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SB-290 Natural disasters: insurance and related alternative risk transfer products: Special Fund for Economic Uncertainties.(2019-2020)

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Date Published: 08/12/2019 02:00 PM
SB290:v97#DOCUMENT

Amended  IN  Assembly  August 12, 2019
Amended  IN  Assembly  June 11, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Bill
No. 290

Introduced by Senator Dodd
(Coauthors: Assembly Members Aguiar-Curry, Daly, and Gallagher)

February 14, 2019

An act to amend Section 16418 of, and to add Section 8566.5 to, the Government Code, relating to emergency services, and making an appropriation therefor.


LEGISLATIVE COUNSEL'S DIGEST


SB 290, as amended, Dodd. Natural disasters: insurance and related alternative risk-transfer risk transfer products: Special Fund for Economic Uncertainties.
Existing law, the California Emergency Services Act, among other things, vests the Governor with various powers and duties related to that act, including coordinating the State Emergency Plan and those programs necessary for the mitigation of the effects of an emergency in this state. Existing law authorizes the Governor to expend any appropriation for support of the California Emergency Services Act to carry out its provisions.
Existing law creates the Department of Insurance, headed by the Insurance Commissioner, and prescribes the commissioner’s powers and duties, including a duty to convene a working group to identify, assess, and recommend risk transfer market mechanisms that promote investment in natural infrastructure to reduce the risks of climate change related to catastrophic events, create incentives for investment in natural infrastructure to reduce risks to communities, and provide mitigation incentives for private investment in natural lands to lessen exposure and reduce climate risks to public safety, property, utilities, and infrastructure.
Existing law establishes the Special Fund for Economic Uncertainties, a continuously appropriated fund, and requires the Controller to transfer as necessary from that fund to the unappropriated balance of the General Fund an amount necessary to eliminate any General Fund deficit as of the end of each fiscal year. Existing law also continuously appropriates moneys in the Special Fund for Economic Uncertainties to the Director of Finance for the purpose of allocating funds for disaster relief, as specified.
This bill would authorize the Governor to purchase insurance, reinsurance, insurance linked securities, or other related alternative risk-transfer risk transfer products for the State of California to help mitigate against costs incurred by the state in response to a mudslide, wildfire, or flood. The bill would require the Office of Emergency Services, or another agency designated by the Governor, to work with the Treasurer and the Insurance Commissioner to determine the appropriate product to be purchased by the state pursuant to these provisions. The bill would authorize the Office of Emergency Services, or the Governor’s designee, the Treasurer, and the Insurance Commissioner to consult with the working group described above when implementing these provisions. The bill would continuously appropriate moneys in the Special Fund for Economic Uncertainties to the Director of Finance, and would authorize the Director of Finance to allocate funds from the Special Fund for Economic Uncertainties to the Governor, for these purposes, thereby making an appropriation.
Vote: 2/3   Appropriation: YES   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 Section 8566.5 is added to the Government Code, to read:

8566.5.
 (a) The Governor may, in accordance with this section, purchase insurance, reinsurance, insurance linked securities, or other related alternative risk-transfer risk transfer products for the State of California to help mitigate against costs incurred by the state in response to a mudslide, wildfire, or flood.
(b) The Office of Emergency Services, or another agency designated by the Governor, shall work with the Treasurer and the Insurance Commissioner to determine the appropriate insurance, reinsurance, insurance linked securities, or related alternative risk-transfer products risk transfer products, including the risk transfer mechanisms described in subdivision (a) of Section 12922.5 of the Insurance Code, to be purchased by the state pursuant to this section.
(c) When implementing this section, the Office of Emergency Services, or another agency designated by the Governor pursuant to subdivision (b), the Treasurer, and the Insurance Commissioner may consult with the working group convened pursuant to subdivision (a) of Section 12922.5 of the Insurance Code.

(c)

(d) The Director of Finance may allocate funds from the Special Fund for Economic Uncertainties to the Governor pursuant to subdivision (c) of Section 16418 for the purposes of this section.

SEC. 2.

 Section 16418 of the Government Code is amended to read:

16418.
 (a) The Special Fund for Economic Uncertainties is hereby created in the State Treasury and is continuously appropriated for the purposes of this section. The contingency reserve for economic uncertainties established within the General Fund by Section 12.3 of the Budget Act of 1980 is hereby discontinued, and any balance in that reserve shall be transferred to the Special Fund for Economic Uncertainties. This special fund represents a reserve fund within the meaning of Section 5 of Article XIII B of the California Constitution. Notwithstanding Sections 16310 and 16314, the Controller may transfer as necessary from the Special Fund for Economic Uncertainties or from the special accounts in the General Fund to the General Fund amounts that are needed to meet cash needs of the General Fund. The Controller shall return all of the moneys so transferred without payment of interest as soon as there are sufficient moneys in the General Fund.
(b) The Controller shall transfer from the Special Fund for Economic Uncertainties to the unappropriated balance of the General Fund an amount necessary to eliminate any General Fund deficit as of the end of each fiscal year, commencing as of June 30, 1985. The amount of transfer for each fiscal year shall be determined on the basis of the State of California Preliminary Annual Report—Accrual Basis, for that fiscal year. Any subsequent adjustments shall be determined jointly by the Controller and the Director of Finance.
(c) Notwithstanding Section 13340, moneys in the Special Fund for Economic Uncertainties are hereby continuously appropriated without regard to fiscal years to the Director of Finance for the purpose of allocating funds for disaster relief pursuant to Chapter 5 (commencing with Section 194) and Chapter 6 (commencing with Section 197) of Part 1 of Division 1 of the Revenue and Taxation Code and Section 8566.5 of the Government Code. However, any allocation made by the director pursuant to this subdivision shall not be made sooner than 30 days after notification in writing of the necessity therefor is provided to the Joint Legislative Budget Committee.
(d) For budgeting and accounting purposes, any appropriations heretofore or hereafter made specifically from the Special Fund for Economic Uncertainties, other than appropriations contained in this section, shall be deemed an appropriation from the General Fund. For year-end reporting purposes, the Controller shall add the balance in the Special Fund for Economic Uncertainties to the balance in the General Fund so as to show the total moneys then available for General Fund purposes.
(e) (1) Notwithstanding Section 13340, there is hereby appropriated from the General Fund, without regard to fiscal years, for transfer by the Controller to the Special Fund for Economic Uncertainties as of the end of each fiscal year the unencumbered balance in the General Fund.
(2) If, at the end of any fiscal year in which it has been determined that there are revenues in excess of the amount that may be appropriated, as defined in subdivision (a) of Section 2 of Article XIII B of the California Constitution, the transfer pursuant to paragraph (1) shall be reduced by the amount of these excess revenues. The estimates of the transfer shall be made jointly by the Department of Finance and the Legislative Analyst’s Office.