BILL ANALYSIS                                                                                                                                                                                                    



                                                                SB 866
                                                                Page  1


        SENATE THIRD READING
        SB 866 (Budget and Fiscal Review Committee)
        As Amended  October 7, 2010
        2/3 vote.  Urgency 

         SENATE VOTE  :Vote not relevant  
         
         SUMMARY  :  Makes various changes to state laws to address the payment  
        of mandate reimbursement claims by local governments. Specifically,  
         this bill  :

        1)Establishes a payment schedule for the state to pay mandate  
          reimbursement claims owed to local governments-cities, counties,  
          cities and counties and special districts-that have been applied  
          for and approved but not yet paid. Specifically, the state would  
          commit to a payment schedule to pay mandate reimbursement claims  
          through June 30, 2004, totaling $690 million plus interest. The  
          schedule of payments would require 2.5% of the total amount of  
          mandate reimbursement claims in 2011-12 and 2012-13 and a  
          gradually increasing share of the total each year until the full  
          amount of the mandate reimbursement claims are repaid in 2020-21.  
          State payments pursuant to the schedule would be continuously  
          appropriated.

        2)Directs the State Controller to prepare within 120 days of  
          enactment a list of mandate reimbursement claims and related  
          interest applied for and approved for specified local governments.  
          The schedule of payments would be applied to the list of mandate  
          reimbursement claims prepared by the State Controller.

        3)Authorizes a joint powers authority to purchase, with the proceeds  
          of its bonds or other revenue, the right of a local government to  
          receive mandate reimbursement claims, and allow a local government  
          the opportunity to sell these mandate claim receivables to a joint  
          powers authority. The bill would give local governments the option  
          of either selling or retaining the mandate claim receivables.

        4)Provides that interest attributable to mandate reimbursement  
          claims be paid by the state along with the underlying mandate  
          reimbursement claims as set forth in the specified schedule. The  
          state would pay 2% annually of the entire amount of mandate claim  
          receivables sold (constituting the mandate claim receivable amount  
          and the interest accrued to date on such mandate claim  
          receivables). The state would continue to pay simple interest on  








                                                                SB 866
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          the mandate claim receivables that are not sold based on the  
          Pooled Money Investment Account rate.

        5)Urgency Clause.  Declares this bill take effect immediately as an  
          urgency statute.

         FISCAL EFFECT  :  The fiscal impact of this measure would depend on  
        how the state would choose to pay off its existing mandate claims in  
        absence of the bill. The bill creates no new fiscal obligation, but  
        does put into place a required payment schedule for the state's  
        existing obligation. There would be no fiscal impact in 2010-11.  
        Estimated impacts for 2011-12 and 2012-13 would be $40 million in  
        each year. The fiscal impact would rise over time, reaching  
        approximately $150 million in the final payment year 2020-21.


         Analysis Prepared by  :   Mark Ibele / BUDGET / 916-319-2099
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