BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2663|
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THIRD READING
Bill No: AB 2663
Author: Bonnie Lowenthal (D)
Amended: 8/17/10 in Senate
Vote: 21
SENATE LOCAL GOVERNMENT COMMITTEE : 5-0, 6/30/10
AYES: Cox, Aanestad, Kehoe, DeSaulnier, Price
SENATE APPROPRIATIONS COMMITTEE : 11-0, 8/12/10
AYES: Kehoe, Ashburn, Alquist, Corbett, Emmerson, Leno,
Price, Walters, Wolk, Wyland, Yee
ASSEMBLY FLOOR : 73-1, 6/2/10 - See last page for vote
SUBJECT : Local government: federal fiscal year
SOURCE : City of South Lake Tahoe
DIGEST : This bill requires the state to delay any
transfer of local funds from cities that function under a
federal fiscal year until October 1, but requires all
transfers to be complete by June 30 of the same fiscal
year. Specifically, this bill delays the transfer,
suspension, or borrowing of Highway Users Tax Account
revenues.
ANALYSIS : The State of California's fiscal year begins
on July 1 (AB 2447 [Deddeh], Chapter 789, Statutes of
1970). The federal government's fiscal year begins on
October 1.
CONTINUED
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State law does not specify a date on which a city must
begin its fiscal year. Five of California's 480 cities use
the federal fiscal year: El Segundo, Huntington Beach,
Inglewood, Long Beach, and South Lake Tahoe.
To help close state budget deficits, the Legislature often
borrows funds from local governments, transfers local
government revenues, and suspends payments to local
governments. For example, the 2009-10 budget transferred
$1.7 billion of redevelopment funds to offset state General
Fund spending and suspended Proposition 1A to borrow $1.9
billion of local property tax revenues.
If the Legislature transfers, borrows, or suspends revenues
allocated to a city that observes the federal fiscal year
calendar, this bill suspends the transaction July, August,
and September. This bill requires, instead, that the
transfer, borrowing, or suspension of revenues must
commence on October 1 and be completed on or before June 30
of that same state fiscal year.
This bill applies only to the borrowings, transfers, or
suspensions of revenues from the Highway Users Tax Account
in the Transportation Tax Fund.
This bill defines "federal fiscal year" as a fiscal year
beginning on October 1 and ending September 30. This bill
defines "state fiscal year" as a fiscal year beginning on
July 1 and ending June 30.
This bill includes legislative findings and declarations
regarding the need to accommodate cities that observe the
federal fiscal year calendar.
Comments
When the state borrows, transfers, or suspends local
governments' funds during July, August, and September - the
first quarter of the state's fiscal year - it
disproportionately affects the five cities in which those
three months are the final quarter of their preceding
fiscal year. To avoid closing the fiscal year with a
deficit, those cities must adapt to state borrowing,
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transfers, or suspensions by sharply adjusting their
spending over a three-month period. By contrast, other
cities can plan ahead to accommodate state fiscal policy
changes over a full fiscal year. This bill grants cities
that follow the federal fiscal year the opportunity to wait
until a new fiscal year begins to adjust to state fiscal
policy changes.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
Unknown with latest amendments.
SUPPORT : (Verified 8/17/10)
City of South Lake Tahoe (source)
Cities of Huntington Beach, Inglewood, and Long Beach
OPPOSITION : (Verified 8/17/10)
Department of Finance
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Arambula, Bass, Beall, Bill
Berryhill, Blakeslee, Block, Blumenfield, Bradford,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon,
DeVore, Emmerson, Eng, Evans, Feuer, Fletcher, Fong,
Fuentes, Fuller, Furutani, Gaines, Galgiani, Garrick,
Gilmore, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill,
Huber, Huffman, Jeffries, Jones, Knight, Logue, Bonnie
Lowenthal, Ma, Mendoza, Monning, Nava, Nestande, Niello,
Nielsen, V. Manuel Perez, Portantino, Ruskin, Salas,
Saldana, Silva, Skinner, Smyth, Solorio, Swanson,
Torlakson, Torres, Torrico, Tran, Villines, Yamada, John
A. Perez
NOES: Anderson
NO VOTE RECORDED: Tom Berryhill, Lieu, Miller, Norby,
Audra Strickland, Vacancy
AGB:mw 8/17/10 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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