BILL ANALYSIS Ó
AB 1292
Page 1
Date of Hearing: May 18, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1292 (Roger Hernandez) - As Amended: May 4, 2011
Policy Committee: Environmental
Safety and Toxic Materials Vote: 8-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill authorizes the issuance of revenue bonds to provide
funding to satisfy matching requirements under the Safe Drinking
Water Act. Specifically, this bill:
1)Authorizes the California Infrastructure and Economic
Development Bank (I-Bank) to contract with the Department of
Public Health (DPH) to issue tax-exempt revenue bonds, with
the proceeds to be placed in the Safe Drinking Water Revolving
Fund (SDWRF).
2)Authorize the issuance of revenue bonds by the I-Bank to be
used to meet the federal matching requirements of the Safe
Drinking Water Act.
3)Provides that tax-exempt revenue bonds be repaid from SDWSRF
as security for revenue bonds and authorizes the use of
interest earned from water system loans from the fund to pay
principal and interest to bond holders.
FISCAL EFFECT
1)Potential issuance of revenue bonds, possibly in the
millions of dollars, to provide the state match for Safe
Drinking Water Act federal money.
2)Annual costs to DPH in the range of $100,000 to $150,000
for contract services to provide financial advice
regarding the implementation of a revenue bond program.
(SDWSRF.)
AB 1292
Page 2
COMMENTS
1)Rationale . DPH (sponsor) asserts that it needs the authority
to issue bonds, through the I-Bank, and to use the interest
from water system loans to repay bond holders so that DPH can
satisfy the 20% state match for federal drinking water funds
and receive the maximum possible amount of those federal
funds. DPR notes that, under existing law, it is not
authorized to use interest earned from water system loans to
pay bond holders.
1)Background . The DPH administers a safe drinking water
regulatory program for all publicly and privately owned water
systems of 15 or more service connections. The department
administers the Safe Drinking Water Revolving Fund, which
provides loans and grants to local agencies for safe drinking
water system upgrades. The fund receives federal monies, for
which the state must provide a 20% match. In recent years,
the state has met this match requirement using proceeds from
bonds issued pursuant to Proposition 50 (the Water Security,
Clean Drinking Water, Coastal and Beach Protection Act of
2002).
DPH reports that the federal drinking water allocation will be
approximately $90 million for each of the next several years,
which will require the state to provide an annual match of $18
million. DPH indicates that current state match sources are
insufficient to provide the full match, so the state risks
forfeiting federal drinking water money.
2)Support . The bill is supported by its sponsor, the Department
of Public Health.
3)There is no formal opposition registered to this bill.
Analysis Prepared by : Jay Dickenson / APPR. / (916) 319-2081