BILL ANALYSIS �
Bill No: AB
2515
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2011-2012 Regular Session
Staff Analysis
AB 2515 Author: Hall
As Amended: March 29, 2012
Hearing Date: June 26, 2012
Consultant: Art Terzakis
SUBJECT
Indian Gaming: local agencies
DESCRIPTION
AB 2515 makes the following modifications to existing
provisions of law governing the award of local mitigation
grants from the Indian Gaming Special Distribution Fund
(SDF):
1.Requires each grant applicant to clearly show how the
grant will mitigate the impact of the casino on the grant
applicant.
2.Requires the Indian Gaming Local Community Benefit
Committee to adopt and approve a Conflict of Interest
Code and provides that any existing conflict of interest
code must be reviewed and amended as necessary to bring
it into compliance with these requirements.
EXISTING LAW
Existing federal law, the Indian Gaming Regulatory Act of
1988, provides for the negotiation and execution of
compacts for the purpose of authorizing class III gaming on
Indian lands within a state. Additionally, the California
Constitution authorizes the Governor to negotiate and
conclude compacts, subject to ratification by the
Legislature.
Existing law establishes the Indian Gaming Special
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Distribution Fund (SDF) in the State Treasury for the
receipt of revenue contributions made by tribal governments
pursuant to the terms of the 1999 model Tribal-State Gaming
Compacts (compacts).
Existing law authorizes the Legislature to appropriate
money from the SDF as follows: (1) Grants for programs
designed to address gambling addiction; (2) Grants for the
support of state and local government agencies impacted by
tribal government gaming; (3) Compensation for regulatory
costs incurred by the California Gambling Control
Commission (CGCC) and the Department of Justice (DOJ) in
connection with the implementation and administration of
compacts; (4) Payment of shortfalls that may occur in the
Indian Gaming Revenue Sharing Trust Fund (RSTF); (5)
Disbursements for the purpose of implementing the terms of
tribal labor relations ordinances promulgated in accordance
with the terms of the 1999 compacts; and, (6) Any other
purpose specified by law.
Existing law provides that the priority for funding from
the SDF is in the following descending order: (1) To make
payments of any shortfalls that may occur in the RSTF; (2)
Grants for programs designed to address gambling addiction;
(3) Compensation to the CGCC and DOJ for regulatory
functions that directly relate to Indian gaming; and, (4)
Grants for the support of local government agencies
impacted by tribal gaming.
Existing law requires the State Auditor to conduct an audit
every three years and report its findings to the
Legislature regarding the allocation and use of SDF grant
monies.
Existing law establishes the RSTF in the State Treasury for
the receipt and deposit of moneys derived from gaming
device license fees paid by Indian tribes with 1999
compacts. Money in that fund is available to the CGCC,
upon appropriation by the Legislature, for distribution to
non-compact tribes, according to the terms of the compacts.
Existing law requires the CGCC to annually determine the
aggregate amount necessary to make up the difference
between $1.1 million and the actual amount paid to each
eligible recipient Indian tribe during the Fiscal Year from
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Page 3
the RSTF. The CGCC must report the amount of the
deficiency to the Budget Committees in each house of the
Legislature. Upon appropriation by the Legislature, the
CGCC shall make payments to eligible recipient tribes, as
specified.
BACKGROUND
Purpose of AB 2515: According to the author's office this
measure is intended to address several Bureau of State
Audits (BSA) recommendations stemming from its 2011 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's office claims that AB
2515 will help clarify existing law and provide direction
to local benefit committees attempting to implement the
distribution of SDF grant funds.
SDF Budget Actions : The Budget Act of 2003-04 appropriated
$25 million from the SDF to local jurisdictions impacted by
Indian gaming. The Budget Acts of 2004-05, 2005-06, and
2006-07, each appropriated $30 million from the SDF to
local governments impacted by Indian gaming. The Budget Act
of 2007-08 included a $30 million appropriation from the
SDF to local governments impacted by Indian gaming;
however, the Governor blue-penciled that appropriation. In
2008, AB 158 - Chapter 754, Statutes of 2008, appropriated
$30 million from the SDF to counties for mitigating Indian
casino impacts. In 2010, SB 856 - Chapter 719, Statutes of
2010, appropriated $30 million from the SDF to restore $30
million in funding vetoed by the Governor in the 2007-08
Budget Act. The bill required the funds be divided amongst
the locals based on the amounts paid into the SDF in the
2006-07 fiscal year. In 2011, AB 1417 - Chapter 736,
Statutes of 2011, appropriated $9.1 million from the SDF to
the CGCC to provide grants to local agencies for the
purpose of mitigating the adverse impacts of tribal gaming.
The Governor's 2012-13 proposed budget assumed the SDF
would have $86.6 million in revenue (down from the $112.5
million estimated for 2011-12). Of that $86.6 million, $50
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million would be transferred to the RSTF to cover the
shortfall in the funding for non-gaming tribes, $15 million
would be 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).
Local Benefit Committees : Existing law establishes Indian
Gaming Local Community Benefit Committees with specified
local government and tribal representation that are
responsible for establishing SDF grant application policies
and procedures, determining grant eligibility, and
selecting grants from Individual Tribal Casino Accounts or
County Tribal Casino Accounts based on "nexus test
criteria" that mainly takes into consideration the
geographical proximity of an applicant local government
jurisdiction to the tribal casino.
All grants from Individual Tribal Casino Accounts are
required to be made only upon the affirmative sponsorship
of the tribe paying into the SDF from whose Individual
Tribal Casino Account grants are available for
distribution. Priority uses for the receipt of grant money
from Individual Tribal Casino Accounts are as follows: law
enforcement; fire services; emergency medical services;
environmental impacts; water supplies; waste disposal;
behavioral; health; planning and adjacent land use; public
health; roads; recreation and youth programs; and,
childcare programs.
