Referral of Fiscal Bills in the California Legislature

Referral of Fiscal Bills in the California Legislature By Chris Micheli

            Recognizing that the California Legislature just completed its fiscal committee deadline for the 2025 Legislative Session, there have been quite a few questions regarding when bills have to be heard in the Senate and Assembly Appropriations Committees and why some bills not “keyed” fiscal were still sent to the fiscal committees.

            By way of background, Joint Rule 10.5 specifies guidance to the attorneys in the Office of Legislative Counsel (OLC) when determining whether a bill should be “keyed” as a fiscal bill. The “keying” of a bill is done by the drafting attorneys at OLC. It is not done by the fiscal committees, nor DOF or LAO.

If the OLC determines that a bill is “fiscal,” then the measure will be re-referred to the Appropriations Committee in each house. The respective Rules Committees do not “refer” a bill to Appropriations Committee when it is keyed fiscal. Rather, they refer bills to one or more policy committees.

If the OLC determines that a bill is not fiscal, then the measure will be sent only to the policy committee(s) for hearing. unless the Appropriations Committee requests the measure and the Rules Committee re-refers the bill to the fiscal committee.

Under Joint Rule 10.5, there are four bases for “keying” a bill fiscal. A bill that appropriates money is a fiscal bill. A bill that results in a “substantial expenditure of state money” is a fiscal bill. A bill that results in a “substantial increase or loss of revenue to the state” is a fiscal bill. And, a bill that results in the reduction of expenditures of state money relating to a state agency program or function is a fiscal bill.

Joint Rule 10.5 can be suspended in either house for a particular bill by approval of the Committee on Rules of that house followed by a two-thirds vote of the membership of that house. However, this is rarely done.

 

            Despite a bill being “keyed” fiscal and being re-referred to the Appropriations Committee, the respective fiscal committees have discretion to deal with those measures, either sending them to their Suspense File for certain measures, or passing them without going to Suspense because the fiscal impact is nominal.

 

            Finally, like any other standing committee of the Legislature, the respective Appropriations Committees can request a bill be re-referred to their committee through a request to their house’s Rules Committee. And, if the Assembly or Senate Committee on Rules approves the request, then the bill will be re-referred to the fiscal committee.

 

            The two Appropriations Committees have long requested “non-fiscal” bills be heard by their committee, despite not being keyed fiscal by OLC. This long-standing practice is due to the fiscal committees having determined that OLC’s interpretation of the provisions of Joint Rule 10.5 sometimes would not have certain measures be heard by the two fiscal committees. As a result, a simple re-referral request to their respective Rules Committee ensures that proper consideration of the potential fiscal effects of a bill are appropriately considered by their committees.

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