BILL ANALYSIS                                                                                                                                                                                                    


            Senator Lois Wolk, Chair

                                                  SB 974 - Steinberg

                                                   Amended: May 3, 2010


            Hearing: May 12, 2010      Tax Levy         Fiscal: Yes

            SUMMARY:  Enacts the Career Pathways Investment Credit;  
                      Repeals TEA Criterion for Enterprise Zone Hiring  
                      Credits, and Requires Taxpayers to Submit  
                      Applications for Certification for All Qualified  
                      Employees Within 21 Days of Hire Date.


            I.  Career Pathways Investment Credit

                 EXISTING LAW provides various tax credits designed to  
            provide incentives for taxpayers that incur certain  
            expenses, such as child adoption, or to influence behavior,  
            including business practices and decisions, such as  
            research and development credits and Geographically  
            Targeted Economic Development Area credits.  The  
            Legislature typically enacts such tax incentives to  
            encourage taxpayers to do something but for the tax credit,  
            they would otherwise not do.

                 THIS BILL enacts the Career Pathways Investment Credit  
            (CPIC), administered and allocated by the California  
            Department of Education (CDE) to qualified taxpayers to  
            apply against liabilities for five taxable years under the  
            Sales and Use Tax, Personal Income Tax, and Corporation  
            Tax.  CDE allocates the credit to taxpayers over five  
            years; however, the taxpayer may apply for CPIC in the  
            sixth year after the first allocation of the credit.   



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            Taxpayers may carryover the credit until exhausted.

                 THIS BILL provides definitions for its terms, and  
            states legislative findings and declarations to support its  

            Application Process:

                 THIS BILL states that beginning on January 1, 2011,  
            CDE calculates the annual CPIC ceiling, and may reserve a  
            portion for subsequent fiscal years.  CDE shall allocate  
            the CPIC on a regular basis, but at least twice per year.   
            CDE must also establish a procedure for qualified taxpayers  
            to file applications for the tax credit, including  
            deadlines, maximum amount of CPIC ceiling, and the  
            approximate date of allocations.  CDE may contract with  
            other entities to aid in the processing and review of  
            applications, and consult with the Treasurer and the  
            California Tax Credit Allocation Committee, which shall  
            assist CDE if requested. CDE must develop and provide forms  
            for the purpose of informing qualified taxpayers of the  
            purposes of the credit.

                   THIS BILL requires CDE to develop and provide forms  
            for use by qualified taxpayers and adopt uniform procedures  
            to submit and review applications.  Applications must  

                            A copy of the contract or MOU between the  
                      qualified taxpayer and the local education agency  
                      that includes a clear and comprehensive plan for  
                      each middle school or high school program that  
                      creates career pathways. 
                            Details about the strength and relevance  
                      of the education plan to the needs of the  
                      industry for qualified technical education  
                      applicable to the economic development needs of  
                      the region in which the local education agency  
                      and partnering private entity are located.

                            Projections of program participant  



                                              SB 974 - Steinberg Page 11

                            The method by which accountability and  
                      program participant enrollments and outcomes will  
                      be maintained.  Outcomes shall include pathway  
                      completion rates, high school graduation rates,  
                      percentages of students attaining an industry  
                      certification, percentages of students  
                      transitioning successfully to postsecondary  
                      education, and employment and earnings after high  

                 THIS BILL requires that the copy of the contract  
            submitted with the application to include a description of  
            the nature and value of the qualified taxpayer's support  
            for career exploration activities, curriculum and  
            professional development programs, and middle school or  
            high school programs that create career pathways that  
            integrate academic and technical learning to prepare pupils  
            for both college and careers, including:

                            Equipment and instructional materials
                            Employees to provide instruction in  
                      partnership with credentialed teachers employed  
                      by the school district, at the school site

                            Opportunities for pupils to be mentored  
                      by, or to shadow employees at a partnering  
                      private entity

                            Paid or unpaid internships

                            Paid jobs

                            Teacher externships

                            Contributions to programs administered by  
                      postsecondary institutions that provide support  
                      to middle or high school programs that create  
                      career pathways.  This support may include,  but  
                      shall not be limited to, teacher training,  
                      curriculum development, and other forms of  
                      technical assistance.



                                              SB 974 - Steinberg Page 11


            Allocation Criteria:

                 THIS BILL requires CDE to prioritize CPIC allocations  
            to qualified taxpayers with a contract or memorandum of  
            understanding with a local education agency that:

                            Have lower unemployment rates than the  
                      statewide average
                            Have lower high school graduation rates  
                      than the statewide average

                            With proportions of private funding  
                      support that exceed the one-to-one match.

