BILL ANALYSIS �
AB 1289
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Date of Hearing: January 19, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1289 (Davis) - As Amended: January 12, 2012
Policy Committee:
JudiciaryVote:10-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill modifies penalty provisions with regard to delinquent
payments into the State Court Facilities Construction Fund
(SCFCF) and the Immediate and Critical Needs Account (ICNA)
within the SCFCF. Specifically, this bill:
1)Provides that the penalty on a delinquent payment-rather than
being calculated at a daily rate equivalent to 1.5% per month
for the number of days the payment is delinquent-will be
calculated as follows:
a) Calculate interest on the payment by multiplying the
amount of the delinquent payment at a daily rate equivalent
to the rate of return in the Local Agency Investment Fund
(LAIF), from the date the payment was due to the earlier of
(1) 30 days after the State Controller issues a final audit
report regarding failure to pay or (2) the date of payment
by the responsible entity.
b) Calculate a penalty at a daily rate equivalent to 1.5%
per month from the date 30 days after the Controller's
final audit report is issued.
2)Provides that penalty payments on any delinquent transfer of
court fees to the SCFCF or ICNA would be made by the entity
(county or court) responsible for the error or other action
that caused the failure to pay, as determined by the
Controller in notice given to the responsible entity.
3)Allows the Controller to permit the county or court to pay the
penalty according to a payment schedule if the penalty amount
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causes a hardship to the paying entity.
4)Makes the above changes applicable to delinquent payments for
which no final audit has been issued by the Controller before
January 1, 2013.
FISCAL EFFECT
1)Calculating penalties using the LAIF rate rather than the
current statutory rate of 1.5% per month (18% per annum) will
increase or decrease penalty revenues to the two funds
depending on the actual LAIF rate, which is currently only
0.38%, but was 1.51% in late 2008. Penalty revenues to the
SCFCF totaled about $460,000 in 2011.
2)Conversely, the bill's modifications could lead to more
accurate and timely remittances of court fines than otherwise
would not have been remitted or were under-remitted due to
miscalculations or misunderstandings of current law. This
could result in increased revenues to both funds.
COMMENTS
Purpose . This bill, sponsored by the State Association of County
Auditors, is intended to clarify current law regarding penalty
provisions in the state's court construction funds - the SCFCF
and the ICNA. The bill provides that penalty payments on the
delinquent transfer of court fees to these construction funds
should be made by the entity (county or court) actually
responsible for the error that caused the failure to pay, as
determined by the Controller. This bill also limits the penalty
when notice of the delinquent transfer is not to the responsible
entity until sometimes years later. This will give local cities,
counties, and agencies an opportunity to correct underpayments
to a specified fund when brought to their attention, without 18%
annual accrued interest as a penalty per current law. As the
author notes, "?small to medium-sized counties are audited on a
multi-year schedule, some only as often as once every 5-7 years.
If the underpayment took place early in the cycle, the interest
will accrue to an exorbitant amount over time until it is
uncovered in an audit."
This bill is mirrors relief provided to counties and courts with
respect to delinquent payments to the Trial Court Trust Fund,
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under SB 539 (Margett)/Chapter 435 of 2007.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081