NOTE: As provided in LFC policy, this report is
intended only for use by the standing finance committees of the
legislature. The Legislative Finance Committee does not assume
responsibility for the accuracy of the information in this report when used for
other purposes.
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version (in HTML & Adobe PDF formats) is available on the Legislative
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SPONSOR: |
Heaton |
DATE TYPED: |
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HB |
23/aHAFC |
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SHORT TITLE: |
Cooperative Act Program Expenses |
SB |
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ANALYST: |
Padilla |
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APPROPRIATION
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Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
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FY03 |
FY04 |
FY03 |
FY04 |
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NFI |
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(Parenthesis
( ) Indicate Expenditure Decreases)
Relates
to Appropriations in the General Appropriation Act
LFC Files
Responses
Received From
Economic
Development Department
Attorney General
SUMMARY
Synopsis
of HAFC Amendment
The House Appropriations and Finance Committee
amendment removes two of the three sections of the bill. The two deleted sections contained
appropriations to EDD totaling $1,900.0 ($1,000.0 for cooperative advertising
and $900.0 for marketing). The remaining
section of the bill establishes EDD’s cooperative advertising program as a
statutory function of the department and requires that travel and other costs
be included as part of the program. As explained below, EDD currently manages
the cooperative advertising program without any specific statutory guidance. EDD already considers travel and others costs
as part of eligible cooperative advertising expenses.
Synopsis
of Original Bill
House Bill 23 appropriates $1,900.0 from the
general fund to the Economic Development Department (EDD) for the purpose of
increasing funding to EDD’s cooperative advertising program and to EDD’s marketing
program. It also amends EDD’s
authorizing statute to include the cooperative advertising program as one of
its functions and requires EDD to include travel and related costs as eligible
costs under cooperative advertising.
Significant
Issues
EDD’s cooperative advertising program, which provides matching funds to non-profit organizations in the state to promote economic development, has existed for some time without any specific statutory authorization. EDD has used its policymaking authority to develop and administer the program. Last year, EDD revised the program guidelines to include travel and related costs as eligible expenses if they are part of expenses related to conferences and trade shows. The relevant page of last year’s Request for Proposals is attached.
The Attorney General’s office indicated some
concerns about the constitutionality of the program with respect to funds that
are provided to non-governmental non-profit organizations. It was unable to fully review the program,
however, due to limited time. Because
the department receives programmatic benefit from the funded proposals, and
because the recipients enter into contractual service agreements with the
department, it appears that the program does not violate provisions of the
anti-donation clause.
The appropriation of $1,900.0 contained in this
bill is a recurring expense to the general fund. Any unexpended or unencumbered balance remaining
at the end of fiscal year 2004 shall revert to the general fund.
The General Appropriation Act GAA includes $426.0 for EDD’s marketing program. The GAA also includes $100.0 for cooperative advertising.
ADMINISTRATIVE IMPLICATIONS
Cooperative Advertising: In FY03, EDD received a $200.0 appropriation
for cooperative advertising. HB 23
recommends a five-fold increase in funding for the program. It is unclear if there is sufficient demand
from non-profit organizations for $1,000.0 worth of funds, but EDD notes that
there has been significantly more demand for co-op funding than money
available. It is also unclear if EDD has
the capacity to administer such an expanded program.
Marketing:
In FY03, EDD expended $240.8 on marketing. In FY02, it expended $914.4. EDD notes that
past uses of marketing funds have included advertising agency services, trade
shows, promotional materials and some media purchases. EDD states that uses for FY04 marketing funds
are not yet known.
CONFLICT, DUPLICATION, COMPANIONSHIP,
RELATIONSHIP
Duplicates some appropriations in the General
Appropriations Act. See “Fiscal
Implications.”
OTHER SUBSTANTIVE ISSUES