The California Debt Limit Allocation Committee (CDLAC) is a three-member body comprised of the State Treasurer as Chair, the Governor, and the State Controller. CDLAC was created in 1985 by Governor proclamation in response to the 1984 Tax Reform Act, which imposed an annual limit on the dollar amount of tax-exempt private activity bonds that may be issued in a state. Private activity bonds included student loan bonds and industrial development bonds (including exempt facility bonds, small-issue industrial development bonds, and bonds for industrial parks). The annual limit was derived by multiplying the state's population by $150, resulting in a $3.8 billion ceiling at that time. The Act also required each state to designate an entity to allocate the state's ceiling among various state and local issuers.
The 1986 Tax Reform Act made major changes to the allocation of private activity bond authority. It reduced the annual volume cap to $75 per capita in 1986 and 1987 and $50 per capita thereafter. The Act also brought bonds for single-family and multifamily housing under the state ceiling. As a result, a new Governor's proclamation was issued in 1986 re-affirming CDLAC as the state's sole entity responsible for allocating the annual ceiling, and expressly authorizing CDLAC to establish procedures and reserve amounts of the ceiling for certain purposes or issuers. In 1987, the California State Legislature statutorily established CDLAC by enacting Chapter 943.
The 1998 Omnibus Budget Act raised the volume cap on private activity bonds to $75 per capita or a minimum of $225 million. However, the increase would take place incrementally over the years 2003 through 2007.
The Community Renewal Tax Relief Act of 2000 accelerates the scheduled increase contained in the 1998 Act by raising the volume cap to $62.50 per capita of the state's population or $187.5 million, whichever is higher, for calendar year 2001 and $75 per capita or $225 million, whichever is higher, in calendar year 2002 and thereafter. The 2000 Act also allows for the volume cap to be indexed for inflation starting in calendar year 2003.