                            Are articulated with postsecondary  
                      certificate and degree programs

                 CDE must also give priority CPIC allocation to  
            qualified taxpayers serving socioeconomically diverse areas  
            to the maximum extent practicable, but shall not preference  
            any application based solely on the date of submission,  
            except to break a tie.   

                 CDE must additionally adopt allocation criteria that  
            award CPIC to qualified taxpayers that demonstrate that  
            either the taxpayer or the local educational agency:

                             Provides at least a one-to-one match of  
                      private to public investment in middle school and  
                      high school programs that create career pathways  
                      or similar programs.
                             Shows program effectiveness for preparing  
                      students for productive, high-wage employment in  
                      growing or high-need sectors in California.   
                      Applicants demonstrate effectiveness by measuring  
                      pathway completion rates, high school graduation  
                      rates, percentages of students attaining an  
                      industry certification, percentages of students  
                      transitioning successfully to postsecondary  
                      education, and employment and earnings after high  



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                             Invests, oversees, and is able to  
                      leverage and sustain current career pathways  
                      programs and current career technical education  


            Awarding the Credit:

                 THIS BILL directs CDE to allocate credits only to  
            qualified taxpayers that enter into contracts with local  
            education agencies to comply with the terms of the bill.   
            The contract shall also provide for legal action to obtain  
            specified performance or monetary damage for breach of  
            contract, including programmatic audits.  Additionally, the  
            measure specifies that CDE certifies each qualified  
            taxpayer the amount of the CPIC ceiling allocated to it for  
            the taxable year.  The certificate shall include the amount  
            of the credit allocation that may be distributed and  
            applied by the qualified taxpayer against tax liability for  
            each of the five taxable years.

            Program Administration:

                 THIS BILL allows CDE to charge a fee to for submitting  
            applications for the CPIC ceiling in the current year or  
            the following year, and for monitoring the compliance of  
            qualified taxpayers.  Fee revenues must be sufficient to  
            reimburse the Franchise Tax Board (FTB), and the Board of  
            Equalization (BOE) for each agency's administrative costs.   

                 THIS BILL creates the CPIC Fee Account, into which all  
            fee revenues shall be deposited.  The Legislature may  
            appropriate fee revenues for reimbursements above.  CDE may  
            borrow moneys to administer the CPIC program; however, any  
            loan shall be repayable solely from appropriations to CDE  
            and do not constitute a general obligation of the state.



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                 THIS BILL allows CDE to prescribe rules and  
            regulations to carry out the program and assess the fee.

            CPIC Credits:

                 THIS BILL allows taxpayers a credit against the  
            Personal Income Tax and Corporation Tax an amount equal to  
            CDE's allocation, commencing in taxable years on or after  
            January 1, 2011.  Taxpayers may apply the credit over each  
            of the next five years as provided in the certification,  
            but must attach a copy of the certification provided to the  
            taxpayer by CDE.  

                 THIS BILL caps the amount of credits that CDE may  
            award to $16 million in 2010-11 fiscal year, $65 million in  
            2011-12 fiscal year, and $95 million in the 2012-13 fiscal  
            years.  Each fiscal year thereafter, FTB shall increase the  
            $95 million baseline amount to reflect the rate of  
            inflation or deflation from the previous date that the  
            baseline was established by measuring change in the  
            Consumer Price Index or other measure deemed accurate by  
            FTB.  CDE may allocate the unused credit allocation amount  
            from previous years, known as the "credit ceiling."  

                   THIS BILL allows taxpayers to also make an  
            irrevocable election to apply the credit to its sales and  
            use tax reimbursements paid and use taxes paid to a  
            retailer by the qualified taxpayer.   Taxpayers must submit  
            a form prescribed by BOE on or before the date the taxpayer  
            would first be allowed to claim the credit against Personal  
            Income Tax or Corporation Tax liability that includes: 

                             The credit amount, 
                             The sales tax reimbursement and use taxes  
                      paid during the taxable year for which the credit  
                      is claimed,

                             A copy of the certification

                 THIS BILL also allows taxpayers to elect to obtain a  
            refund of sales and use taxes paid during the taxable year  



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            for which the credit is claimed.  Taxpayers must file a  
            claim for refund with the irrevocable election described  
            above, and the refund amount cannot exceed the credit  
            amount.  No interest shall be paid on the refund, but any  
            remaining credit amount that exceeds the refund amount may  
            be carried over and applied against future sales and use  
            taxes paid until exhausted. BOE may seek deficiency  
            judgments for credits erroneously claimed administratively  
            or judicially.  BOE shall provide annual listing to CDE and  
            FTB of taxpayers choosing to apply the credit to sales and  
            use taxes.


