BILL ANALYSIS
AB 2591
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Date of Hearing: May 24, 2010
ASSEMBLY COMMITTEE ON BUDGET
Bob Blumenfield, Chair
AB 2591 (Feuer) - As Amended: May 10, 2010
SUBJECT : State Budget and Legislative Reform
SUMMARY : This bill would amend statute to fully implement the
budget reform provisions of ACA 4 (Feuer). This bill and ACA 4
constitute a state government reform package that is sponsored
by the organization California Forward. Specifically, this
bill :
1)Provides a statutory framework for the implementation of
performance-based budgeting;
2)Creates the systematic program performance review by the
Legislature;
3)Makes operational "pay-as-you-go" provisions contained in ACA
4; and
4)Specifies specific financial information that must be provided
by the Governor when submitting the budget.
FISCAL EFFECT : This bill, if implemented with ACA 4 (Feuer),
is likely to require new state spending in the tens of millions
of dollars annually to develop and implement new performance
standards. This includes additional resources for the DOF and
the LAO given their expanded roles under this bill. In addition,
new information technology expenditures could result to address
the new requirements.
COMMENTS : AB 2591 is a companion to ACA 4 (Feuer) which is a
Constitutional Amendment proposed by the California Forward
organization. California Forward created a bipartisan plan to
improve California's budget and fiscal processes based upon best
practices in other states and over two years of engagement with
citizens and organizations across California. One of the goal
of this package of reforms is to provide balanced solutions to
improve the accountability, effectiveness, and timeliness of the
state budget process.
AB 2591 establishes the statutory provisions that are referenced
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in ACA 4, to make the California Forward proposal full
operational.
AB 2591 requires the use of performance-based budgeting,
beginning in 2014-15. The bill defines a performance-based
budget as including:
1)The mission and goals of the agency;
2)The activities and programs for achieving these goals;
3)Performance metrics that reflect the desired outcomes and
targeted performance measurements;
4)Prior-year performance data and an explanation for any
deviation from previous year's targets; and,
5)Proposed changes in statute.
In 2012-13, the Governor would be required to include
performance measures and standards for all agencies in the
2014-15 budget, with the Legislative Analyst required to review
these measures as part of the overall budget review. The
Legislature may amend performance standards.
The bill also establishes a task force of the Director of
Finance, the Controller, and the Chairs and Vice Chairs of the
Budget Committees to establish guidelines to establish
performance-based budgeting and to review the plan to train
executive staff to begin using the performance-based budget
process.
AB 2591 requires a summary of mission, goals, performance, and
objectives for each agency on the Governor's web site.
AB 2591 requires the Legislature to designate or create a joint
committee that would review the performance of ever area of the
budget. The bill requires that all areas of the budget are
reviewed at least once every ten years, but requires that at
least one-third of all expenditures be reviewed by 2015 and that
two-thirds of all expenditures are reviewed by 2018. The
Legislature is required to adopt a schedule for the reviews,
including deadlines, within one year of enactment of the bill.
The reviews include all expenditures, but would also include tax
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expenditures, deductions and credits.
Each review is designed to take six months to complete. The
process envisioned in AB 2591 is as follows:
1)The joint committee develops an "initial review" document and
must submit it to the appropriate policy committee for
consideration, this occurs six months prior to the deadline;
2)The policy committee must make recommendations back to the
joint committee within 90 days of the deadline;
3)The committee makes it final recommendation; and,
4)Proposed legislation from the joint committee would be
referred to the appropriate policy committee.
In preparing proposed legislation for a program that is reviews,
the joint committee shall propose one of the following:
1)Changes to the program to reduce costs;
2)Change to the program to improve outcomes; or,
3)Termination of the program.
AB 2591 requires the fiscal committee of each house to determine
whether a bill or measure should be reviewed by the Legislative
Analyst's Office (LAO) to make determination of whether the
statute is restricted by the new constitutional "pay as you go"
provisions (contained in ACA 4) that require that any statute or
measure that has "qualified state costs" of more than $25
million must have offsetting program reductions or revenue
increases of an equal or greater amount.
The bill also allows the Legislature to override the LAO's
determination of constitutionality by a two-thirds vote in each
house. This bill authorizes the LAO to consider impacts to other
programs and establish a time period in making determinations in
this section. The Legislative Counsel digest shall reflect the
determination made by the LAO before a measure is read for a
third time if the LAO determines that the bill has qualified
state costs of $25 million or more.
AB 2591 defines "qualified state costs" to exclude: general
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obligation bond debt; restoration of funding that was reduced in
a prior fiscal year, to balance the budget to address a
forecasted deficit; one-time increases in the budget bill or a
budget trailer bill; COLAs or other workload increases,
including increases in Memorandums of Understanding (MOUs)
approved by the Legislature; and, local mandates. This bill
defines "a net increase in qualified costs" to mean ongoing
expenditures and does not include one-time expenditures. This
bill defines "additional revenue" to mean a sustained increase
as determined by the state agency responsible for collecting the
revenue.
In addition, AB 2591 waives the requirements of the new
"pay-as-you-go" Constitutional Amendment if the state is in a
structural surplus, and the net increase in costs or net
decrease in revenues does not exceed the amount by which state
revenues exceed state expenditure obligations in any given year,
over a five year period starting with the prior fiscal year.
AB 2591 specifies that the governor's budget must include a
projection of both expenditures and revenues for the three
fiscal years following the fiscal year succeeding the budget
year. The budget must also contain an estimate of the long-term
impact of expenditure and revenue proposals on the economy of
California and a five-year capital infrastructure plan.
REGISTERED SUPPORT / OPPOSITION :
Support
AARP
State Building and Construction Trades Council of California
Sierra Business Council
Monterey County Business Council
San Joaquin County Business Council
Fresno Business Council
Contra Costa Council
San Francisco Chamber of Commerce
Greenlining Institute
California Church IMPACT
Yolo County Board of Supervisors
California La Raza Lawyers Association
San Gabriel Valley Economic Partnership
California Alliance of Child and Family Services
Kern County Taxpayers Association
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Progressive Christians Uniting
The Campaign for College Opportunity (SCA 19 and SB 844)
WELL Network
Town of Paradise
Inland Empire Economic Partnership
San Carlos Chamber of Commerce
Valley Industry and Commerce Association
Opposition
Cal-Tax
East Bay Municipal Utility District
AFSCME
California Teachers Association
California Labor Federation
Analysis Prepared by : Christian Griffith / BUDGET / (916)
319-2099