BILL ANALYSIS
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REPLACE 09/10/09-PER COMMITTEE CONSULTANT
SENATE THIRD READING
SB 65 (Ducheny)
As Amended September 4, 2009
2/3 vote. Urgency
SENATE VOTE :vote not relevant
SUMMARY: Makes changes to bonding requirements, as requested by
the State Treasurer's Office, and provide for additional
deferrals of state payments to address the cash crisis the state
is currently in. Specifically, these amendments:
1)Increases from 2% to 3%, until June 30, 2013, the amount which
may be appropriated for fees, costs, and other similar
expenses incurred in connection with a credit enhancement of
liquidity agreement linked to a bond sale.
a) Without this provision, the Treasurer will be unable to
extend existing debt and efficiently handle the current
cash situation.
2)Defers $250 million in payments to the University of
California System from February to no earlier than April 20th,
but no later than May 31, 2010.
3)Defers $250 million in payments to the California State
University System from February to no earlier than April 20th,
but no later than May 31, 2010.
4)Defers $150 million in payments to the California State
University System from March to no earlier than May 1st, but
no later than May 31, 2010.
5)Defers $100 million in payments to the California Community
College System from March 2009 to May 2010.
6)Modifies the deferral of Highway User Tax Account (HUTA)
payments such that July and August 2009 payments shall be made
in September of 2009. Additionally, payments for November
2009 through March 2010 shall be paid on, or within 2 working
days of, April 28, 2010.
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a) Exempts counties with a population of less than 40,000
from the deferral; and,
b) Allows locals to utilize other fund reserves to meet
cash obligations during the deferral period.
7)Delays state SSI/SSP payment to the federal government in
February and March 2010 to no earlier than April 20th, but no
later than May 31, 2010.
8)Urgency Clause: Declares this bill take effect immediately as
an urgency statute.
FISCAL EFFECT:
1)The cash deferral provisions of this bill will reduce the cost
to the state by reducing the size of the Revenue Anticipation
Notes (RANs) that must be issued, as well as reducing the
interest rate for those bonds. Near term interest costs for
this borrowing is likely increase by over $50 million per year
without these provisions.
2)The provisions affecting the Treasurer's ability to extend
existing debt will save the state billions of dollars. If
these provisions are not approved, the Treasurer will be
required to either:
a) Retire that debt at a cost of approximately $2 billion.
These funds will likely come from planned GO bonds. These
bond funds are intended to fund projects throughout the
state, and would have to be diverted for this purpose
instead; or,
b) Pay interest and other costs on these existing debts at
an increased rate with a current year cost of $150 million,
2010-11 costs of over $600 million, and increasing interest
costs each year there-after until these debts are retired.
Analysis Prepared by : Adam Dondro / BUDGET / (916) 319-2099
FN: 0003150
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