Existing federal law, the Indian Gaming Regulatory Act of 1988, provides for the negotiation and execution of tribal-state gaming compacts for the purpose of authorizing certain types of gaming on Indian lands within a state. The California Constitution authorizes the Governor to negotiate and conclude compacts, subject to ratification by the Legislature. Existing law ratifies a number of tribal-state gaming compacts between the State of California and specified Indian tribes.

This bill would state the intent of the Legislature to enact legislation related to tribal gaming in California.

SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Isadore Hall, III

Chair

2015 - 2016 Regular

Bill No: 2102 Hearing Date: 6/28/2016

SUBJECT: Tribal gaming: Indian Gaming Local Community Benefit Committee

DIGEST: This bill requires each Indian Gaming Local Community Benefit Committee (benefit committee) to adopt and approve a Conflict of Interest Code pursuant to the state’s Political Reform Act and provides that any existing Conflict of Interest Code must be reviewed and amended as necessary to bring it into compliance with the requirements of the Act.

ANALYSIS:

Existing law:

1. The federal 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.
2. Creates in the State Treasury the Indian Gaming Special Distribution Fund (SDF) for the receipt and deposit of moneys received by the state from certain Indian tribes pursuant to the terms of gaming compacts entered into with the state.
3. Authorizes the Legislature to appropriate money from the SDF as follows: (a) grants for programs designed to address gambling addiction; (b) grants for the support of state and local government agencies impacted by tribal government gaming; (c) 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; (d) payment of shortfalls that may occur in the Indian Gaming Revenue Sharing Trust Fund (RSTF); (e) disbursements for the purpose of implementing the terms of tribal labor relations ordinances promulgated in accordance with the terms of the 1999 compacts; and, (f) any other purpose specified by law.

1. Provides that the “priority” for funding from the SDF is in the following descending order: (a) to make payments of any shortfalls that may occur in the RSTF; (b) grants for programs designed to address gambling addiction; (c) compensation to the CGCC and DOJ for regulatory functions that directly relate to Indian gaming; and, (d) grants for the support of local government agencies impacted by tribal gaming.
2. Creates, until January 1, 2021, a County Tribal Casino Account in the treasury of each county that contains a tribal casino, which is funded according to specified formulas.
3. Requires the State Controller to divide the County Tribal Casino Account for each county that has gaming devices that are subject to an obligation to make contributions to the SDF into a separate account, known as an Individual Tribal Casino Account, for each tribe that operates a casino within the county. Each Individual Tribal Casino Account is required to be funded in proportion to the amount that each individual tribe paid in the prior fiscal year to the SDF, and used for grants to local agencies impacted by tribal casinos, as specified.
4. Establishes an Indian Gaming Local Community Benefit Committee in each county in which gaming is conducted, specifies the composition and responsibilities of that committee, and requires that committee to make the selection of grants from the casino accounts. Among other things, the committee is responsible for establishing all application policies and procedures for grants from the casino accounts.
   
5. 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.
   
6. The Political Reform Act of 1974 requires every agency to 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. The Act provides that such a “code” shall require that each designated employee file statements disclosing reportable investments, business positions, interests in real property and income. The Act 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.

This bill:

1. Requires each benefit committee to adopt and approve a Conflict of Interest Code pursuant to the state’s Political Reform Act and provides that any existing Conflict of Interest Code must be reviewed and amended as necessary to bring it into compliance with the requirements of the Act.
   
2. Deletes obsolete allocation provisions relating to the SDF and makes other code maintenance changes.

Background

Indian Gaming Local Community Benefit Committees. As noted above, existing law establishes 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.

Purpose of AB 2102. According to the author’s office, this bill is intended to address the State Auditor’s recommendations stemming from a 2011 review of the SDF and the benefit committees. The Bureau of State Audits (BSA) found that members of benefit committees do not always make the financial disclosures required by state law. Although each member is required to file a statement of economic interest, the audit found that 12 of the 49 benefit committee members in four of the seven counties whose grants were reviewed failed to file their statements. Furthermore, two members filed statements more than a year late. Several factors contributed to these omissions, including the failure of some benefit committees to establish conflict of interest codes that include each of the elements required by state law as well as the failure of filing officers who collect such forms to follow guidelines for administering the process.

The State Auditor recommended that benefit committees ensure that their 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 that this bill will clarify existing law and provide direction to benefit committees attempting to implement the distribution of SDF grant monies.

Prior/Related Legislation

AB 1916 (Hall), Chapter 600, Statutes of 2014) created the “Tribal Nation Grant Fund” in the State Treasury, to be administered by the CGCC, for the receipt and deposit of moneys received by the state from Indian tribes, pursuant to the terms of tribal-state gaming compacts.

AB 1042 (Hall, Chapter 746, Statutes of 2013) required the Department of Finance, in consultation with the CGCC, to calculate the total revenue in the SDF that will be available for the current budget year for local government agencies impacted by tribal gaming. In addition, appropriated $13 million from the SDF to the CGCC to provide grants to local agencies for the 2013-14 fiscal years.

