BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 357|
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THIRD READING
Bill No: SB 357
Author: Ducheny (D), et al
Amended: 4/1/09
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE : 13-0, 4/14/09
AYES: Wright, Harman, Benoit, Calderon, Denham, Florez,
Negrete McLeod, Oropeza, Padilla, Romero, Wiggins,
Wyland, Yee
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Tribal gaming: grants to local jurisdictions
SOURCE : Barona Band of Mission Indians
DIGEST : This bill extends the sunset date, from January
1, 2010 to January 1, 2021, on the law which specifies how
Indian Gaming Special Fund local mitigation grant monies
are distributed.
ANALYSIS : Existing law creates the Indian Gaming Special
Distribution Fund (SDF) in the State Treasury for the
receipt of revenue contributions made by tribal governments
pursuant to the terms of the 1999 model Tribal-State Gaming
Compacts (compacts).
Existing law authorizes the Legislature to appropriate
money for the SDF for the following purposes:
CONTINUED
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1.Grants for programs designed to address gambling
addiction.
2.Grants for the support of state and local government
agencies impacted by tribal government gaming.
3.Compensation for regulatory costs incurred by the
California Gambling Control Commission (CGCC) and the
Department of Justice (DOJ) in connection with the
implementation and administration of compacts.
4.Payment of shortfalls that may occur in the Indian Gaming
Revenue Sharing Trust Fund (RSTF). This shall be the
priority use of monies in the SDF.
5.Disbursements for the purpose of implementing the terms
of tribal labor relations ordinances promulgated in
accordance with the terms of the 1999 compacts.
6.Any other purpose specified by law.
Existing law provides that the priority for funding from
the SDF is in the following descending order:
1.To make payments for any shortfalls that may occur in the
RSTF.
2.Grants for programs designed to address gambling
addiction.
3.Compensation to CGCC and DOJ for regulatory functions
that directly relates to Indian gaming.
4.Grants for the support of local government agencies
impacted by tribal gaming.
Existing law requires the Department of Finance, in
consultation with CGCC, to calculate the total revenue in
SDF that will be available for the budget year for local
government agencies impacted by tribal gaming. Requires
this information to be included in the May Budget revision.
Existing law establishes, until January 1, 2010, the
methodology for the allocation of SDF monies to local
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governments that have tribal government gaming in its
jurisdiction. Authorizes eligible local governments to
establish Benefit Committees to award SDF monies to fund
grant projects pursuant to specified criteria.
Existing law requires each county that administers grants
from the SDF to provide an annual report to the Chairperson
of the Joint Legislative Budget Committee, the chairpersons
of the Senate and Assembly Committees on Governmental
Organization, and CGCC by October 1 of each year detailing
the specific projects funded by all grants in its
jurisdiction. Counties that do not provide the annual
report required under current law to CGCC and the
Legislature are ineligible for funding from the SDF for the
following year.
Existing law requires the State Auditor to conduct an audit
every three years and report its findings to the
Legislature regarding all allocation and use of SDF grant
monies.
Executive Order D-66-03 authorizes and requires CGCC to
collect and account for all SDF contributions under the
tribal-gaming compacts.
This bill extends the sunset on the SDF local government
grant statute from January 1, 2020. This extension ensures
that the local government grant allocation statute will be
available for the remaining life of the 1999 compacts,
which expire in 2020.
Background . The SDF was established by agreement among the
signatory parties of the 1999 compacts and subsequently
created in the State Treasury by SB 1385 (Battin), Chapter
874, Statutes of 1999. SB 1383 and subsequent legislation
specify the allowable and priority uses of funds
appropriated by the Legislature from the SDF.
The 1999 compacts . Under the terms of the 1999 compacts,
tribes that operated more than 200 gaming devices on
September 1, 1999 make contributions into the SDF. There
were 38 tribes conducting gaming on September 1, 1999, of
which 28 had more than 200 gaming devices. As of today,
primarily due to renegotiated compacts under the
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Schwarzenegger administration, 21 tribes make contributions
into the SDF.
The amount each tribe contributes into the SDF is based on
the average gaming device net win multiplied by the number
of gaming devices that the tribe had in operation on
September 1, 1999. Beginning in the 2008-09 fiscal year,
the SDF is projected to receive approximately $50 million a
year.
Budget Actions . The Budget Act of 2003-04 appropriated $25
million from the SDF to local jurisdictions impacted by
Indian gaming. The Budget Acts of 2004-05, 2005-06, and
2006-07, each appropriated $30 million from the SDF to
local governments impacted by Indian gaming.
