BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 2221 (Campos) - Business Filing Coordination Council.
Amended: March 28, 2014 Policy Vote: GO 9-0
Urgency: No Mandate: No
Hearing Date: August 4, 2014
Consultant: Mark McKenzie
This bill does not meet the criteria for referral to the
Suspense File.
Bill Summary: AB 2221 would establish a seven-member Business
Filing Coordination Council (Council) within the Secretary of
State's Office (SOS) to provide an independent oversight and
advisory role in the business filing process and annually report
on its activities to the Governor and Legislature.
Fiscal Impact: First year costs of approximately $50,000 for the
SOS to make website modifications and provide staff support to
the Council. Ongoing SOS staffing costs of approximately
$46,000 annually (1/2 PY equivalent) to support the Council and
generate reports. (Business Fees Fund)
Background: Existing law requires specified business entities,
such as corporations, certain business partnerships, and limited
liability corporations, to submit specified filing and
registration documents with the SOS. The SOS Business Programs
Division examines, files, and maintains business formation
documents as well as changes to business filings to ensure
entities are properly formed, merged, converted, amended, and
dissolved in compliance with state law. The SOS also processes
and maintains Statements of Information that identify a business
entity's key officers and contact information.
The SOS processes more than 2 million documents and information
requests annually, relying primarily on antiquated paper-based
filing systems. Although there have been well-documented
backlogs in the processing of business filings in recent years,
the Legislature has dedicated additional resources to the SOS
through the budget process, and business filing processing times
have been reduced from an all-time high of 85 days to five days
or less. In addition, the SOS is currently engaged in a
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multi-year effort to replace the paper-based record systems with
an online automated filing system. This "California Business
Connect" information technology project was initiated in 2011
and is expected to be completed in June of 2016. Once fully
implemented, Business Connect will allow for real-time filing of
business records, allow the public and government agencies to
access business information, and allow for secure and timely
processing of payments.
Proposed Law: AB 2221 would establish the Business Filing
Coordination Council within the SOS, composed of the following
seven members: the Commissioner of Business Oversight, the
Director of Consumer Affairs, the Secretary of State, the
Directory of Technology, or one of their respective designees,
and one member appointed by the Senate Rules Committee, the
Speaker of the Assembly, and the Governor, respectively. The
members of the Council would serve without compensation and no
state funds would be used to compensate a member for expenses.
The Council would be required to do the following:
Review and collect data concerning the needs of
businesses that file documents with the SOS.
Support, maintain, and improve the efficiency of
business filings.
Provide businesses with additional points of contact for
concerns or suggestions for improving the business climate
through improved business filings.
Report to the Legislature and Governor by December 31 of
each year on the progress of meeting the above
requirements, and post the report on the SOS website.
Staff Comments: This bill would provide an additional layer of
oversight and stakeholder feedback that is intended to improve
the efficiency of the business filing process. The SOS
indicates that its Business Programs Division currently has an
advisory body, the Business Filers Users Group, which consists
of business customers, business entity specialists, filing
companies, business attorneys and firms, taxpayer advocates, and
government information publishers. This group provides feedback
from stakeholders and is intended to improve the business filing
process.
Existing law, Government Code Section 12176, requires all fees
collected by the SOS pursuant to specified codes, including
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certain corporation fees for business filings, notary public
license fees, and other regulatory and general fees related to
SOS functions and duties, to be paid into the Business Fees
Fund. That provision also declares legislative intent that the
fees shall be used to support the SOS administration of the
programs from which the fees are collected. Any amounts in the
fund that exceed appropriations made in the annual Budget Act
shall be transferred to the General Fund each year. According
to 2014-15 budget documents, approximately $11.8 million is
expected to be transferred from the Business Fees Fund to the
General Fund in the budget year. As such, any costs associated
with this bill, could result in a commensurate reduction in
General Fund revenues in future years.
Proposed Author Amendments: The author has proposed minor
amendments to add a co-author and make several technical and
clarifying changes.