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AB-5 California State Lottery: allocation of revenue.(2007-2008)

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AB5:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2007–2008 4th Ext.

Assembly Bill
No. 5

Introduced  by  Assembly Member Plescia

November 19, 2008

An act to add and repeal Sections 8880.4.1, 8880.63.1, and 8880.64.1 of the Government Code, relating to the California State Lottery, making an appropriation therefor, and declaring the urgency thereof, to take effect immediately.


LEGISLATIVE COUNSEL'S DIGEST


AB 5, as introduced, Plescia. California State Lottery: allocation of revenue.
The California State Lottery Act of 1984, enacted by initiative, authorizes a California State Lottery and provides for its operation and administration by the California State Lottery Commission and the Director of the California State Lottery, with certain limitations. Existing law establishes the State Lottery Fund, which is continuously appropriated for the purposes of the California State Lottery. Existing law requires that not less than 84% of the total annual revenues from the sale of state lottery tickets or shares be returned to the public in the form of prizes and net revenues to benefit public education, and that no more than 16% of those revenues be used for expenses of the lottery.
This bill would require, instead, that not less than 87% of the total annual revenues from the sale of state lottery tickets or shares be used for prizes and to benefit education, and no more than 13% be used for lottery expenses. By changing the purpose for which moneys in a continuously appropriated fund may be used, the bill would make an appropriation.
Existing law requires that 50% of the total annual lottery revenues be returned to the public in the form of prizes, and that 34% of those revenues be used to benefit public education.
This bill would require, instead, that not less than 50% of the total annual lottery revenues be returned to the public in the form of prizes. The bill would delete the requirement that 34% of those revenues be used to benefit education, and would provide, instead, that the specific percentages of the total annual revenues to be allocated for prizes and public education shall be established by the commission at levels designed to maximize the total amount of net revenues available for allocation to public education.
The bill would provide that, if A.B. 1654 of the 2007–08 Regular Session is approved by the voters, these provisions shall become inoperative.
This bill would declare that it is to take effect immediately as an urgency statute.
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 8880.4.1 is added to the Government Code, to read:

8880.4.1.
 Revenues of the state lottery shall be allocated as follows:
(a) Not less than 87 percent of the total annual revenues from the sale of state lottery tickets or shares shall be returned to the public in the form of prizes and net revenues to benefit public education.
(1) Not less than 50 percent of the total annual revenues shall be returned to the public in the form of prizes as described in this chapter.
(2) Subject to paragraph (1), the specific percentages of total annual revenues to be allocated for prizes and for public education pursuant to Section 8880.5 shall be established by the commission at levels designed to maximize the total amount of net revenues available for allocation to public education. However, for the 1998–99 fiscal year and each fiscal year thereafter, 50 percent of any increase in the amount calculated for allocation to public education pursuant to this paragraph from the amount calculated for public education in the 1997–98 fiscal year shall be allocated to school districts and community college districts for the purchase of instructional materials, on the basis of an equal amount per unit of average daily attendance, as defined by law, and through a fair and equitable distribution system across grade levels.
(3) All unclaimed prize money shall revert to the benefit of public education, as provided for in subdivision (e) of Section 8880.32.
(4) All of the interest earned upon funds held in the State Lottery Fund shall be allocated to the benefit of public education, as specified in Section 8880.5. This interest is in addition to, and shall not be considered as any part of, the percentage of the total annual revenues to be allocated for the benefit of public education as specified in paragraph (2).
(5) No more than 13 percent of the total annual revenues shall be allocated for payment of expenses of the lottery as described in this chapter. To the extent that expenses of the lottery are less than 13 percent of the total annual revenues, any surplus funds also shall be allocated to the benefit of public education, as specified in this section or in Section 8880.5.
(b) Funds allocated for the benefit of public education pursuant to subdivision (a) are in addition to other funds appropriated or required under existing constitutional reservations for educational purposes. No program shall have the amount appropriated to support that program reduced as a result of funds allocated pursuant to subdivision (a). Funds allocated for the benefit of public education pursuant to subdivision (a) shall not supplant funds committed for child development programs.
(c) None of the following shall be considered revenues for the purposes of this section:
(1) Revenues recorded as a result of a nonmonetary exchange. “Nonmonetary exchange” means a reciprocal transfer, in compliance with generally accepted accounting principles, between the lottery and another entity that results in the lottery acquiring assets or services and the lottery providing assets or services.
(2) Reimbursements received by the lottery for the cost of goods or services provided by the lottery that are less than or equal to the cost of the same goods or services provided by the lottery.
(d) Reimbursements received in excess of the cost of the same goods and services provided by the lottery, as specified in paragraph (2) of subdivision (c), are not a part of the percentage of total annual revenues to be allocated for the benefit of public education, as specified in paragraph (2) of subdivision (a). However, this amount shall be allocated for the benefit of public education as specified in Section 8880.5.
(e) (1) Except as provided in paragraph (2), this section shall supersede Section 8880.4, which shall become inoperative. Any reference in this chapter to Section 8880.4 shall be deemed to refer to this section.
(2) If Assembly Bill 1654 of the 2007–08 Regular Session is approved by the voters, this section shall become inoperative on the date that Assembly Bill 1654 takes effect, and shall be repealed on the January 1 next following that date.