            II. Enterprise Zone Program

                 EXISTING LAW provides special tax incentives for  
            businesses located in enterprise zones (including  
            accelerated depreciation, 100% net operating loss  
            carryover, wage credits, and credits for sales tax on  
            equipment purchased for use in the zone).  The law allows  
            the governing body of a city or county to request the  
            Department of Housing and Community Development (HCD) to  
            designate qualified areas as enterprise zones from  
            applications received from the governing bodies.  Zones are  
            designated for 15 years with the exception of zones  
            designated prior to 1990 that may have their designation  
            period extended to 20 years.

                 EXISTING LAW allows four kinds of Geographically  
            Targeted Economic Development Areas: Enterprise Zones,  
            Local Agency Military Base Recovery Areas (LAMBRAs),  
            Manufacturing Enhancement Areas (MEAs), and Targeted Tax  
            Areas (TTAs).  While some differences exist among the tax  
            incentives for each, taxpayers generally have access to  
            each form of preferable tax treatment.  The law currently  
            limits the number of enterprise zones that may be  
            designated to 42 and HCD has currently designated either  
            conditionally or finally 40 zones.  State law allows eight  
            LAMBRAs, two MEAs, and one TTA, all of which are  



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                 EXISTING LAW allows employers inside an enterprise  
            zone to claim a tax credit of 50% of the wages paid to a  
            qualified employee in the first year, 40% in the second  
            year, 30% in the third year, 20% in the fourth year, and  
            10% in the fifth year, up to 150% of the minimum wage.   
            Qualified employees include individuals: 

                       Eligible for job training programs
                       Eligible for most social welfare programs
                       Economically disadvantaged
                       A "dislocated worker," as defined
                       A disabled individual who is eligible or  
                   enrolled in a state rehabilitation plan
                       Service connected veteran
                       Member of a federally recognized Indian tribe
                 EXISTING LAW also allows employer to claim the  
            enterprise zone hiring credit for residents of Targeted  
            Employment Areas (TEAs) in addition to the criteria listed  
            above.  Enterprise Zones may draw TEAs to contain census  
            tracts where 51% or more of the individuals are low or  
            moderate income, meaning 80% of the area wide, or  
            countywide, median.  In other words, TEAs can be drawn to  
            include communities where only half of the residents are  
            actually or somewhat low-income, but qualify employers for  
            a tax credit for anyone living within the TEA.  TEAs need  
            not be contiguous, and they need not be drawn within the  
            borders of the Enterprise Zone.
                 THIS BILL repeals the TEA criterion.

                 EXISTING LAW provides that taxpayers must obtain  
            certification for an employee's eligibility for the hiring  
            credit from the local Job Training Partnership Act Office,  
            the Employment Development Department, the local county  
            GAIN office, or the local government administering the  
            zone, but does not specify a deadline.  

                 THIS BILL requires the taxpayer to obtain  
            certification within 21 days of the employees' commencement  
            date of employment.  The certifying agency cannot certify  
            an employee whose employment commenced more than 21 days  
            before the taxpayer requests certification.  



                                              SB 974 - Steinberg Page 11

            FISCAL EFFECT: 

                 If the measure is amended to incorporate the changes  
            in Comment G, SB 974 has no net revenue effect.  Repealing  
            TEA and retro-vouchering provisions increase revenue by $20  
            million in 2010-11, $75 million in 2011-12, and $100  
            million in 2012-13, an amount entirely offset by granting  
            the CPIC.


            A. Purpose of the Bill

                 According to the Author, "SB 974 is before the Senate  
            Revenue and Taxation Committee today because it establishes  
            a new tax credit in state law, the Career Pathways  
            Investment Credit.  This bill reflects my priorities in tax  
            policy: first, that we pay for any new tax credits or  
            expenditure that we authorize - which is essential, given  
            our budget situation - and second, that we critically  
            evaluate the tax credit programs we already have on the  
            books, to make sure that are maximizing the program  
            benefits of our tax credits. SB 974 funds the new Career  
            Pathways Investment Credit by repealing two parts of the  
            Enterprise Zone program."


