Bill to Provide Greater Oversight of State, Local Government Debt Passes Committee
SB 1029 responds to issues raised by a San Francisco embezzlement case in which millions of dollars in bonds were looted
SACRAMENTO – Legislation by Sen. Bob Hertzberg, D-Van Nuys, that requires the state to track and report on all state and local government debt until it is fully repaid or redeemed was passed today by the Senate Governance and Finance Committee.
SB 1029, which is sponsored by state Treasurer John Chiang, also requires the issuer of any state or local government debt to provide an annual debt accountability report to the state. In addition, debt issuers must certify they have adopted local debt policies and that the debt issuance is consistent with those policies.
The bill follows multiple investigations into the 2014 disappearance of $3.9 million in San Francisco bond proceeds. Ultimately, the case led to Clarke Howatt, the finance director for the Association of Bay Area Governments (ABAG), pleading guilty to a felony charge of wire fraud in federal court and acknowledging he inappropriately took millions of dollars from bond funds.
SB 1029 is drawn from recommendations made by Chiang, who established a special task force to study best practices on fiduciary care of bond proceeds, and the Senate Governance and Finance Committee, which produced an oversight report on the ABAG case. Hertzberg is chair of the committee.
“Accountability and transparency are crucial to ensuring government bonds are being managed responsibly,” Hertzberg said. “This bill makes sure bond management is transparent and accountable to taxpayers, and it prevents lax oversight that facilitates the misuse of bond proceeds.”
In response to the San Francisco case, Chiang appointed the Treasurer’s Special Task Force on Bond Accountability to identify best practices for managing bond proceeds and strategies to increase transparency and oversight of the use of bond funds.
“California taxpayers need to know how bond proceeds are being spent,” Chiang said. “Sen. Hertzberg’s legislation will make such important information available to the public.”
SB 1029 requires the issuer of any debt of state or local government to provide a debt accountability report each fiscal year to the California Debt and Investment Advisory Commission with specified information on each authorized debt issue.
SB 1029 passed on a bipartisan 7-0 vote and goes next to the Senate Appropriations Committee.
Bob Hertzberg, chair of the Senate Committee on Governance and Finance, represents nearly 1 million San Fernando Valley residents of Senate District 18, which includes part of Burbank and the following communities in Los Angeles: Arleta, Granada Hills, Hansen Dam, Lake View Terrace, Mission Hills, North Hills, North Hollywood, part of Northridge, Pacoima, Panorama City, Sherman Oaks, Studio City, part of Sun Valley, Sylmar, Toluca Lake, Valley Glen, Valley Village, Van Nuys, the City of San Fernando and Universal City. See a district map at http://sd18.senate.ca.gov/district. After serving in the Assembly from 1996-2002, including two years as Speaker, Hertzberg invested in solar, wind and electric-car projects; and worked for structural changes in government through the Think Long Committee of California. Learn more at www.senate.ca.gov/hertzberg.
MEDIA CONTACT: Andrew LaMar
Senator Robert M. Hertzberg
Capitol Building, Room 4038
Sacramento, CA 95814