BILL ANALYSIS
SB 1516
Page 1
Date of Hearing: July 9, 2008
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mark Leno, Chair
SB 1516 (Simitian) - As Amended: June 30, 2008
Policy Committee: EducationVote:8-3
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill authorizes the California Reading and Literacy
Improvement and Public Library Construction and Renovation Bond
Act of 2010 (the library bond), a general obligation (G.O.) bond
of $4 billion to be placed on a statewide general election
ballot in 2010. Specifically, this bill:
1)Requires all bond monies to be continuously appropriated to
the State Librarian (SL) and be available for grants to any
city, county, city and county, or library district to own and
maintain a public library, as specified. This bill
establishes the minimum grant amount of $500,000 per project
and a maximum grant of $30 million per project.
2)Specifies that grant funds are to be used to acquire or
construct new facilities or add on to existing facilities;
remodeling existing facilities for the purpose of converting
to a public library; procurement or installation of
furnishings and equipment; payment of fees to architects,
engineers, etc.; and service charges to the public works
department, as specified. This measure also prohibits the use
of grant funds for specified purposes, including books/
library materials and administrative costs, as specified.
3)Requires the California Public Library Construction and
Renovation Board of 2010 (the board) to consider applications
for construction or rehabilitation of library facilities made
under Proposition 14 , the library bond approved by voters in
March 2000, and allocate the funding with first priority for
"outstanding" applications deemed eligible by the SL and
submitted for the 2000 library bond. This measure further
specifies that the total amount awarded for these applications
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not exceed $150 million
4)Requires each grant recipient to provide 35% of the total cost
of the project in matching funds and specifies that the
balance (up to $30 million) be provided from bond funds. This
bill also requires at least five percent of the total library
bond to be available for joint-use projects that meet
specified criterion.
FISCAL EFFECT
Assuming the $4 billion in bonds are sold at an average interest
rate of 5.25% and retired over 30 years, debt service costs for
principal and interest would total about $8 billion or $267.7
million annually.
COMMENTS
1)Purpose . According to the 2007 California Public Library
Facilities Needs Assessment, there are 662 projects statewide
totaling $8 billion that are needed in the next 10 years. Of
the $8 billion, 85% is for the construction of new library
facilities and approximately $5.8 billion is needed within the
next five years for projects.
Proposition 14, approved by voters in March 2000, provided
$350 million in G.O. bonds for the construction or
rehabilitation of library facilities. As part of the funding
process for this bond, the board established criterion that
rated potential projects as "outstanding," "very good," or
"acceptable." The $350 million authorized was insufficient to
fund all "outstanding" projects. As a result, SB 1516
proposes to set aside $150 million for this purpose.
According to the California Library Association, the sponsor
of this bill, "Libraries are a dynamic and vital part of the
educational system and provide countless resources and
services for Californians, including bridging the so-called
'digital divide.' During difficult downturns in the economy,
libraries remain an 'equalizer,' as extensive services are
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provided at no cost to all patrons. Libraries continue to
expand their roles by providing community enriching services,
such as pre-school literacy readiness programs, Homework Help
Centers and after-school tutoring services, programs in
conjunction with pediatric clinics and juvenile halls,
resources for resume writing, job training, and special
services for seniors."
2)Should the legislature authorize a G.O. bond to be placed on
the ballot in 2010 given the state's current fiscal crisis ?
According to the Legislative Analyst Office (LAO) overview of
the 2008-09 May Revision, the budget shortfall is $15.2
billion. Likewise, the state is facing a serious cash
management issue. The Budget Conference Committee recently
adopted measures (including deferring school district and
community college payments) to mitigate the state's
anticipated $3.6 billion cash management problem that will
likely surface in August 2008.
According to the LAO, the 2008-09 proposed budget provides
$5.2 billion (4% of budget) for debt-service expenditures. Of
this amount, $4.4 is for G.O. bonds and approximately $810
million is for lease-revenue bonds. The LAO further states
"Since 1970, voters have authorized a total of $122 billion in
G.O. bonds. Of this amount, $85 billion has been authorized
since 2000-with $43 billion approved by the state's voters in
2006 alone. The increase in bond financing has led to a sharp
increase in the amount of spending on infrastructure debt
service. Specifically, total infrastructure debt service has
doubled over the past decade, from $2.5 billion in 1998-99 to
$5.2 billion in 2008-09. These costs will continue to rise as
additional bonds are sold to fund the November 2006 G.O. bond
package and the AB 900 (Solorio) lease-revenue prison
construction bond package."
3)Other Proposed Bond Measures . The Safe, Reliable High-Speed
Passenger Train Bond Act, as originally enacted by SB 1856
(Costa) - Chapter 697, Statutes of 2002, is scheduled to be
voted on at the November 4, 2008 statewide ballot as
Proposition 1, and, if approved, authorizes the issuance and
sale of $9.95 billion worth of state G.O. bonds.
Two initiatives have qualified for the November statewide
ballot to authorize the issuance and sale of state G.O. bonds,
as follows:
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a) $5 billion to provide grants to buyers of high fuel
economy and alternative fuel vehicles, incentives for
research, development and production of renewable energy
technology, incentives to purchase these technologies,
grants to eight cities to provide education about these
technologies, and grants to colleges to train students in
these technologies. (Proposition 10)
b) $980 million to fund the construction, expansion,
remodeling, renovation, furnishing and equipping of
children's hospitals. (Proposition 3)
Proposed G.O. bond authorization measures still active in the
2008-09 legislative session are, as follows:
c) AB 100 (Mullin) - $9.087 billion for education
facilities (On Senate Education Suspense File).
d) SB 1516 (Simitian) - $4 billion for library construction
(On Assembly Education Suspense File).
e) SB 1572 (Wyland) - $900 million for veterans mortgage
loans (Recently passed this committee).
f) SB 1670 (Kehoe) - $2 billion for energy efficiency and
carbon reduction-related programs. (Scheduled to be heard
in this committee today).
g) SB 2 (2nd Extraordinary Session) (Perata) - $6.835
billion for water-related projects (On Senate Floor).
h) SB 6 (2nd Extraordinary Session) (Machado) - A blank
authorization for water-related projects (In Senate Natural
Resources and Water Committee).
4)Previous legislation .
a) SB 156 (Simitian), which is identical to this measure,
was held on the Senate Appropriations Committee's suspense
file in May 2007.
b) SB 1161 (Alpert), Chapter 698, Statutes of 2004, Chapter
698, Statutes of 2004, established the California Reading
and Literacy Improvement and Public Library Construction
and Renovation Bond Act of 2006, which authorized $600
million in G.O. bonds for the libraries. Proposition 81
failed in the June 2006 primary election.
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Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081