BILL ANALYSIS �
AB 750
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Date of Hearing: May 18, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 750 (Hueso) - As Amended: May 5, 2011
Policy Committee: JEDE Vote:4-2
Banking and Finance 10-1
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill creates the investment trust blue ribbon task force
for the purpose of establishing a California Investment Trust
which would be a state bank receiving deposits of state funds.
Specifically, this bill:
1)Requires the Secretary of Business, Transportation and Housing
(BTH) to convene the task force. Specifies the task force
will include the Secretary of BTH, the Controller, Treasurer,
and Governor (or their designees) and other individuals, as
specified.
2)Establishes the purpose of the task force is to consider the
viability of establishing the California Investment Trust,
which would be a state bank receiving deposits of state funds.
Specifies criteria for evaluating the state trust.
3)Establishes that the task force will be staffed from existing
resources provided by the BTH Agency.
4)Provides that the appointed task force members shall be
reimbursed solely for the actual travel costs for attending
meetings. Costs associated with state government officials
attending meetings shall be paid by the respective government
entities.
5)Requires the task force to provide a report to the Legislature
by December 1, 2012. Requires the report to include
recommendations and a list of issues and considerations and,
if there is a supportive recommendation, other specified
information.
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FISCAL EFFECT
The Business Transportation and Housing Agency estimates costs
would be between $660,000 and $700,000 to staff the task force.
An additional $25,000 would be required for support of the
appointed members of the task force.
COMMENTS
1)Purpose. According to the author, this bill is needed to
explore the viability of a California State Bank. In response
to the sluggish economy several states including Maine,
Oregon, Washington and Rhode Island are examining the
appropriateness of creating a state bank. The author feels
California should also consider this option to help the state
address its challenges.
2)The California Infrastructure and Economic Development Bank
(I-Bank) . The I-Bank is located within the BTH Agency and is
governed by a five-member Board of Directors. The
I-Bank was created in 1994 to promote economic revitalization,
enable future development, and encourage a healthy climate for
jobs in California. The I-Bank has broad authority to issue
tax-exempt and taxable revenue bonds, provide financing to
public agencies, provide credit enhancements, acquire or lease
facilities, and leverage State and Federal funds. Current
I-Bank's programs include the Infrastructure State Revolving
Fund (ISRF) Program, 501(c)(3) Revenue Bond Program,
Industrial Development Revenue Bond Program, Exempt Facility
Revenue Bond Program and Governmental Bond Program.
3)Background. Due to the recent economic crisis, the issue of
states creating their own state banks has enjoyed more
interest. The only example of a state bank, however, is the
Bank of North Dakota (BND). In 1919, the state legislature
established BND with $2 million of capital. BND was charged
with the mission of "promoting agriculture, commerce and
industry" in North Dakota. BND was never meant to compete with
or replace existing banks. Instead, BND was created to partner
with other financial institutions and assist them in meeting
the needs of the citizens of North Dakota.
BND operates with more than $270 million in assets capital.
North Dakota began using bank profits in 1945 when money was
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first transferred into the GF. Since that time, capital
transfers have become the norm to augment state revenues. To
this extent, BND is considered a success.
4)Legislative hearing. The Assembly Banking and Finance
Committee has announced interest in an informational hearing
on the issue of whether or not it is feasible for California
to create a state bank.
5)There is no registered support or opposition on file.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081