to community needs, not routinely made by insurers, and that have a high impact on low and moderate income communities, and b) On the actions taken by the COIN program to analyze insurer data for purposes of identifying potential insurer investment opportunities, and on COIN's outreach and marketing efforts, and c) Identifying the amount of California public debt purchased by insurers, the amount of identified California investments by insurers, and the amount of green investments by insurers. 5)Provides that the data call and information posting provisions will sunset on January 1, 2020. FISCAL EFFECT: Annual ongoing general fund revenue loss in the range of $3.8 million from the extension of the Community Development Financial Institutions (CDFI) tax credit. COMMENTS: The bill contains intent language that the authority for DOI to continue to conduct data calls relating to community development investments by insurers, which currently sunsets in 2017, should be extended. As noted above, a report relating to the previous data call and efforts by COIN to further the purposes of the program was due December 31, 2016. However, the DOI fast tracked the most recent data call ahead of the Legislatively-established time table, and issued the report last month. Unfortunately, stakeholders were unable to come to agreement on the role of future data calls, and the role of COIN is becoming more proactive in identifying, developing and AB 2728 Page 4 marketing appropriate community development investments by insurers. As a result, the bill was pared back, and these issues will be before the Legislature next year. GOVERNOR'S VETO MESSAGE: I am returning the following seven bills without my signature: Assembly Bill 717 Assembly Bill 724 Assembly Bill 1561 Assembly Bill 2127 Assembly Bill 2728 Senate Bill 898 Senate Bill 907 Each of these bills creates a new tax break or expands an existing tax break. In total, these bills would reduce revenues by about $300 million through 2017-18. As I said last year, tax breaks are the same as new spending -- they both cost the General Fund money. As such, they must be AB 2728 Page 5 considered during budget deliberations so that all spending proposals are weighed against each other at the same time. This is even more important when the state's budget remains precariously balanced. Therefore, I cannot sign these measures. Analysis Prepared by: Mark Rakich / INS. / (916) 319-2086 FN: 0005051