BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1506|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
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|327-4478 | |
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THIRD READING
Bill No: AB 1506
Author: Anderson (R), et al
Amended: 8/10/10 in Senate
Vote: 27 - Urgency
SENATE GOVERNMENTAL ORG. COMMITTEE : 9-0, 6/22/10
AYES: Wright, Harman, Calderon, Denham, Florez, Negrete
McLeod, Padilla, Price, Yee
NO VOTE RECORDED: Oropeza, Wyland
SENATE APPROPRIATIONS COMMITTEE : 9-0, 8/2/10
AYES: Kehoe, Alquist, Ashburn, Corbett, Emmerson, Price,
Wolk, Wyland, Yee
NO VOTE RECORDED: Leno, Walters
ASSEMBLY FLOOR : 78-0, 9/2/09 - See last page for vote
SUBJECT : State funds: registered warrants
SOURCE : Author
DIGEST : This bill requires state agencies to accept
registered warrants issued by the state for the payment of
obligations owed them.
ANALYSIS : 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.
CONTINUED
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This bill:
1. Requires a state agency to accept from a person or
entity a registered warrant (RW) issued by the State
Controller that is endorsed by that payee, at full face
value, for payment of any obligation owed by that payee
to that state agency, if the State Controller determines
that the following conditions are satisfied:
A. Acceptance of RWs will not jeopardize the ability
of the state to issue regular warrants for education,
debt service, state payroll, pensions, In-Home
Supportive Services (IHSS), Medi-Cal providers, or
any other payment required by federal law, the State
Constitution, or court orders.
B. Acceptance of RWs will not result in a "net cost"
to the state, as specified.
2. Prohibits a state agency from accepting a RW for
obligations owed by a payee for payments subject to
immediate deposit standards, as specified.
3. Requires the State Controller to submit a report to the
Joint Legislative Budget Committee with the following
information by September 1 following the conclusion of a
fiscal year in which state agencies accept RWs:
A. The number and amount of RWs accepted by state
agencies.
B. The effect of accepting RWs on the state's cash
flow and financial well being, including net costs or
savings, and any impacts on state payments required
by federal law, the State Constitution, or court
orders.
4. Sunsets on July 1, 2012.
Background
Warrants are the government equivalent of checks, and are
issued by the State Controller to pay the state's
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obligations. There are three types of warrants: RWs,
registered reimbursement warrants, and registered refunding
warrants.
The State Constitution mandates that education and debt
service have priority status for regular warrants. The
State Constitution, federal law and a court order require
that state payroll, the Public Employees' Retirement
System, the State Teachers' Retirement System, IHSS, and
Medi-Cal providers also be paid with regular warrants. The
state may issue RWs for all other payments, including those
to private businesses, local governments, taxpayers
receiving income tax refunds and owners of unclaimed
property.
An RW is a "promise to pay," or an IOU, that is issued by
the state when there are not enough funds to pay all of its
General Fund obligations. RWs bear interest and are
redeemable by the State Treasury only when the General Fund
has sufficient money. RWs are presently considered legal
investments for all trust funds, insurance funds, savings
and loans funds, and funds of all counties, municipal
corporations, districts, public corporations, political
subdivisions, or state agencies. Further, state law
expressly permits a taxpayer to pay a tax liability, as
specified, in whole or in part, by a check in an amount not
to exceed the amount of an RW, and the Government Code
declares "all warrants are payable in such coin or currency
of the U.S. as at the time of payment is legal tender for
the payment of public and private debts."
Currently, under Section 17280.1 of the Government Code,
the Franchise Tax Board has authority to accept RWs in
satisfaction of taxpayer obligations to the state. In July
2009, the Board of Equalization voted to accept RWs in
satisfaction of obligations associated with tax programs it
administers. The Employment Development Department also
began accepting RWs in August 2009. The Department of
Motor Vehicles and most other agencies, however, did not
accept RWs in lieu of cash.
This bill requires all state agencies to accept RWs (at
full face value) as payments for obligations owed the state
after certain determinations are made by the State
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Controller. These include that (1) acceptance of RWs will
not jeopardize the ability of the state to issue regular
warrants for education, debt service, state payroll,
pensions, IHSS, Medi-Cal providers, or any other payment
required by federal law, the California Constitution, or a
court order and (2) acceptance of RWs will not result in a
net cost to the state.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12
2012-13 Fund
Controller report Up to $100
one-timeGeneral/
Special
SUPPORT : (Verified 8/10/10)
Acclamation Insurance Management Services
Alliance Consulting Engineers, Inc.
Alpine Mountain Empire Chamber of Commerce
American Federation of State, County and Municipal
Employees, Local 2620
Associated Builders and Contractors of California
Associated Builders and Contractors, Inc. (San Diego
Chapter)
Associated General Contractors of America (San Diego
Chapter)
Beaumont Unified School District
Bill Leonard, Member, Board of Equalization
Board of Equalization
Bob Duff, Board Member, La Mesa-Spring Valley School
District
Borrego Springs Chamber of Commerce
Borrego Water District
Bourdette & Partners
Cajon Valley Union School District
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California Association of Health Facilities
California Chapter of the American Fence Association
California Fence Contractors' Association
Century Design Inc.
Chemists, Inc.
Cities of Buena Park, Costa Mesa, El Cajon, Escondido,
Garden Grove, Irvine, La Mesa, La Palma, Laguna Niguel,
Lemon Grove, Moreno Valley, Oceanside, Rancho Santa
Margarita, San Juan Capistrano, Santee, and Solana Beach
City of La Quinta staff
Clark Steel Fabricators Inc.