AB 2515 (Hall, Chapter 704, Statutes of 2012) required each grant applicant to show how the grant will mitigate the impact of the casino on the grant applicant. Also, appropriated $9.1 million from the SDF to the CGCC to provide grants to local agencies for the 2012-13 fiscal years.

AB 1417 (Hall, Chapter 736, Statutes of 2011) as introduced, this bill 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), 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) 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 Indian Gaming Local Community Benefit Committees to adopt a conflict of interest code. AB 742 was gutted in this committee, to prohibit a specific 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 BSA relative to the allocation and use of proceeds from the SDF.

SB 288 (Battin, Chapter 13, Statutes of 2006) appropriated $20 million from the SDF for grants to local jurisdictions impacted by tribal gaming.

SB 621 (Battin, Chapter 858, Statutes of 2003) established, until 1/1/2009, priorities and procedures for specified funding to local governments from the SDF for mitigating impacts from tribal casinos and 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) provided 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, appropriated the sum of $50.6 million 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.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT:

None received

OPPOSITION:

None received

Date of Hearing: May 11, 2016

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 2102

Author:(Roger Hernández) – As Amended Ver:March 15, 2016

Urgency: No State Mandated Local Program: Yes Reimbursable: Yes

SUMMARY:

This bill requires Indian Gaming Local Community Benefit Committees (Benefit Committees) 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.

FISCAL EFFECT:

One-time, reimbursable state costs of up to $130,000 for Benefit Committees to adopt and approve of Conflict of Interest Code.

COMMENTS:

1. Purpose. According to the author the intent of this bill is to address Bureau of State Audits (BSA) recommendations stemming from its review of the Indian Gaming Special Distribution Fund (SDF) and the Benefit Committees. This review recommended that local committees ensure that their conflict-of-interest codes comply with the Political Reform Act (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.
2. Background. Benefit Committees establish SDF grant application policies and procedures, determine grant eligibility, and select grants from Individual Tribal Casino Accounts or County Tribal Casino Accounts. 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.
3. 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.
4. Previous legislation. AB 2515 (Hall), Chapter 704, Statutes of 2012, modified the procedures governing the award of local mitigation grants from the SDF to require grant applications to Benefit Committees to clearly show how the grant will mitigate the impact of the specified casino and appropriates $9.1 million from the SDF. Earlier versions of that bill had a provision related to Conflict of Interest Codes, but that provision was removed in the Senate.

Analysis Prepared by: Luke Reidenbach / APPR. / (916) 319-2081

Date of Hearing: April 20, 2016

ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION

Adam Gray, Chair

ABPCA Bill Id:AB 2102 (

Author:Roger Hernández) – As Amended Ver:March 15, 2016

SUBJECT: Tribal gaming: Indian Gaming Local Community Benefit Committee

SUMMARY: Modifies an existing provision of law governing the award of local mitigation grants from the Indian Gaming Special Distribution Fund (IGSDF). Specifically, this bill:

1) 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:

1) 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.

2) Establishes the IGSDF 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).

3) Authorizes the Legislature to appropriate money from the IGSDF 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.

4) Provides that the priority for funding from the IGSDF 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.

5) 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.

6) 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.

7) 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 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.

FISCAL EFFECT: Unknown

COMMENTS:

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 IGSDF 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.

Purpose of the bill: According to the author's office, this bill is intended to address several Bureau of State Audits (BSA) recommendations stemming from its 2011 review of the SDF and the benefit committees by 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 BSA report revealed that members of benefit committees do not always make the financial disclosures required by state law. Although each member is required to file a statement of economic interest that helps to identify conflicts of interest that he or she might have, the review found that 12 of the 49-committee members in four of the seven counties whose grants were reviewed failed to file their statements. Further, two members filed statements more than a year late. Several factors contributed to these omissions, including the failure of some benefit committees to establish conflict-of-interest codes that include each of the elements required by state law as well as the failure of filing officers who collect such forms to follow guidelines for administering the process.

Prior legislation: AB 2515 (Hall), Chapter 704, Statutes of 2012. Modifies the procedures governing the award of local mitigation grants from the IGSDF 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 appropriates $9.1 million from the IGSDF.

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 IGSDF.

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 IGSDF for mitigating impacts from tribal casinos. In addition, appropriated $25 million from the IGSDF to mitigate the impact of tribal gaming on local governments.

AB 673 (J. Horton) Chapter 210, Statutes of 2003. Specified that money in the IGSDF 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 IGSDF. Also, established a mechanism by which funds may be transferred from the IGSDF 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 (IGSDF and RSTF) for the deposit of revenues derived from Indian gaming and gaming device licensing fees. In addition, 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.

REGISTERED SUPPORT / OPPOSITION:

Support

None on file

Opposition

None on file

Analysis Prepared by: Eric Johnson / G.O. / (916) 319-2531