BILL ANALYSIS
AB 189
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 189 (Budget Committee)
As Amended September 8, 2009
2/3 vote. Urgency
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|ASSEMBLY: | |(May 4, 2009) |SENATE: |37-0 |(October 14, |
| | | | | |2009) |
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(vote not relevant)
Original Committee Reference: RLS.
SUMMARY : Make statutory changes regarding the cost of issuing
bonds for the State Treasurer.
The Senate amendments delete the Assembly version of this bill,
and instead:
1)Increase from 2% to 3%, until June 30, 2013, the amount which
may be appropriated for fees, costs, and other similar
expenses incurred in connection with a credit enhancement or
liquidity agreement linked to a bond sale.
Without this provision, the Treasurer may be unable to extend
existing debt to manage the current cash situation.
2)Add an urgency clause, allowing this bill to take effect
immediately upon enactment.
AS PASSED BY THE ASSEMBLY , this bill expressed the intent of the
Legislature to enact statutory changes relating to the Budget
Act of 2009.
FISCAL EFFECT :
1)The provisions affecting the Treasurer's ability to extend
existing debt will save the state billions of dollars. If
these provisions are not approved, the Treasurer will be
required to either:
a) Retire that debt at a cost of approximately $2 billion.
These funds will likely come from planned GO bonds. These
bond funds are intended to fund projects throughout the
state, and would have to be diverted for this purpose
AB 189
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instead; or,
b) Pay interest and other costs on these existing debts at
an increased rate with a current year cost of $150 million,
2010-11 costs of over $600 million, and increasing interest
costs each year there-after until these debts are retired.
Analysis Prepared by : Adam Dondro / BUDGET / (916) 319-2099
FN: 0003206