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AB-1237 Local government finance.(2013-2014)

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AB1237:v98#DOCUMENT

Amended  IN  Assembly  April 01, 2013

CALIFORNIA LEGISLATURE— 2013–2014 REGULAR SESSION

Assembly Bill No. 1237


Introduced by Assembly Member Garcia

February 22, 2013


An act to add Sections 53891.2 and 53891.3 to, and to add Article 10.1 (commencing with Section 53902) to Chapter 4 of Part 1 of Division 2 of Title 5 of, the Government Code, relating to local government finance.


LEGISLATIVE COUNSEL'S DIGEST


AB 1237, as amended, Garcia. Local government finance.
Existing law requires the Controller to prescribe uniform accounting and reporting procedures that are applicable to specified types of local agencies. Existing law excludes certain agencies from this requirement, including cities.
This bill would specifically require the Controller to prescribe uniform accounting procedures for cities, conforming to Generally Accepted Accounting Principles, and in consultation with the Committee on City Accounting Procedures, which would be created by the bill. The bill would specify the composition of the committee.
This bill would create the City Budget Act, which would be applicable to certain fiscal procedures of cities, dependent special districts, and other agencies whose affairs and finances are under the supervision and control of the city council. The bill would require the Controller to promulgate rules, regulations, and classifications as he or she deems necessary and commensurate with the accounting procedures for cities prescribed pursuant to the bill. The bill would require that the city budget process be conducted pursuant to the specified procedures, and would require a copy of the city’s audited comprehensive annual financial report for the next preceding fiscal year to be filed by the city in the office of the Controller, not later than January 15 March 31 of each year. Because it would impose new duties on cities and agencies under their supervision and control, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 Section 53891.2 is added to the Government Code, to read:

53891.2.
 Pursuant to this division, the Controller shall prescribe for cities uniform accounting procedures conforming to Generally Accepted Accounting Principles (GAAP). The Controller shall prescribe these procedures after consultation, with and approval by, the Committee on City Accounting Procedures created by Section 53891.3. Approval of these procedures shall be by a majority vote of the total membership of the committee. The vote may be conducted by mail at the discretion of the chairperson of the committee, provided, however, that if one or more members of the committee request a meeting for the purpose of voting, the chairperson shall call a meeting of the committee, as provided in Section 53891.3.

SEC. 2.

 Section 53891.3 is added to the Government Code, to read:

53891.3.
 (a) The Committee on City Accounting Procedures, which is hereby created, shall consist of 10 members appointed by the Controller, who shall serve at the pleasure of the Controller. The committee members shall have the following qualifications:
(1) Four members shall be city finance officers.
(2) Three members shall be city managers, including one each from the northern, southern, and central California region.
(3)  One member shall be a city representative from a rural area.
(4)  One member shall be a county auditor-controller.
(5)  One member shall be a representative appointed by the California Society of Certified Public Accountants.
(b) The members of the committee shall serve without compensation, but shall be reimbursed for their necessary traveling and other expenses incurred in attending meetings of the committee. These expenses shall be paid by the city or county of which the member is an officer. The expenses incurred in attending meetings by the certified public accountant shall be paid by the California Society of Public Accountants.
(c) The Controller shall designate a member of the committee to serve as chairman. The committee shall meet at the call of the chairman and each member shall be given written notice of any meeting at least 10 days prior to the date of the meeting.

SEC. 3.

 Article 10.1 (commencing with Section 53902) is added to Chapter 4 of Part 1 of Division 2 of Title 5 of the Government Code, to read:
Article  10.1. City Budget Act

53902.
 This article shall be known, and may be cited, as the City Budget Act. Unless the context otherwise requires or provides, the general provisions set forth in this article, and the requirements concerning city budget matters prescribed by the Controller under Section 53891.2, shall govern the construction of this article.

53902.1.
 Except as otherwise defined in this section, the meaning of terms used in this article shall be as defined in the uniform accounting procedures for Cities prescribed by the Controller pursuant to Section 53891.2. As used in this article, the following terms have the following meanings:
(a) “Adopted budget” means the budget document formally approved by the city council after the required public hearings and deliberations on the recommended budget.
(b) “Budget year” means the fiscal year for which the budget is being prepared.
(c) “City official” means the chief administrative officer, city administrator, city executive, city finance officer, city manager, or any other official employed in any of the several cities under various titles whose duties and responsibilities are comparable to any of the officials named in this subdivision.
(d) “Controller” means the State Controller.
(e) “Council” means the city council of the city, or the same legislative body acting as the governing board of a special district whose affairs and finances are under its supervision and control.
(f) “Final budget” means the adopted budget adjusted by all revisions throughout the fiscal year as of June 30.
(g) “Fiscal year” means the current 12-month period to which the annual operating budget applies and at the end of which a government determines its financial position and the results of its operations.
(h) “Obligated fund balance” means the nonspendable, restricted, committed, and assigned fund balances.
(i) “Recommended budget” means the budget document recommended to the city council by the designated City city official.

53902.2.
 This article shall apply to cities, dependent special districts, and other agencies whose affairs and finances are under the supervision and control of the council.

53902.3.
 Except as otherwise specifically provided by law, a majority vote of the total membership of the council is required for the council to take action pursuant to this article.

