BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 1455 (DeSaulnier) - Libraries Bond
Amended: May 6, 2014 Policy Vote: Education 5-0,
Gov.&Fin. 4-2
Urgency: No Mandate: No
Hearing Date: May 19, 2014 Consultant: Jacqueline
Wong-Hernandez
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 1455 enacts the California Reading and Literacy
Improvement and Public Library Construction and Renovation Bond
Act (Library Bond Act) of 2016 to be submitted to the voters at
the November 2016 statewide general election. If approved by the
voters, the Act would authorize the issuance of an unspecified
amount in general obligation (GO) bonds for public library
construction and renovation.
Fiscal Impact:
Bonds: Unspecified state GO bond obligations, likely in the
hundreds of millions of dollars. Substantial state costs,
likely in the tens of millions of dollars, in bond interest
over 30 years.
California Public Library Construction and Renovation
(CPLCR) Board: Potentially significant costs to convene
Board and complete required work, funded by bonds.
Needs assessment: $43,000 in one-time costs to the
California State Librarian (CSL) to conduct the required
assessment.
Ballot costs: $275,000 - $660,000 in one-time costs to the
Secretary of State. Placing a measure on a statewide ballot
costs $55,000 - $66,000 per page; ballot measures range in
length, but average 10 pages in length.
Background: Section 1 of Article XVI of the California
Constitution and the state's General Obligation Bond Law guide
the issuance of GO debt. The Constitution allows the Legislature
to place GO bonds on the ballot for specific purposes with a
two-thirds vote of the Assembly and Senate. Voters also can
place bonds on the ballot by initiative. Unlike local GO bonds,
when the state's electorate approves a state GO bond, passage
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does not automatically trigger an increased tax or dedicated
revenue stream to repay the bonds. Article XVI of the California
Constitution commits the state to repay investors from general
revenues above all other claims, except payments to public
education.
In 1988, the voters approved $75 million in state GO bonds under
the California Library Construction and Renovation Bond Act of
1988 to establish a grant fund for the acquisition,
construction, remodeling, or rehabilitation of public library
facilities.
In 2000, the voters approved $350 million in state GO bonds
under the Library Bond Act of 2000 for the purpose of financing
public library construction and renovation. These funds have
been fully expended.
In June of 2006, the voters rejected a $600 million state GO
bond measure, with approximately 53% of voters voting against
it. Proposition 81, similar to the California Reading and
Literacy Improvement and Public Library Construction and
Renovation Bond Act of 2000, would have provided financing for
public library construction and renovation.
Proposed Law: This bill enacts the Library Bond Act of 2016,
which authorizes the sale of an unspecified amount of bonds, for
voters to consider on the November, 2016 ballot.
This bill creates the California Public Library Construction and
Renovation Fund into which the proceeds of the bond sale are to
be deposited, and continuously appropriates moneys in the fund
to the State Librarian to fund grants to agencies authorized at
the time of their application to own and maintain a library. The
State Librarian administers the bond.
Local agencies may apply for funds to acquire or update
facilities, and related work, as specified. Agencies must apply
for more than $500,000, and cannot apply for a project for which
they have already advertised construction bids. Grant recipients
must provide a 35% local match of grant funds for the costs of
the project, with the remaining 65% coming from state bond
funds, as specified.
This bill establishes the CPLCR Board, comprised of: a) the
SB 1455 (DeSaulnier)
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State Librarian; b) an Assemblymember appointed by the Speaker
of the Assembly; c) a Senator appointed by the Senate Committee
on Rules; and, d) 2 members appointed by the Governor. This bill
allows the State Librarian to use bonds funds for the actual
amount of office, personnel, and other customary and usual
expenses for directly administering grants.
SB 1455 also makes legislative findings and declarations that
support its purposes.
Staff Comments: This bill will result in direct state General
Fund costs of approximately $275,000 - $550,000, to place a new
Library Bond Act on the November 2016 statewide ballot. If
enacted by voters, this measure will result in substantial
additional state costs.
As currently written, this bill asks voters to approve the
issuance (and repayment) of an unspecified amount state GO
bonds, but the amount decided upon is likely to be in the
hundreds of millions of dollars. In 2000, voters approved $350
million in state GO bonds under the Library Bond Act of 2000,
after a CSL needs assessment determined that there was more than
$1 billion in statewide "need". All of those GO bond funds have
been expended, and the new CSL needs assessment required by this
bill is likely to find at least hundreds of millions of dollars
in need.
Until the amounts are specified, the fiscal impact of this bill
is unknown. However, presumably this bond, consistent with past
library bonds and needs assessments, will be in the hundreds of
millions of dollars (up to the low billions of dollars). Staff
notes for reference, that assuming an interest rate of 5% and
the issuance of 30-year bonds, for each hundred million dollars
of bonds issued, annual debt service would be approximately $6.5
million (General Fund).