SAN FRANCISCO — A bill to block financial firms with an interest in debt sales from participating in school bond elections passed the California Assembly Monday.
The measure, Assembly Bill 621, by Don Wagner, R-Irvine, would prohibit a local agency from working on any bond deal with an individual or firm that provides services to the bond election campaign. It passed the Assembly 51-10.
Wagner said during a committee hearing last week that a loophole in current law allows districts to use taxpayer dollars to fund campaigns. The bill, he said, would "prohibit the end run" around conflict of interest rules.
The bill has the support of state Treasurer Bill Lockyer, a Democrat.
Lockyer sent letters to Attorney General Kamala Harris in March asking her to give an opinion on the roles of underwriters, financial advisors and bond counsels in school bond elections.
The treasurer has also pushed for legislation to curb high-cost capital appreciation bonds sales by school districts, which are typically tied to the voter bond authorizations. CABs sales and their perceived shortcomings have received media attention recently in California. The CAB limit bill, AB 182, unanimously passed out of the Assembly in April and is in committee in the Senate.
Wagner's bill, amended last month, is similar to unsuccessful legislation proposed in 2011 by former Assembly member Chris Norby, a Fullerton Republican who lost his re-election bid in 2012.
There is more interest in the issue following a number of articles related to campaign contributions and services provided by bond firms, including stories in The Bond Buyer.
Critics of Wagner's legislation have said the bill would limit the school districts' financial flexibility, making it harder to pass school bond ballot measures in some parts of the state.