BILL ANALYSIS �
AB 2515
Page 1
Date of Hearing: May 2, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2515 (Hall) - As Amended: March 29, 2012
Policy Committee: Governmental
Organization Vote: 16 - 0
Urgency: No State Mandated Local Program:
Yes Reimbursable: Yes
SUMMARY
This bill modifies the procedures governing the award of local
mitigation grants from the Indian Gaming Special Distribution
Fund (SDF) to require grant applications to the Indian Gaming
Local Community Benefit Committee to clearly show how the grant
will mitigate the impact of the specified casino and requires
the Indian Gaming Local Community Benefit Committee to adopt and
approve a Conflict of Interest Code.
FISCAL EFFECT
Costs associated with this legislation should be minor and
absorbable within existing resources.
COMMENTS
1)Purpose . According to the author the intent of this bill is to
address several Bureau of State Audits (BSA) recommendations
stemming from its review of the SDF and the benefit
committees, including more rigorously reviewing applications
for grants that are to be administered and spent by an entity
other than the local government that applies for the funds,
and ensuring that benefit committees' conflict-of-interest
codes comply with the political reform act by reviewing the
act and their codes, and changing the codes as necessary to
meet the act's requirements.
The author contends, this bill will clarify existing law and
provide direction to local benefit committees attempting to
implement the distribution of SDF grant funds.
AB 2515
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2)Background . Both the SDF and the Indian Gaming Revenue Sharing
Trust Fund (RSTF) were established in the 61 tribal-state
gaming compacts negotiated in 1999 by then-Governor Davis and
ratified by the Legislature that same year.
The 1999 compacts require each tribe that operates more than
200 slot machines as of September 1, 1999, before the compacts
were ratified, to deposit a percentage of its average net wins
(ranging from 7-13%) into the SDF (the state General Fund
receives no revenue from the 1999 compacts). Twenty-five
tribes currently make contributions into the SDF.
Tribes with 1999 compacts are required to purchase slot
machine licenses by paying both a one-time fee and quarterly
fees based upon the number of slot machines the tribe
operates. These fees are deposited into the RSTF and are used
to support the annual $1.1 million payments to the 71
"non-compact" tribes. Unfortunately, the fee structure
established in the 1999 compacts designed to support the $1.1
million payments to the non-compact tribes does not generate
a sufficient level of funding necessary to support this
obligation, thus necessitating annual transfers (approximately
$50 million in the 2012-13 Budget) from the SDF to address
this "shortfall."
3)Special Distribution Fund . Along with covering "shortfalls" in
the RSTF, money paid by gaming tribes into the SDF is required
to be used for funding programs designed to address problem
gambling; support for any local or state government agencies
that are impacted by gaming; compensation for any Department
of Justice (DOJ) regulatory costs; and for implementing any
tribal labor relations ordinances promulgated in accordance
with individual gaming compacts.
The 2012-13 budget assumes the SDF will have $86.6 million in
revenue (down from the $112.5 million estimated for 2011-12).
Of that $86.6 million, $50 million will be transferred to the
RSTF to cover the shortfall in the funding for non-gaming
tribes, $15 million is provided to the DOJ, $9 million to the
Gambling Control Commission, $8 million to the Department of
Public Health for the Office of Problem Gambling, and the
remaining $5 million would be held in a reserve for economic
uncertainties (approximately $41 million less than 2011-12).
No funding is proposed for the local mitigation grants that
are the subject of this legislation.
AB 2515
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4)Is This Bill Necessary ? The Governor's proposed 2012-13 budget
does not include any funding for local mitigation grants, nor
does the current condition of the fund allow for any local
mitigation funding. With only $5 million in reserve, the fund
will face a $30 or $40 million shortfall in 2013-14. Given
the status of the SDF, it is unclear why this legislation is
necessary at this time.
5)Bureau of State Audits (BSA) Findings . In July 2007, the BSA
released an audit of the local mitigation grants funded by the
SDF. The auditors reviewed 30 local grants made to six
counties totaling $12.1 million. BSA found five instances
totaling $505,000 when the grants were not used to offset the
adverse effects of casinos. In addition, they found 10
instances totaling $2.3 million where the purpose of the
grants stated in the application may have been somewhat
relevant but appeared to primarily address unrelated needs in
the communities. In addition the auditor found that in some
local communities a significant amount of the distribution
fund money was deposited into local government accounts which
earned interest that was used to pay general county
operational costs rather than for mitigation projects.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081