BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 374


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          SENATE THIRD READING


          SB  
          374 (Hall)


          As Introduced  February 24, 2015


          Majority vote


          SENATE VOTE:  35-0


           ------------------------------------------------------------------ 
          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Governmental    |18-0 |Gray, Linder, Alejo,  |                    |
          |Organization    |     |Bigelow, Campos,      |                    |
          |                |     |Cooley, Cooper, Daly, |                    |
          |                |     |Cristina Garcia,      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |Eduardo Garcia,       |                    |
          |                |     |Gipson,               |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |Roger Hernández,      |                    |
          |                |     |Levine, Mayes, Perea, |                    |
          |                |     |Salas, Steinorth,     |                    |
          |                |     |Wilk                  |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
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                                                                     SB 374


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          SUMMARY:  Deletes obsolete allocation provisions relating to the  
          Indian Gaming Special Distribution Fund (SDF) and makes other  
          code maintenance changes.


          EXISTING LAW:  


          1)The federal Indian Gaming Regulatory Act of 1988 provides for  
            the negotiation and execution of compacts for the purpose of  
            authorizing class III gaming on Indian lands within a state.   
            Additionally, the California Constitution authorizes the  
            Governor to negotiate and conclude compacts, subject to  
            ratification by the Legislature.


          2)Creates in the State Treasury, the SDF for the receipt and  
            deposit of moneys received by the state from certain Indian  
            tribes pursuant to the terms of gaming compacts entered into  
            with the state. 


          3)Authorizes the Legislature to appropriate money from the SDF  
            as follows:  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 the  
            California Gambling Control Commission (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;  
            and, f) any other purpose specified by law.










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          4)Provides that the "priority" for funding from the SDF is in  
            the following descending order:  a) to make payments of any  
            shortfalls that may occur in the RSTF; b) grants for programs  
            designed to address gambling addiction; c) compensation to the  
            CGCC and DOJ for regulatory functions that directly relate to  
            Indian gaming; and, d) grants for the support of local  
            government agencies impacted by tribal gaming.


          5)Creates, until January 1, 2021, a County Tribal Casino Account  
            in the treasury of each county that contains a tribal casino,  
            which is funded according to specified formulas. 


          6)Requires the State Controller to divide the County Tribal  
            Casino Account for each county that has gaming devices that  
            are subject to an obligation to make contributions to the SDF  
            into a separate account, known as an Individual Tribal Casino  
            Account, for each tribe that operates a casino within the  
            county.  Each Individual Tribal Casino Account is required to  
            be funded in proportion to the amount that each individual  
            tribe paid in the prior fiscal year to the SDF, and used for  
            grants to local agencies impacted by tribal casinos, as  
            specified. 


          7)Requires the State Auditor to conduct an audit every three  
            years and report its findings to the Legislature regarding the  
            allocation and use of SDF grant moneys.


          This bill deletes obsolete allocation provisions from specified  
          fiscal years relating to the SDF and takes other minor code  
          maintenance changes.


          FISCAL EFFECT:  Unknown.  This bill is keyed non-fiscal by the  
          Legislative Counsel.









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          COMMENTS:  


          Purpose of this bill:  According to the author's office, this  
          bill is simply intended to make technical, clarifying and  
          conforming changes to current statutes pertaining to the SDF.   
          The author's office also notes that at some point this bill may  
          be used as a vehicle to address issues brought forth by various  
          entities at a March 24, 2015, informational hearing conducted by  
          the Senate Governmental Organization Committee titled,  
          "Confronting Shortfalls in Indian Gaming Funds - the Special  
          Distribution Fund (SDF) and the Revenue Sharing Trust Fund  
          (RSTF)." 