Conflict of Interest Code : Existing law specifies that
every agency promulgate and adopt a Conflict of Interest
Code which will have the force of law and any violation is
deemed a violation of state law. Such a "code" shall
require that each designated employee, file statements
disclosing reportable investments, business positions,
interests in real property and income. It also sets forth
specific circumstances under which designated employees or
categories of designated employees must disqualify
themselves from making, participating in the making, or
using their official position to influence the making of
any decision.
Bureau of State Audits (BSA): In July 2007, the BSA
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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 where grants were not used to offset the
adverse effects of casinos. In addition, they found 10
successful applications totaling $2.3 million where the
rationale for the grants as stated in the application
appeared to primarily address unrelated needs in the
communities. The auditor also found that in some
communities, a significant amount of the distribution fund
money was deposited in local government accounts that
earned interest used to pay general county operational
costs rather than for mitigation projects.
As noted above, in February of 2011, BSA conducted a
follow-up audit and found that local benefit committees
still had trouble complying with the distribution
requirements. The audit found that in 2008-09, of the $30
million appropriated by the Legislature for local
mitigation grants, local governments could not provide
evidence that $3.2 million in grant funding was used to
mitigate the impact of a casino.
Legislative Analyst's Concerns: In the Legislative
Analyst's Office (LAO) analysis of the 2009-10 budget, and
in earlier reports, they noted that the local grants have
outlived their usefulness due to the major changes in the
SDF. The law governing the local grants was implemented
when the SDF was flush with revenue, paid in large part by
tribes that no longer pay into the fund. In addition,
these tribes have separate obligations under their new
compacts to enter into enforceable agreements with local
jurisdictions to mitigate the effects of their casinos on
nearby counties. In addition, the LAO pointed out that
two-thirds of the funding is provided to Riverside, San
Diego and San Bernardino counties (with 43% going to
Riverside alone) and all of the amended compacts for tribes
that no longer pay into the SDF are located in Riverside
and San Bernardino counties. Therefore, under this new
scenario, the allocation formula no longer makes sense.
The LAO recommended that any continuation of the local
grants emphasize two key priorities:
Ensure that only the highest-priority local
infrastructure, problem gambling, and public safety needs
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resulting from casinos receive funding.
Ensure that any county receiving mitigation payments from
a tribe with a recently amended compact does not also
receive substantial SDF grant funding related to that
tribe.
PRIOR/RELATED LEGISLATION
AB 1417 (Governmental Organization) Chapter 736, Statutes
of 2011. As introduced, this measure would have
reorganized statutes pertaining to Indian gaming compacts
primarily by moving them to a newly created Title 16.5 on
Tribal Gaming in the Government Code. AB 1417 was
subsequently gutted in this committee to become the vehicle
for the distribution of $9.1 million from the SDF to the
CGCC to provide grants to local agencies.
AB 1039 (Perea) 2011-12 Session. Would have declared the
intent of the Legislature to establish a fair and
proportionate system to award SDF grants. (Held in
Assembly Rules Committee)
AB 742 (Nestande) 2011-12 Session. Would have required
grant applicants applying for local mitigation funding from
the SDF to demonstrate how the grant will be used to
mitigate the impact of a casino and would have required all
local Indian Gaming Local Benefit Committees adopt a
conflict of interest code. AB 742 was gutted in this
committee (new author also - Bonnie Lowenthal), to prohibit
a single mining operation proposed in Riverside County at a
location that the Pechanga Tribe considers a most important
sacred place. (Held in Senate Rules Committee)
SB 856 (Budget and Fiscal Review) Chapter 719, Statutes of
2010. Among other things, appropriated $30 million from
the SDF to restore funding deleted from the Budget Act of
2007 for grants to mitigate the impact of tribal gaming on
local governments.
AB 158 (Torrico) Chapter 754, Statutes of 2008. Enacted
several recommendations proposed by the State Auditor
relative to the allocation and uses of proceeds from the
SDF.
SB 288 (Battin) Chapter 13, Statutes of 2006.
Appropriated $20 million from the SDF for grants to local
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jurisdictions impacted by tribal gaming.
SB 621 (Battin) Chapter 858, Statutes of 2003. Among other
things, established, until 1/1/2009, priorities and
procedures for specified funding to local governments from
the SDF for mitigating impacts from tribal casinos. Also,
appropriated $25 million from the SDF to mitigate the
impact of tribal gaming on local governments.
AB 673 (J. Horton) Chapter 210, Statutes of 2003.
Specified that money in the SDF may be used to make payment
of shortfalls that may occur in the RSTF and specified that
payment for those shortfalls in the RSTF shall be the
priority use of moneys in the SDF. Also, established a
mechanism by which funds may be transferred from the SDF to
the RSTF pursuant to specified provisions of the
tribal-state compacts and appropriated the sum of
$50,568,787.99 for the purpose of making payments to
eligible Indian tribes for the preceding fiscal year. In
addition, established and provided for the funding of the
Office of Problem and Pathological Gambling in the
Department of Alcohol and Drug Programs.
AB 1385 (Battin) Chapter 874, Statutes of 1999. Among
other things, ratified 57 tribal-state gaming compacts and
created two special funds in the State Treasury (SDF and
RSTF) for the deposit of revenues derived from Indian
gaming and gaming device licensing fees. Also, designated
the Governor as the state officer responsible for
negotiating and executing compacts between the State and
federally recognized Indian tribes located in the State.
SUPPORT: None on file as of June 22, 2012.
OPPOSE: None on file as of June 22, 2012.
FISCAL COMMITTEE: Senate Appropriations Committee
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