BILL ANALYSIS Ó
AB 1292
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1292 (Roger Hernández)
As Amended July 12, 2011
Majority vote
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|ASSEMBLY: |78-0 |(June 2, 2011) |SENATE: |29-0 |(August 31, |
| | | | | |2011) |
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Original Committee Reference: E.S. & T. M.
SUMMARY : Authorizes the California Department of Public Health
(CDPH) to contract with California Infrastructure and Economic
Development Bank (I-Bank) to sell revenue bonds to assist
drinking water systems in meeting their federal Safe Drinking
Water State Revolving Fund (SDWSRF) matching fund requirements.
The Senate amendments add the requirement that CDPH must include
in their biennial report, beginning in January 1, 2013, the
results of a federal survey of California's public water
infrastructure needs.
EXISTING LAW :
1)Creates the I-Bank within the Business, Transportation and
Housing Agency, to promote economic revitalization, enable
future development, and encourage a health climate for jobs in
California. Authorizes the I-Bank to issue tax-exempt and
taxable revenue bonds to underwrite the costs of
infrastructure development that meets certain public purposes.
2)Establishes the SDWSRF and continuously appropriates the funds
to CDPH to provide grants or revolving fund loans for public
water systems to enable suppliers to meet safe drinking water
standards.
3)Under the federal 1996 Safe Drinking Water Act (SDWA),
establishes the Drinking Water State Revolving Fund (DWSRF) to
provide states with a financing mechanism to ensure safe
drinking water to the public.
AB 1292
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AS PASSED BY THE ASSEMBLY, this bill was substantially similar
to the version approved by the Senate.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, this bill would result in the potential issuance of
revenue bonds, possibly in the millions of dollars, to provide
the state match for SDWA federal money. The annual cost to CDPH
is estimated to be 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.
COMMENTS :
Need for the bill . According the CDPH, the sponsors of this
bill, the legislation is necessary to assure that California is
able to receive the maximum amount of federal funds available in
2011, and in subsequent years, to address drinking water system
infrastructure needs. California receives annual funding from
the U.S. Environmental Protection Agency (US EPA) for the SDWSRF
program. The annual funding amount has ranged from $66 million
to $126 million, and is expected to continue at approximately
$90 million per year for 2011 and for the next several years
based on recent federal budget actions. In order for the state
to receive these federal dollars, the state must provide a 20%
match of state funds.
With an allocation of approximately $90 million per year, the
required state match is projected to be $18 million annually;
current state match sources are not enough to provide the full
match for the current federal grant or in subsequent years.
This increased allocation of federal funds requires the state to
put forth a larger match in order to draw down this critical
funding.
The state match can come from General Fund allocations or from
state bond measures (e.g., California has done this with
Proposition 13, Proposition 50, and Proposition 84). As an
alternative to these options, US EPA allows states to sell
revenue bonds to provide the state match. States are allowed to
use the moneys in the SDWSRF as security for revenue bonds, and
to use the interest earned from water system loans to pay
principal and interest to bond holders. CDPH does not currently
have statutory authority to issue or sell revenue bonds; this
bill would provide such authority.
AB 1292
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Analysis Prepared by : Bob Fredenburg / E.S. & T.M. / (916)
319-3965
FN: 0002080