          During the informational hearing, the Legislative Analyst's  
          Office (LAO) reported that the Legislature has ratified  
          tribal-state gaming compacts with 73 of the State's 110  
          federally recognized tribes.  Of these tribes, 58 currently  
          operate 60 casinos.  These compacts require that the tribes make  
          payments to various state accounts under certain conditions.   
          Specific payment requirements differ across tribes and depend on  
          various factors, such as the number of slot machines operated  
          and/or the average slot machine net win.  Currently, 46 tribes  
          make payments into the following three state accounts:  1) the  
          RSTF receives payments from 37 tribes; 2) the SDF receives  
          payments from 26 tribes; and, 3) the General Fund receives  
          payments from 11 tribes.


          The LAO indicated that "as a result of amendments to several  
          tribal state compacts that were ratified beginning in 2007, the  
          SDF has seen significant decline in its fund balances.  This is  
          because the amended compacts decreased the amount of revenue  
          that certain tribes are required to pay into the SDF by  
          requiring that these tribes instead make payments to the General  
          Fund."  Furthermore, the LAO stated that "the expenditures in  
          excess of revenues were supported by using prior-year fund  








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          balances in the SDF and that the SDF fund balance is expected to  
          be exhausted in the current year."


          Prior legislation:  AB 1916 (Hall), Chapter 600, Statutes of  
          2014.  Created the "Tribal Nation Grant Fund" in the State  
          Treasury, to be administered by the CGCC, for the receipt and  
          deposit of moneys received by the state from Indian tribes,  
          pursuant to the terms of tribal-state gaming compacts.


          AB 1042 (Hall), Chapter 746, Statutes of 2013.  Required the  
          Department of Finance, 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.  In addition, appropriated $13  
          million from the SDF to the CGCC to provide grants to local  
          agencies for the 2013-14 Fiscal Year.


          AB 2515 (Hall), Chapter 704, Statutes of 2012.  Among other  
          things, revised the procedures governing the award of grants  
          from the SDF to ensure that the funds are properly used to  
          mitigate costs associated with tribal gaming and appropriated  
          $9.1 million from the SDF for grants to mitigate the impacts of  
          tribal gaming on local governments for the 2012-13 Fiscal Year.


          AB 1417 (Hall), Chapter 736, Statutes of 2011.  As introduced,  
          this measure would have reorganized statutes pertaining to  
          Indian gaming compacts primarily by moving them to a newly  
          created Title 16.5 on Tribal Gaming in the Government Code.  AB  
          1417 was subsequently gutted in this committee to become the  
          vehicle for the distribution of $9.1 million from the SDF to the  
          CGCC to provide grants to local agencies. 


          SB 856 (Budget and Fiscal Review), Chapter 719, Statutes of  
          2010.  Among other things, appropriated $30 million from the SDF  








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          to restore funding deleted from the Budget Act of 2007 for  
          grants to mitigate the impact of tribal gaming on local  
          governments.   


          AB 158 (Torrico), Chapter 754, Statutes of 2008.  Enacted  
          several recommendations proposed by the California State Auditor  
          relative to the allocation and uses of proceeds from the SDF. 


          SB 288 (Battin), Chapter 13, Statutes of 2006.   Appropriated  
          $20 million from the SDF for grants to local jurisdictions  
          impacted by tribal gaming.


          SB 621 (Battin), Chapter 858, Statutes of 2003.  Among other  
          things, established priorities and procedures for specified  
          funding to local governments from the SDF for mitigating impacts  
          from tribal casinos and appropriated $25 million from the SDF to  
          mitigate the impact of tribal gaming on local governments


          AB 673 (J. Horton), Chapter 210, Statutes of 2003.  Among other  
          things, specified that money in the SDF may be used to make  
          payment of shortfalls that may occur in the RSTF and provided  
          that payment for those shortfalls in the RSTF shall be the  
          priority use of moneys in the SDF.  Also, established a  
          mechanism by which funds may be transferred from the SDF to the  
          RSTF pursuant to specified provisions of the tribal-state  
          compacts and appropriated the sum of $50.6 million for the  
          purpose of making payments to eligible Indian tribes for the  
          preceding fiscal year.   




          Analysis Prepared by:                                             
                          Eric Johnson / G.O. / (916) 319-2531  FN:  
          0002039








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