SEC. 2.

 Section 8880.63.1 is added to the Government Code, to read:

8880.63.1.
 (a) At least 50 percent of the total projected revenue, computed on a fiscal-year basis, accruing from the sales of all lottery tickets or shares shall be apportioned for payment of prizes.
(b) (1) Except as provided in paragraph (2), this section shall supersede Section 8880.63, which shall become inoperative. Any reference in this chapter to Section 8880.63 shall be deemed to refer to this section.
(2) If Assembly Bill 1654 of the 2007–08 Regular Session is approved by the voters, this section shall become inoperative on the date that Assembly Bill 1654 takes effect, and shall be repealed on the January 1 next following that date.

SEC. 3.

 Section 8880.64.1 is added to the Government Code, to read:

8880.64.1.
 (a) Expenses of the lottery shall include all costs incurred in the operation and administration of the lottery and all costs resulting from any contracts entered into for the purchase or lease of goods and services required by the lottery, including, but not limited to, the costs of supplies, materials, tickets, independent audit services, independent studies, data transmission, advertising, promotion, incentives, public relations, communications, compensation paid to the lottery game retailers, bonding for lottery game retailers, printing, distribution of tickets or shares, reimbursement of costs of services provided to the lottery by other governmental entities, and for the costs for any other goods and services necessary for effectuating the purposes of this chapter. As a promotional expense, the commission may supplement the prize pool of a game or games upon its determination that a supplement will benefit the public purpose of this chapter.
(b) (1) Not more than 13 percent of the total annual revenues accruing from the sale of all lottery tickets and shares from all lottery games shall be expended for the payment of the expenses of the lottery.
(2) Expenses recorded as a result of a nonmonetary exchange shall not be considered an expense for the purposes of Section 8880.4 and this section. “Nonmonetary exchange” means a reciprocal transfer, in compliance with generally accepted accounting principles, between the lottery and another entity that results in the lottery acquiring assets or services and the lottery providing assets or services.
(c) (1) Except as provided in paragraph (2), this section shall supersede Section 8880.64, which shall become inoperative. Any reference in this chapter to Section 8880.64 shall be deemed to refer to this section.
(2) If Assembly Bill 1654 of the 2007–08 Regular Session is approved by the voters, this section shall become inoperative on the date that Assembly Bill 1654 takes effect, and shall be repealed on the January 1 next following that date.

SEC. 4.

 The Legislature finds and declares that this act furthers the purpose of the California State Lottery Act of 1984, enacted by Proposition 37 at the November 6, 1984, general election.

SEC. 5.

 This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are:
In order to generate additional revenue at the earliest possible time to respond to the current fiscal crisis facing the state, it is necessary that this act take effect immediately.