BILL ANALYSIS Ó
SB 182
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SENATE THIRD READING
SB
182 (Committee on Governance and Finance)
As Introduced February 9, 2015
2/3 vote. Urgency
SENATE VOTE: 37-0
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Local |9-0 |Maienschein, | |
|Government | |Gonzalez, Alejo, | |
| | |Chiu, Cooley, Gordon, | |
| | |Holden, Linder, | |
| | |Waldron | |
| | | | |
| | | | |
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SUMMARY: Validates the organization, boundaries, acts,
proceedings, and bonds of the state government, counties,
cities, special districts, and school districts, among other
public bodies.
EXISTING LAW allows agencies to make changes to the
SB 182
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organization, boundaries, acts, proceedings, and bonds of the
state, cities, counties, special districts, school districts,
and other local agencies.
FISCAL EFFECT: None
COMMENTS:
1)Bill Summary and Background on Validating Acts. The annual
Validating 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 Validating Acts cure typographical, grammatical, and
procedural errors. They do not forgive fraud, corruption, or
unconstitutional acts. By insulating state and local bonds
against harmless errors, the Validating 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 2842 (Bennett), Chapter 593, Statutes of 1939). The
current custom and practice is to pass three Validating Acts
that retroactively cure public officials' mistakes. The first
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two measures are urgency bills that go into effect when they
are chaptered. The First Validating Act (SB 181 (Governance
and Finance Committee), Chapter 4) was chaptered on June 1,
2015. The Second Validating Act (SB 182 (Governance and
Finance Committee) of the current legislative session) will
reach Governor Brown in August, validating mistakes made after
SB 181. The Third Validating Act (SB 183 (Governance and
Finance Committee), Chapter 45, Statutes of 2015) will take
effect on January 1, 2016, covering the period between the
chaptering of SB 182 and the end of 2015.
2)Urgency Clause. This bill contains an urgency clause and
requires a two-thirds vote of each house.
Analysis Prepared by:
Debbie Michel / L. GOV. / (916) 319-3958 FN:
0001549