BILL ANALYSIS                                                                                                                                                                                                    



                                                          AB 1473
                                                          Page  1

Date of Hearing:   May 19, 1999

              ASSEMBLY COMMITTEE ON APPROPRIATIONS 
                    Carole Migden, Chairwoman

        AB 1473 (Hertzberg) - As Amended: April 21, 1999 

Policy Committee:                              Consumer  
Protection   Vote:                             6-0

Urgency:     Yes                  State Mandated Local  
Program:NoReimbursable:           

  SUMMARY  :

This bill:

1)Requires the Governor to submit a three-year capital  
  expenditure plan in conjunction with his or her annual budget.  
   The plan would include all proposed projects to be financed  
  over the period that would be funded wholly or in part by the  
  state and would identify the fund source for every project. 

2)Deletes the existing requirement for the Department of Finance  
  (DOF) to prepare a report on the state's ten-year need to  
  finance infrastructure.

  FISCAL EFFECT  :

The initial three-year plan would probably cost the DOF at least  
$200,000 to produce and print.  Subsequent plans would probably  
cost at least $100,000.  Costs to departments should be  
absorbable.

(State agencies currently prepare five-year capital outlay plans  
for state-owned facilities.  The bill would also require  
identification of all local government projects that the state  
would propose to fund in whole or in part over the three-year  
period.  The DOF would have to prioritize departmental  
submittals into the statewide expenditure plan and identify the  
fund source for every project.)

  COMMENTS  :

 Purpose  .  According to the sponsor of the measure, the  








                                                          AB 1473
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California Business Roundtable, AB 1473 will "require state  
policymakers to undertake a comprehensive review of California's  
capital facilities needs, establish a clear set of priorities,  
and adopt an annual plan to serve as a budget blueprint for  
financing those priorities over the next decade."  The sponsor  
notes that historically "neither the Administration nor the  
Legislature has evaluated statewide facilities needs and  
investments in a rational, comprehensive fashion."  The Business  
Roundtable believes that AB 1473 offers such a plan.

  Current Practice  .  Pursuant to requirements in the State  
Administrative Manual, state agencies that are requesting  
funding for capital outlay projects are also required to submit  
five-year capital outlay plans to the DOF and to the Legislative  
Analyst.  Plans are not submitted for local infrastructure that  
is funded by the state.

  Related Legislation  .  There are two other capital outlay  
planning bills in the Assembly which require the DOF to submit a  
multi-year capital outlay plan as a supplement to the Governor's  
Budget.  Both bills require a five-year plan rather than the  
three-year plan proposed by AB 1473.
  
1)AB 500 (Corbett) also requires state departments to submit  
  five-year capital outlay plans, with specified information.   
  The DOF statewide plan is to be a compilation of the  
  departmental plans.  This bill is almost identical to AB 907  
  (Vasconcellos) of 1996, which was vetoed by Governor Wilson.  

2)AB 636 (Migden) is similar to AB 500, but is more detailed  
  regarding the type of information required in departmental  
  plans and in the statewide plan.  This bill also requires  
  identification of local infrastructure that the administration  
  would propose to fund (on a program, rather than a  
  project-specific basis), and prioritization of department's  
  five-year capital outlay proposals as opposed to the  
  compilation required under AB 500.

  LAO Report  .  In December 1998, the Legislative Analyst's Office  
released a report entitled Overhauling the State's  
Infrastructure Planning and Financing Process, which identified  
the following problems:
1)Infrastructure investment has not been treated as a problem in  
  and of itself. 









                                                          AB 1473
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2)Current agency and Finance capital outlay plans are  
  inadequate. 

3)Programmatic goals for capital outlay are often lacking.  

4)There are no criteria for setting statewide priorities.  

5)No stable funding source for infrastructure exists, but for  
  highway construction/renovation. 

6)State and local funding responsibilities are not fully  
  articulated. 

7)Local infrastructure plans are even worse than the state's.  

The report then detailed a series of recommended actions the  
state should take to improve our infrastructure planning and  
financing process:

1)Develop and implement a capital outlay plan for each state  
  program that identifies needs based on the long-term goals and  
  objectives of each program. 

2)Determine which local infrastructure programs the state will  
  continue to fund and obtain information on needs for those  
  programs. 

3)Prepare an integrated plan based on statewide priority-setting  
  criteria. Provide steady and stable funding for the state's  
  infrastructure plan.

4)Establish appropriate legislative committees to develop and  
  oversee policies regarding the prioritization, financing, and  
  implementation of the state's infrastructure plan.  

5)Dedicate six percent of annual General Fund revenues to  
  infrastructure investment.

6)Utilize more "pay as you go" financing, as opposed to debt  
  financing.

The LAO notes that states such as Washington and Minnesota have  
implemented changes similar to their recommendations.
  Analysis Prepared by  :    Chuck Nicol / APPR. / (916)319-2081