53902.4.
 (a) The Controller shall promulgate any rules, regulations, and classifications as he or she deems necessary and commensurate with the accounting procedures for cities prescribed pursuant to Section 53891.2, to secure standards of uniformity among the various cities in carrying out the provisions of this article. The rules, regulations, and classifications shall be adopted with consultation and approval in accordance with Section 53891.2.
(b) The Controller shall prescribe the forms required to be used in presenting the required information in the budget document after consultation with the Committee on City Accounting Procedures established in Section 53891.3. Any city may add to the information required, or display it in more detail, provided that the financial information and the classifications or items required to be included in the budget are clearly and completely set forth. Any change proposed by a city in the arrangement of the information required on the forms shall be subject to review and approval by the Controller.

53903.
 For the adopted budget, the various forms, as prescribed by the Controller pursuant to Section 53902.4, shall provide for the presentation of data and information to include, at a minimum, estimated or actual amounts of the following items, by fund:
(a) Fund balances, including the following. balances:
(1) Nonspendable.
(2) Restricted.
(3) Committed.
(4) Assigned.
(5) Unassigned.
(b) Additional financing sources shall be classified by source, in accordance with the accounting procedures for cities as prescribed by the Controller pursuant to Section 53891.2. For comparative purposes, the amounts of financing sources shall be shown as follows:
(1) On an actual basis for the fiscal year two years prior to the budget year.
(2) On an actual basis, except for those sources that can only be estimated, for the fiscal year prior to the budget year.
(3) On an estimated basis for the budget year, as submitted by the city official.
(4) On an estimated basis for the budget year, as approved, or as adopted, by the council.
(c) Financing uses for each budget unit, classified by the fund or funds from which financed, by the objects of expenditure, other financing uses, intrafund transfers, and transfers out, in accordance with the accounting procedures for cities and by any further classifications or requirements pertaining to city budget matters as prescribed by the Controller pursuant to Section 53891.2. For comparative purposes, the amounts of financing uses shall be shown as follows:
(1) On an actual basis for the fiscal year two years prior to the budget year.
(2) On an actual basis, except for those uses that can only be estimated, for the fiscal year prior to the budget year.
(3) On an estimated basis for the budget year, as submitted by the city official.
(4) On an estimated basis for the budget year, as approved, or as adopted, by the council.
(d) Appropriations for contingencies.
(e) Provisions for nonspendable, restricted, committed, and assigned fund balances.
(f) The appropriations limit and the total annual appropriations subject to limitation as determined pursuant to Division 9 (commencing with Section 7900) of Title 1.

53903.1.
 There shall be a schedule in, or supporting, the adopted budget document or separate ordinance or resolution, setting forth for each budget unit the following data for each position classification:
(a) Salary rate or range, as applicable.
(b) Total allocated positions approved by the council.

53903.2.
 At a minimum, within the object of capital assets, the budget amounts for the following shall be reported, as specified:
(a) Land shall be reported in total amounts, except when included as a component of a project.
(b) Structures and improvements shall be reported separately for each project, except that minor improvement projects may be reported in totals.
(c) Equipment shall be reported in total amounts, by budget unit.
(d) Infrastructure shall be reported in total amounts, by budget unit.
(e) Intangible assets may be reported in total amounts, by budget unit.

53903.3.
 Funding sources shall equal the financing uses, in both the adopted budget and the final budget.

53903.4.
 The budget may contain one or more appropriations, an appropriation or appropriations for contingencies, in an amount or such amounts as the council deems sufficient.

53903.5.
 The resolution of adoption of the budget of the city, each dependent special district, and each other agency, as defined in Section 53902.2, shall specify the following:
(a) Appropriations, by objects of expenditure within each budget unit, except for capital assets that are appropriated at the subobject level pursuant to Section 53903.2.
(b) Other financing uses, by budget unit.
(c) Intrafund transfers, by budget unit.
(d) Transfers out, by fund.
(e) Appropriations for contingencies, by fund.
(f) Provisions for nonspendable, restricted, committed, and assigned fund balances, by fund and purpose.
(g) The means of financing the budget requirements.

53904.
 The adoption of the budget may be accomplished by a resolution in which the adoption is effectuated by reference to the financing uses in the budget as finally determined, provided that the minimum requirements set forth in Section 53903.5 are met in the budget document. If adopted by reference, the budget shall have the same effect, and be subject to the same provisions of law, as if the resolution of adoption had been accomplished by specific designation.

53904.1.
 The council may set forth appropriations in greater detail than required in Section 53903.5, and may authorize any additional controls for the administration of the budget as it deems necessary. The council may designate a city official to exercise these administrative controls.

53905.
 (a) A copy of the adopted budget in the format prescribed by the Controller shall be filed by the city official in the office of the clerk of the board and the office of the Controller not later than December 1 of each year.
(b) (1) If the city official, after receipt of written notice from the Controller, fails to transmit a copy of the adopted budget within 20 days, the city shall forfeit to the state one thousand dollars ($1,000), to be recovered in an action brought by the Attorney General, in the name of the Controller.
(2) Upon a satisfactory showing of good cause, the Controller may waive the penalty for late filing provided in paragraph (1).

53906.
 The adopted budget shall include a schedule showing the managerial budget of each service activity financed by a proprietary fund. The schedule shall set forth expected operations of the activity in that such detail for revenues, expenses, and reserves as will adequately display the nature and the approximate size of its operations. Comparative data, as prescribed in Section 53903, shall be provided.

53907.
 A copy of the audited comprehensive annual financial report for the next preceding fiscal year shall be filed by the appropriate city official in the office of the Controller not later than January 15 March 31 of each year.

SEC. 4.

 If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.