BILL ANALYSIS                                                                                                                                                                                                    




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                           2746 (Blakeslee)
          
          Hearing Date:  8/2/2010         Amended: 6/15/2010
          Consultant: Katie Johnson       Policy Vote: BFI 10-0
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          BILL SUMMARY:  AB 2746 would authorize the California Earthquake  
          Authority (CEA) to contract for the services of a chief  
          mitigation officer, a post that would be subject to the Fair  
          Political Practices Commission (FPPC) Form 700 filing.
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                            Fiscal Impact (in thousands)

          Major Provisions         2010-11      2011-12       2012-13     Fund
                                                                  
          CEA contract for                $65          $130 $130 Private*
          chief mitigation officer

          *Fully supported by premiums
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          STAFF COMMENTS: 

          In order to support and enhance the authority's various  
          mitigation programs, this bill would authorize the CEA to  
          contract for the services of a chief mitigation officer, a post  
          that would be subject to FPPC Form 700 filing. Costs to CEA to  
          hire a chief mitigation officer would be approximately $65,000  
          in FY 2010-2011 and $130,000 annually thereafter. CEA is fully  
          funded by policyholder premiums and its budget is separate and  
          apart from the California State Budget. Costs to the FPPC to  
          monitor one additional person's finances would be minor and  
          absorbable.

          This bill would also permit CEA to accept grants and gifts of  
          property, and services for the Earthquake Loss Mitigation Fund  
          or the related residential retrofit program from federal, state,  
          and local government sources and private sources.

          CEA is a publicly-managed, privately-funded entity. Companies  
          that sell residential property insurance may choose to offer  










          their own privately funded earthquake insurance product, or they  
          may choose to participate in CEA. The Legislature created the  
          authority in 1996 after the 6.7 magnitude earthquake centered in  
          Northridge, California. Administrative costs may exceed no more  
          than 3 percent of annual written premiums.

          A similar bill, AB 43 (Blakeslee, 2009), was vetoed by Governor  
          Schwarzenegger. He said, "While I am supportive of the  
          California Earthquake Authority (CEA) contracting for the  
          services of a Chief Mitigation Officer to be responsible for the  
          mitigation activities of the CEA, I cannot support the provision  
          in this bill eliminating the limit on the number of civil  
          service employees that can be employed by the CEA." This bill  
          would address the veto message by permitting CEA to contract for  
          a chief mitigation officer, but would not seek to eliminate  
          CEA's staff limit.