The Budget Act of 2007-08 included a $30 million
appropriation from the SDF to local governments impacted by
Indian gaming, however, the Governor blue-penciled that
appropriation. In his veto message, the Governor stated:
"As evidenced in a recent Bureau of State Audits
report, there is great concern regarding whether these
funds are being used solely for their intended purpose,
which is to mitigate the impacts of having tribal
casinos in their communities. I will support
legislation that includes an appropriation for
mitigation funds if the process if reformed. With this
reduction, there still remained $283,000 for payment to
Del Norte County which reflects local mitigation grant
funding not received by Del Norte County from the
Indian Gaming Special Distribution Fund in fiscal years
2003-04, 2004-05, and 2005-06."
The Governor's 2008-09 proposed budget did not include an
appropriation from the SDF for local mitigation. Neither
did the Governor's 2008 may Revise. $30 million in funding
from the SDF was ultimately made for local mitigation
grants pursuant to AB 158 (Torrico), Chapter 754, Statutes
of 2008.
The Governor's 2009-10 proposed budget and the 2009 Budget
Act did not include an appropriation from the SDF for local
mitigation grants.
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FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 4/28/09)
Barona Band of Mission Indians (source)
Agua Caliente Band of Cahuilla Indians
California State Sheriffs' Association
Habematolel Pomo of Upper Lake
Ione Band of Miwok Indians
Susanville Indian Rancheria
Sycuan Band of Kumeyaay Nation
Redding Rancheria
Regional Council of Rural Counties
Resighini Rancheria
Table Mountain Rancheria
Viejas Band of Kumeyaay Indians
ARGUMENTS IN SUPPORT : The Barona Band of Mission Indians
(Barona) points out that the 1999 compacts require that
"the State's share of the Gaming Device revenue shall be
placed in the Special Distribution Fund, available for
appropriation by the Legislature for, among other things,
grants, including any administrative costs, for the support
of state and local government agencies impacted by tribal
government gaming."
Further, Barona points out that the compact also states,
"it is the intent of the parties that Compact Tribes will
be consulted with the process of identifying purposes for
grants made to local governments." Proponents contend that
there are several implicit factors in this 1999 compact
statement, including: (1) this statement clearly refers to
the 1999 compact "parties", which are currently the State
of California and the 21 tribes that continue to be parties
to the 1999 compacts, (2) given this, the consultation on
local government grants refers solely to those tribes that
operate under the 1999 compacts, (3) SDF-paying tribes must
be primary in any process of guiding local government
mitigation grants. To further underscore this point,
proponents believe it is important for state leaders to
remember that each 1999 compact is an individual agreement
between the state and a single tribal government - and
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local government mitigation grant funds must be viewed in
that context, and (4) moreover, State support of SDF-paying
tribes' ability to operate within the parameters of the
1999 compacts (including local government grant provisions)
strengthens the parties government-to-government
relationship.
Barona notes that the current statute that outlines the
formula for allocation of local mitigation funds is
generally reasonable. Particularly given that the statute
requires SDF funds for local mitigation purpose to have the
consent of SDF-paying tribes before being allocated. These
funds benefit the SDF-paying tribes' local communities in a
manner that is consistent with the 1999 compacts, the
Coyote Valley case and the recent Rincon decision. This
formula should be maintained and the sunset date should be
extended for the life of the 1999 compacts, which expire in
2020.
Finally, Barona contends that at the time of the 1999
compacts, SDF-paying tribes had - and continue to have - a
reasonable expectation that the local government grant
component of the compact would continue to be honored via
annual appropriations of monies to mitigate local impacts
of SDF-paying tribes' gaming operations.
The California Association of Tribal Governments (CATG)
member tribes support the underlying principals of the 1999
tribal-state compacts and Proposition 1A, which intended
Indian gaming revenue to be used in part to support local
governments impacted by tribal government gaming, and to
provide payments to non-compact tribes. State law provides
that payments to non-compact tribes are the priority use of
the SDF.
Although the CATG supports payments form the SDF to
impacted local governments, in the near future there must
be a discussion and solution to address the distribution
formula within Government Code Section 12718. The January
30, 2009 analysis from the Legislative Analyst's Office
(LAO), reports the SDF balance will be depleted as early as
2011 or as late as 2015 if SDF funding to local governments
continues at the previous appropriation levels. The LAO
notes that because of the decline in payments by gaming
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tribes into the SDF, "the SDF now has a large,
unsustainable structural deficit that must be addressed by
the Legislature within the next few years." The LAO
recommends significant changes to the local grant funding
process in order to sustain the long term viability of the
SDF. Because many of its member tribes are beneficiaries
of payments from the SDF, the CATG and its member tribes
have a legitimate interest in sustaining the long term
viability of the SDF.
TSM:cm 4/28/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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