Bill Providing Greater Oversight of State, Local Government Debt Passes Senate, Goes to Governor
SB 1029 responds to issues raised by a San Francisco embezzlement case in which millions of dollars in bonds were looted
SACRAMENTO – The Senate today passed legislation by Sen. Bob Hertzberg, D-Van Nuys, that requires the state to track and report on all new state and local government debt until it is fully repaid or redeemed.
SB 1029, which is sponsored by state Treasurer John Chiang, was approved on a 39-0 vote and goes to the governor for his consideration. The bill requires the issuer of any new state or local government debt to provide an annual report to the state, and debt issuers must certify they have adopted local debt policies and that the debt issuance is consistent with those policies.
“This bill ensures that bond management is transparent and accountable to taxpayers, and it helps prevent lax oversight that can lead to mismanagement or misuse of bond proceeds,” Hertzberg said. “Accountability and transparency are essential elements of making sure government works as it should.”
The legislation 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.
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.
SB 1029 builds upon recommendations made by Treasurer Chiang’s task force on 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.
“California relies heavily on borrowing to build its schools, highways, and other critical public infrastructure. In just the last three decades alone, California and her local governments have issued more than $1.5 trillion in debt,” said Chiang. “If signed by the Governor, SB 1029 will not only impose greater accountability and transparency requirements on government borrowers but will empower the public to be citizen watchdogs.”
“Since borrowed money must be repaid with interest, the public, which is often on the hook, should be provided tools to hold officials accountable for their borrowing decisions,” stated Chiang. “My deepest thanks go to Senator Bob Hertzberg for partnering with me on this critical legislation to protect taxpayers.”
SB 1029 requires the issuer of any new 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.
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