BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                   AB 189|
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                                 THIRD READING


          Bill No:  AB 189
          Author:   Assembly Budget Committee 
          Amended:  9/8/09 in Senate 
          Vote:     27 - Urgency

           
           SENATE FLOOR  :  25-0, 9/12/09 (FAIL)
          AYES:  Alquist, Calderon, Cedillo, Corbett, Correa,  
            DeSaulnier, Ducheny, Florez, Hancock, Kehoe, Leno, Liu,  
            Lowenthal, Negrete McLeod, Oropeza, Padilla, Pavley,  
            Price, Romero, Simitian, Steinberg, Wiggins, Wolk,  
            Wright, Yee
          NO VOTE RECORDED:  Aanestad, Ashburn, Benoit, Cogdill, Cox,  
            Denham, Dutton, Harman, Hollingsworth, Huff, Maldonado,  
            Runner, Strickland, Walters, Wyland

           ASSEMBLY FLOOR  :  Not relevant


           SUBJECT  :     Letters of credit

           SOURCE  :     Author


          DIGEST  :     Senate Floor Amendments  of 9/8/09 delete the  
          prior version of the bill expressing the intent of the  
          Legislature to enact statutory changes relating to the 2009  
          Budget Act.  This bill now increases, the cap from two to  
          three percent, on the annual amount of fees, costs, and  
          other similar expenses to be incurred by the state in  
          connection with letters of credit.  The amendments increase  
          this cap to three percent until June 30, 2013.  It is  
          estimated this will create a cost avoidance of $150 million  
                                                           CONTINUED





                                                                AB 189
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          in 2009-10; with actual costs of less than $20 million.

           ANALYSIS  :    Existing law sets forth the duties and  
          authority of the Treasurer generally in the sale of state  
          bonds.  Moneys are continuously appropriated from the  
          General Fund in an annual amount necessary to pay all  
          obligations, including principal, interest, fees, costs,  
          indemnities, and all other amounts incurred by the state  
          under or in connection with any credit enhancement or  
          liquidity agreement entered into by the state, as  
          specified, for bonds payable pursuant to an appropriation  
          from the General Fund.  Existing law prohibits the amount  
          appropriated for these fees, costs, and other similar  
          expenses from exceeding a percentage of the original  
          principal amount of the bonds that is specified in the  
          federal Internal Revenue Code.

          This bill, until June 30, 2013, increases that percentage  
          by which those expenses are calculated to three percent.

           FISCAL EFFECT  :    Appropriation:  Yes   Fiscal Com.:  Yes    
          Local:  No

          DLW:mw  10/12/09   Senate Floor Analyses 

                       SUPPORT/OPPOSITION:  NONE RECEIVED

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