BILL ANALYSIS
AB 1506
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Date of Hearing: April 28, 2009
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Mary Hayashi, Chair
AB 1506 (Anderson) - As Introduced: February 27, 2009
SUBJECT : State funds: registered warrants.
SUMMARY : Requires, as an urgency statute, a state agency to
accept from any person a registered warrant endorsed by that
person, at full face value, for the payment of any obligations
owed by that person to that state agency.
EXISTING LAW prescribes procedures for the issuance of
registered warrants and provides that a registered warrant is
acceptable and may be used as security for the performance of
any public or private trust or obligation.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author's office,
"Assembly Bill 1506 is a taxpayer rights bill that would require
a state agency to accept, from any person, a registered warrant
- commonly known as an IOU - endorsed by that person, at full
face value, for the payment of any obligations owed by that
person to that state agency."
Background . Generally, under state law, the Controller is
responsible for issuing warrants drawn from the General Fund for
payment of obligations of the state. In instances where the
amount payable out of the General Fund is in excess of the
balance remaining in the General Fund after deducting amounts
earmarked or reserved for payment by law, the Controller can
issue a "registered warrant."
A registered warrant is a warrant that carries a promise to pay
the bearer the amount shown on the warrant plus interest, by a
date prescribed on the warrant, usually within one year of the
date of issuance. Interest accumulates at the rate determined by
the Pooled Money Investment Account (PMIA).
Under state law, if a taxpayer has a tax liability and is a
payee named in a registered warrant, the taxpayer may pay any
AB 1506
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tax liability specified above, in whole or in part, by a check
in an amount not to exceed the amount of the registered warrant.
State law provides that the check may not be presented for
payment by the state or paid by the bank until the registered
warrant is payable upon its presentation to the Treasurer.
Under the California Government Code, registered warrants are
legal investments for funds of all banks and are negotiable
instruments. Registered warrants bear interest at a rate fixed
by California law from the date of registration to the date of
maturity, or the date upon which the California Treasurer
advertises that they are payable upon presentation if they bear
no date of maturity.
This bill purports to instill fairness between the state and its
constituents in an unstable and imbalanced economic environment
by allowing taxpayers to issue registered warrants to the state.
However, the bill does not contain any provisions that would
require individuals to provide the state with the same legal and
financial backing the state provides to support its registered
warrants, such as a guaranteed interest rate tied to the PMIA,
payment on a date certain, and a market on which to trade the
note.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
None on file.
Analysis Prepared by : Sarah Huchel / B. & P. / (916) 319-3301