BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 120|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: SB 120
Author: Anderson (R)
Amended: 5/31/11
Vote: 27 - Urgency
SENATE GOVERNMENTAL ORGANIZATION COMM. : 12-0, 4/26/11
AYES: Wright, Anderson, Berryhill, Cannella, Corbett, De
Le�n, Evans, Hernandez, Padilla, Strickland, Wyland, Yee
NO VOTE RECORDED: Calderon
SENATE APPROPRIATIONS COMMITTEE : 9-0, 5/26/11
AYES: Kehoe, Walters, Alquist, Emmerson, Lieu, Pavley,
Price, Runner, Steinberg
SUBJECT : State funds: registered warrants
SOURCE : Author
DIGEST : This bill requires a state agency to accept a
registered warrant issued by the State Controller for
payment of any state obligation.
ANALYSIS : Existing law prescribes procedures for the
issuance of registered warrants and provides that a
registered warrant is acceptable and may be used as
security for the performance of any public or private trust
or obligation.
This bill requires a state agency to accept a registered
warrant issued by the State Controller for payment of any
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state obligation.
Background
Warrants are the government equivalent of checks, and are
issued by the State Controller to pay the state's
obligations. There are three types of warrants:
registered warrants, registered reimbursement warrants, and
registered refunding warrants.
The California Constitution mandates that education and
debt service have priority status for regular warrants.
The California Constitution, federal law and a court order
require that state payroll, the California Public
Employees' Retirement System, the California State
Teachers' Retirement System, In-Home Supportive Services
and Medi-Cal providers also be paid with regular warrants.
The State may issue registered warrants for all other
payments, including those to private businesses, local
governments, taxpayers receiving income tax refunds and
owners of unclaimed property.
A registered warrant is a "promise to pay" when there are
not enough funds to pay all of its General Fund
obligations. Registered warrants bear interest and are
redeemable by the State Treasury only when the General Fund
has sufficient money. Registered warrants are presently
considered legal investments for all trust funds, insurance
funds, savings and loan funds, and funds of all counties,
municipal corporations, districts, public corporations,
political subdivisions, or state agencies. Further, state
law expressly permits a taxpayer to pay a tax liability, as
specified, in whole or in part, by a check in an amount not
to exceed the amount of a registered warrant, and the law
declares "all warrants are payable in such coin or currency
of the U.S. as at the time of payment is legal tender for
the payment of public and private debts."
Currently, under Government Code Section 17280.1, the
Franchise Tax Board has authority to accept registered
warrants in satisfaction of taxpayer obligations to the
State. In July 2009, the Board of Equalization voted to
accept registered warrants in satisfaction of obligations
associated with tax programs it administers. The
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Employment Development Department (EDD) also began
accepting registered warrants in August 2009. The
Department of Motor Vehicles (DMV) and most other agencies,
however, did not accept registered warrants in lieu of
cash.
Government Code Section 17203 provides that registered
warrants issued by the State are acceptable and may be used
as security for the performance of any public or private
trust obligation or for the performance of any act,
including the use of such registered warrants by banks and
savings and loan associations as security deposits of funds
of any county, municipal or public corporation, district,
political subdivision, or state agency.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Registered warrant potentially major
administrative costs General/
usage in fiscal years when registered
warrants Various/
are issued
Special
SUPPORT : (Verified 5/31/11)
Acclamation Insurance Management Services
American Federation of State, County and Municipal
Employees, AFL-CIO
Arc and United Cerebral Policy in California
Associated Builders and Contractors of California
Board of Directors, Borrego Water District
Boardmember Darrell Beck, Ramona Municipal Water District
Boardmember George Runner, California State Board of
Equalization
Brett Almquist, On The Border Mexican Grill & Cantina
California Chapter of the American Fence Association
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California Fence Contractors' Association
California State Controller John Chiang
Cities of El Cajon, Encinitas, Escondido, and Moreno Valley
City Attorney Jan I. Goldsmith, City of San Diego
Congressman Brian Bilbray, U.S. House of Representatives
Congressman Duncan Hunter, U.S. House of Representatives
Councilmember Deborah Pauly, City of Villa Park
Councilmember Ernest Ewin, City of La Mesa
Councilmember Kelly Bennett, City of Murrieta
Councilmember Melissa Melendez, City of Lake Elsinore
Councilmember Merrilee Boyack, City of Poway
Councilmember Rick Gibbs, City of Murrieta
Councilmember Robin Hastings, City of Moreno Valley
Councilmember Steve Castaneda, City of Chula Vista
Councilwoman Melissa Melendez, City of Lake Elsinore
Deer Springs Fire Protection District
Deputy Mayor Jerome Stocks, City of Encinitas
Director Stephen Abbott, Fallbrook Health District
Donna T. Gebhart, Gebhart & Associates
Engineering Contractors' Association
Escondido Chamber of Commerce
Executive Director Carlos Flores, San Diego Regional Center
Executive Director Mark R. Klaus, Home of Guiding Hands
Fallbrook Healthcare District Board of Directors
Flasher Barricade Association
Food and Beverage Association
Frank Lang, Lang Richert & Patch
General Manager Ralph D. McIntosh, Ramona Municipal Water
District
Governing Board President Robert Shield, Grossmont Union
High School District
Greater Fresno Area Chamber of Commerce
Helix Water District
Howard Jarvis Taxpayers Association
Independent Waste Oil Collectors and
John Gibson, Hamann Companies
Kevin Pinciotti, Straightline Engineering, Inc.
Lakeside Chamber of Commerce
Marin Builders' Association
Mark Hoffman, Foothills Christian Church
Mayor Don Higginson, City of Poway
Mayor Gary Capata, City of Laguna Niguel
Mayor Gary Monahan, City of Costa Mesa
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Mayor James Bond, City of Encinitas
Mayor Leroy Mills, City of Cypress
Mayor Mary England, City of Lemon Grove
Mayor Pro Tem Mary England, City of Lemon Grove
Mayor Pro Tempore Brad Reese, City of Villa Park
Mayor Pro Tempore Doug McAllister, City of Murrieta
Mayor Randon K. Lane, City of Murrieta
Mayor Randy Voepel, City of Santee
Orange County Board of Supervisors
Orange County Taxpayers Association
Otay Water District
President & C.E.O. Alan G. Hutcheson, Dantel
President Margie L. Rice, Board of Directors of the Midway
City Sanitary District
President William C. Young, El Cajon Grading & Engineering
Co., Inc.
Ramona Municipal Water District Board of Directors
Research Director Chuck Flacks, San Diego Workforce
Partnership
Riverside County Farm Bureau, Inc.
San Diego County Board of Supervisors
San Diego County Fire Chiefs Association
San Diego County Medical Society
Santee School District
Southwest California Legislative
State Building and Construction Trades Council of
California, AFL-CIO
Student Trustee Charles L. Taylor III, Cuyamaca College
Supervisor Pat Bates, Orange County
SureWest Communications
Trabuco Canyon Water District
Trustee Bob Duff, La Mesa-Spring Valley School District
Trustee John Norman, San Jacinto Unified School District
Vice Chair Michelle Steel, California State Board of
Equalization
Vista Irrigation District
Waste Management
ARGUMENTS IN SUPPORT : According to the author's office,
this bill is a taxpayers' rights measure that addresses an
inequity in current law, whereby the state may issue IOUs
in lieu of warrants, but is not required to accept these
IOUs for obligations owed to the state.
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PQ:mw 5/31/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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