BILL ANALYSIS Ó SB 1029 Page 1 Date of Hearing: August 3, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair SB 1029 (Hertzberg) - As Amended June 15, 2016 ----------------------------------------------------------------- |Policy |Local Government |Vote:|9 - 0 | |Committee: | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill requires state and local agencies to submit an annual report to the California Debt and Investment Advisory Committee (CDIAC) that includes debt issuances, outstanding debt, and use of proceeds over the reporting period, as specified. The bill would also require CDIAC to track and report on all state and local outstanding debt until it is fully repaid or redeemed. FISCAL EFFECT: 1)CDIAC administrative costs of approximately $132,000 in the SB 1029 Page 2 first two years (1 PY), $261,000 in years three and four (2 PY), and $393,000 annually thereafter (3 PY) for new positions to receive, review, process, and include reported data on new debt issuances in its database. (California Debt and Investment Advisory Commission Fund) 2)CDIAC indicates that any one-time costs for systems upgrades would be minor and absorbable. Staff notes that there could be future cost pressures to the extent the bill authorizes CDIAC to develop alternative reporting methods for data collection. CDIAC indicates it would absorb any future costs for these upgrades. (California Debt and Investment Advisory Commission Fund) COMMENTS: 1)Purpose. According to the author, "This bill imposes additional reporting requirements on debt issuers that will benefit taxpayers, investors, and public agencies. Taxpayers deserve to have enough information to determine, with confidence, that public officials are being good stewards of public funds. Investors will benefit from having more knowledge about the types of internal controls that governments have in place to ensure that debt proceeds are used as promised." This bill is sponsored by California State Treasurer, John Chiang. 2)Background. Existing law establishes CDIAC within the State Treasurer's Office to support and improve public finance practices by providing public officials with information, SB 1029 Page 3 analysis, and training. CDIAC collects, maintains, and provides comprehensive information on all state and local debt authorization and issuance, and serves as a statistical clearinghouse for all state and local debt issues. Existing law requires CDIAC to make this information readily available upon request by any public official or any member of the public. Any state or local agency that issues debt must submit both a "report of proposed debt issuance" at least 30 days prior to issuing debt, and a "report of final sale" within 21 days of the date of sale of the debt, as specified. Existing law authorizes CDIAC to require information it considers appropriate to be included in those reports. Existing law also requires local agencies to annually submit information on their financial transactions to the State Controller's Office (SCO). These financial transactions reports include specified information regarding local agency debt, including the principal amount of debt issues outstanding at the time of the report, the amount of debt authorized by a bond act or other appropriate authorization relevant to the issue that remains authorized but unissued, and a list of purposes and amounts expended for each purpose in the prior fiscal year from the proceeds of the issue. Analysis Prepared by:Jennifer Swenson / APPR. / (916) 319-2081 SB 1029 Page 4