BILL ANALYSIS �
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THIRD READING
Bill No: AB 18X1
Author: Blumenfield (D)
Amended: 6/9/11 in Senate
Vote: 27
PRIOR VOTES NOT RELEVANT
SUBJECT : Budget Act of 2011: Schools and Local Public
Safety
Protection Act of 2011
SOURCE : Author
DIGEST : This bill enacts the Schools and Local Public
Safety Protection Act of 2011, which extends for one year
the current vehicle fee rate, the sales and use tax rate,
income tax dependent exemption and income tax rural
surcharge.
Senate Floor Amendments of 6/9/11 were technical.
ANALYSIS : The Governor has called for an election to
decide the question of maintaining existing tax rates for
an additional five years. Given the current date, and the
time it takes to call an election, this will not happen
until after the new fiscal year has started on July 1,
2011. Bridge financing includes extending the following
taxes for one year:
Current vehicle license fee rate of 1.15 percent.
CONTINUED
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Current sales tax rate at six percent and dedicate
one percent to local public safety realignment.
2010 personal income tax (PIT) dependent exemption
credit level ($99) for the 2011 and 2012 tax years.
2010 PIT surcharge (0.25 percent for the 2012 tax
year.
The purpose of this 'bridge" of one year, provides
certainty for school districts and local public safety
activities. If the election fails, local schools and
public safety operations will need time to plan for another
round of significant reduction, and it will not be possible
for local schools and counties to reduce costs quickly
enough to adjust for the large reductions required if an
election fails.
Local Public Safety Services Realignment
Revenues for Local Public Safety Services . This statute
specifies that one percent of the sales and use tax and 0.4
percent of the vehicle license fee be continued for one
year until July 1, 2012 until an election can be held to
consider a constitutional amendment to extend these taxes
and dedicate these revenues to local governments. The
Department of Finance estimates that extending the one
percent sales and use tax and 0.4 percent vehicle license
fee taxes set to expire July 1, 2011 will generate $5.6
billion in revenues in the 2011-12 fiscal year.
This statute creates the Local Revenue Fund 2011 and
directs that these revenues be deposited into this fund and
be continuously appropriated. The county treasurer, city
and county treasurer, or other appropriate official shall
create a County Local Revenue Fund 2011 within the treasury
of each applicable local government to receive funds from
the Local Revenue Fund 2011.
This bill requires that funds deposited in the Local
Revenue Fund 2011 and then subsequently in the County Local
Revenue Fund 2011 be used exclusively to fund local public
safety services. However, the funds may also be used to
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reimburse the State for costs incurred in providing public
safety services on behalf of local agencies until full
implementation of the realignment occurs.
After the taxes expire the State shall continue to annually
provide monies to the Local Revenue Fund 2011 in an amount
equal to or greater than the aggregate amount that
otherwise would have been provided by the taxes.
This bill provides that if the State fails to annually
appropriate that amount, the Controller shall transfer that
amount from the General Fund monthly to the Local Revenue
Fund 2011. This bill prescribes that this obligation will
have a lower priority claim to General Fund money than
school funding and voter-approved debt liabilities.
Definition of Public Safety Services . This bill defines
public safety services as follows:
Employing and training public safety officials,
including law enforcement personnel, attorneys
assigned to criminal proceedings, and court security
staff.
Managing local jails and providing housing,
treatment, and services for, and supervision of,
juvenile and adult offenders.
Preventing child abuse, neglect, or exploitation;
providing services to children who are abused
neglected or exploited, or who are at risk of abuse,
neglect, or exploitation, and the families of those
children; providing adoption services, providing
transitional housing and other services to emancipated
youth, and providing adult protective services.
Providing mental health services to children and
adults to reduce failure in school, harm to self or
others, homelessness, and preventable incarceration or
institutionalization.
Prevention, treating, and providing recovery
services for substance abuse.
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This bill describes "2011 Realignment Legislation" to be
legislation enacted before October 9, 2011, that will
provide for the assignment of public safety services
responsibilities to local agencies. This bill specifies
that the 2011 Realignment Legislation will specifically set
forth the methodology for allocating funds to local
agencies, the methodology for determining the amount of
revenues owed counties at the end of the five-year period,
and the process for the local governments to reimburse the
State for transition costs before realignment is fully
implemented.
The realignment of public safety services defined in this
bill allows for greater integration and innovation in
program design and adaptation to local circumstances and
priorities. Furthermore, realigning the revenues to the
local level also helps to better align the funding with the
level of government ultimately responsible for managing the
realigned programs. This should improve accountability and
the ability of local programs to respond to local
priorities.
State Mandates . This bill specifies that a local
jurisdiction does not have to comply with providing a
higher service level, as prescribed by one of the
following, if the overall effect is to increase the costs
of the public safety programs realigned in the 2011
Realignment Legislation.
Legislation enacted after October 9, 2011.
Regulations, executive orders, or administrative
directives implemented after October 9, 2011.
Plans, waivers, or amendments to those plans or
waivers that are submitted to the federal government.
Federal Impacts . If federal law is changed to alter the
conditions under which federal matching funds are obtained
for the programs described above in subdivisions (c), (d),
or (e) and the changes have the overall effect of
increasing costs incurred by the local agency, this bill
specifies that the State should provide at least 50 percent
of the nonfederal share of those costs, annually, as
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determined by the State.
If the State is a party to any complaint brought in a
federal judicial or administrative proceeding that involves
the programs described above in subdivisions (c), (d), and
(e) and there is a settlement or judicial or administrative
order that imposes a cost in the form of a monetary penalty
or has the overall effect of increasing costs borne by the
local agency, the State shall annually provide at least 50
percent of the nonfederal share of those costs as
determined by the State. Payment by the State is not
required if the State determines that the settlement or
order relates to one or more local agencies failing to
perform a ministerial duty, failing to perform a legal
obligation in good faith, or acting in a negligent or
reckless manner.
Judicial Relief . This bill maintains the authority of an
appropriate party to seek judicial relief if the State or a
local agency fails to perform a duty or obligation under
this constitutional amendment or under the 2011 Realignment
Legislation and provides that these proceedings have
priority over other civil matters.
Other Restrictions on Expenditure of Funds Deposited in
Local Fund. This bill requires that the funds deposited in
the County Local Revenue Fund 2011 be spent exclusively on
local public safety services, the bill also places the
following restrictions on the expenditure of monies from
these funds:
Requires that the funds be spent in a manner
designed to maintain the State's eligibility for
federal matching funds and to ensure compliance by the
State with applicable federal standards governing the
State's provision of local public safety services.
Requires that the funds shall not be used by local
agencies to supplant other funding for public safety
services.
Education Funding
Revenues for Education Funding . This bill specifies that
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0.1 of the vehicle license fee, the revenues generated from
maintaining the 2010 dependent credit level ($99) for the
2011 and 2012 tax years, and reestablishing the 0.25
surcharge in the 2011 tax year be used exclusively to
support school districts and community college districts.
The Department of Finance estimates that these revenues
will generate $3.8 billion in the 2011-12 fiscal year.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: Yes
Passage of this legislation will generate about $9.4
billion.
General Fund revenues of $3.8 billion in 2011-12 that will
be directed to K-14 education and be used to avoid
additional cuts to local public schools and community
colleges.
Additional local revenues for public-safety realignment of
$5.6 billion in 2011-12 that will be deposited in the Local
Revenue Fund 2011.
The realignment of local public safety services will result
in additional State savings especially in the area of state
corrections. However, the level of
savings is ultimately dependent on the implementation of
the 2011 Realignment Legislation.
DLW:do 6/10/11 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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