COEUS Technologies
Congressman Brian Bilbray, 50th District
Congressman Duncan Hunter, 52nd District
Cordi and Associates
Councilmember Ernest Ewin, City of La Mesa
Councilmember Katrina Foley, City of Costa Mesa
Councilmember Mary England, City of Lemon Grove
Custom Service Systems
DNB Engineering, Inc.
Doug Metz, Coronado School Trustee
El Cajon Grading & Engineering Co., Inc.
Engineering Contractors' Association
Escondido Chamber of Commerce
Fallbrook Public Utilities District
Father Joe's Villages
Flasher/Barricade Association
Folsom Technology Group
Food and Beverage Association of San Diego
Foothills Christian Church
Gafcon
Gate City Beverage Distributors
Gear Vendors, Inc.
General Personnel Management Inc.
Grossmont Healthcare District
Grossmont Union High School District
Hamann Companies
Harbor Distributing, LLC
Hart Optical Co.
Helix Electric, Inc.
Helix Water District
HGH Home of Guiding Hands
Hitzke Development Corporation
Howard Jarvis Taxpayers Association
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Independent Waste Oil Collectors and Transporters
Investor Equity Group
J-ROC Construction, Inc.
Julian Community Services District
Kelly International Development Corporation
Lakeside Chamber of Commerce
Lakeside Fire Protection District
Lakeside Union School District
Lemon Grove School District
Leo Hamel Fine Jewelers
Leucadia Wastewater District
Madison Avenue Educational Center
Marin Builders' Association
Mayor Bud Lewis, City of Carlsbad
Mayor Donald McCay, City of Buena Park
Mayor Jim Desmond, City of San Marcos
Mayor Mark Lewis, City of El Cajon
Mayor Mark Nielsen, City of San Juan Capistrano
Mayor Pro Tem Wendy Leece, City of Costa Mesa
Mayor Scott Farnam, City of Wildomar
Mayor William Dalton, City of Garden Grove
Midway City Sanitary District
Morro Hills Community Services District
Moulton Niguel Water
Municipal Water District of Orange County
Neighborhood Market Association
Noah Homes
North Coast Association of Residential Care Administrators
Oceanside Chamber of Commerce
Orange County Board of Supervisors
Otay Water District
Palm Desert Chamber of Commerce
People's Advocate, Inc.
Pina Business Services
Pistoresi Chrysler - Dodge - Jeep
Prescott & Associates
Purl's Sheet Metal & Air Conditioning
Quest for Excellence
R2A Architecture
Ramona Unified School District
Rancho San Diego Chamber of Commerce
RBA Raisin Bargaining Association
Redondo Beach Chamber of Commerce
RGP Prosthetic Research Center
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Rick Winet, School Board Trustee, La Mesa Spring Valley
School District
Roel Construction Company
Royce & Company
Rural Economic Action League of San Diego County
San Diego County Board of Supervisors
San Diego County District Attorney
San Diego County Fire Chiefs Association
San Diego County Medical Society
San Diego East County Chamber of Commerce
San Diego Insurance Staffing
San Diego North Chamber of Commerce
San Diego Regional Center
San Diego Regional Chamber of Commerce
San Diego Workforce Partnership
San Marcos Chamber of Commerce
Santee School District
Southwest California Legislative Council
St. Madeleine Sophie's Center
STAT Pharmaceuticals
State Building and Construction Trades Council of
California
Summit Transmissions
Sunny Days Preschool
Supervisor Ron Roberts, San Diego County
SureWest Communications
Synergy Solutions
TEAM XL
Tierrasanta Community Council
Tina Pope, Board Member, Escondido Union High School
District
TLC Staffing
Trabuco Canyon Water District
United Agribusiness League
Vanguard Cleaning Systems, Inc.
Vice Mayor Brian Jones, City of Santee
Wade, Howard & Associates, CPAs LLP
Waste Management
Williams & Sons Masonry, Inc.
Yorba Linda Water District
OPPOSITION : (Verified 8/10/10)
Department of Finance
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ARGUMENTS IN SUPPORT : According to the author's office,
this bill is a taxpayers' rights measure that addresses an
inequity in current law, whereby the state may issue IOUs
in lieu of warrants, but is not required to accept these
IOUs for obligations owed to the state.
ARGUMENTS IN OPPOSITION : While the bill may have some
merit in alleviating some of the hardships related to the
receipt and use of
IOUs, the Department of Finance opposes this bill for the
following reasons:
Given the amount and timing of the receipt of IOUs in
lieu of cash payments is unknown, this bill could
complicate the state's ability to manage its cash
program.
By allowing IOUs to be submitted to the state in lieu of
cash payments, this bill would at least partially cancel
the cash flow benefits to the state of issuing IOUs.
The provisions of this bill become inoperative on July 1,
2012, and they automatically become repealed on January
1, 2013.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Brownley, Caballero, Charles Calderon, Carter, Chesbro,
Conway, Cook, Coto, Davis, De La Torre, De Leon, DeVore,
Duvall, Emmerson, Eng, Evans, Feuer, Fletcher, Fong,
Fuentes, Fuller, Furutani, Gaines, Galgiani, Garrick,
Gilmore, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill,
Huber, Huffman, Jeffries, Jones, Knight, Krekorian, Lieu,
Logue, Bonnie Lowenthal, Ma, Mendoza, Miller, Monning,
Nava, Nestande, Niello, Nielsen, John A. Perez, V. Manuel
Perez, Portantino, Ruskin, Salas, Saldana, Silva,
Skinner, Smyth, Solorio, Audra Strickland, Swanson,
Torlakson, Torres, Torrico, Tran, Villines, Yamada, Bass
NO VOTE RECORDED: Buchanan, Vacancy
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TSM:mw 8/10/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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