            B.   Not so EZ.

                 California's enterprise zone program, the result of  
            collaboration between former Assemblymembers Pat Nolan and  
            Maxine Waters (AB 40 and 514, 1984, respectively), has  
            evolved from a well-intentioned legislative effort to use  
            tax credits to draw investment into depressed rural and  
            urban areas into an almost half-billion tax credit program  



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            referred to as California's best economic development  
            program.  Passionately defended by business interests and  
            local administrators as the state's best tool for economic  
            development, the program is not without detractors who  
            state that the program offers a poor return on the state's  
            investment due to its statutory design.  Administered by  
            the Department of Housing and Community Develop (HCD),  
            which took over responsibility for the EZ Program from the  
            now-defunct Trade and Commerce Agency in 2003, the program  
            allows five different tax benefits for taxpayers doing  
            business in one of the state's 42 zones.

                 For many years, the program resulted in revenue losses  
            of less than $10 million.  However, beginning in 1998, the  
            program began to significantly grow in cost, due largely to  
            an industrious cottage industry of accounting firms and tax  
            credit consultants that found the program could be marketed  
            under contingency arrangements to taxpayers who were  
            unaware of its generous benefits, especially the hiring  
            credit, which can be worth up to $37,444 to an employer  
            over five years if qualified wages reach the cap of 150% of  
            the minimum wage.  Additionally, some of these accounting  
            firms and tax credit consultants pushed local zone  
            administrators to issue certifications qualifying employees  
            for the hiring credit using questionable interpretations of  
            statute and scant documentation, including  
            "cross-jurisdictional vouchering," where an enterprise zone  
            manager for one zone would certify employees employed in a  
            different zone, among others.  

                 HCD's vouchering regulations eliminated or limited  
            many sources of abuse in 2007; however, accounting firms  
            and tax credit consultants unsuccessfully brought suit to  
            enjoin the regulations (Cyntron Payroll Solutions v.  
            Department of Housing and Community Development), and  
            attempted to disqualify the Franchise Tax Board from  
            auditing enterprise zone tax credits at all, arguing that  
            the Government Code placed local zone administrators as the  
            sole arbiters of whether an employee is qualified under  
            criteria in the Revenue and Taxation Code.  The BOE  
            affirmed FTB's role in The Appeal of Deluxe (Dec. 12, 2006,  
            No. 297128) 2006 Cal. Tax Lexis 432, but FTB's authority  
            was subsequently weakened by the Second Court of Appeal in  



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            Dicon Fiberoptics v. Franchise Tax Board (Case B202997,  
            2009) by stating that while FTB is legally authorized to  
            audit EZ credits, the voucher constitutes prima facie  
            evidence that the taxpayer is entitled to the credit.

                 Enterprise zone advocates cite accounts from taxpayers  
            who state that they locate in California largely because of  
            enterprise zone program incentives, which overcome  
            disadvantages posed by California's tax and regulatory  
            system.  Enterprise zone supporters state that the  
            incentives draw investment into economically distressed  
            communities and provide avenues for hard-to-hire  
            individuals to find employment.  

                 At the Committee's Enterprise Zone Oversight Hearing  
            on March 10, 2010, the Committee from proponents and  
            opponents of the program.  The Committee also received oral  
            and written testimony from several academic experts on the  

                             Dr. Charles Swenson, whose work shows  
                      that enterprise zones have decreased unemployment  
                      and poverty rates in California census tracts  
                      within zones<1>
                             David Neumark, whose paper states that  
                      California's enterprise zones have no effect upon  
                      employment and business formation in zones,<2>  
                      and zones which have lower share of manufacturing  
                      and where managers perform more marketing  
                      activities have more favorable effects on  
                      employment, and zones that devote more time to  
                      helping firms claim tax credits eliminate any  

            <1> "Government Programs Can Improve Local Labor Markets:  
            Evidence from State Enterprise Zones, Federal Empowerment  
            Zones, and Federal Enterprise Communities," by John Ham,  
            Ayse Imrohoroglu, and Charles Swenson, February 2009.

            <2> "Do Enterprise Zones Create Jobs?" by David Neumark and  
            Jed Kolko, Journal of Urban Economics, June 2010



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                      positive benefit.<3>

                             Eileen Norcross of the Mercatus Center at  
                      George Mason University, who stated that  
                      enterprise zones have failed to produce the hoped  
                      for benefits of economic revitalization and  
                      robust economic growth because the policy is  
                      discriminatory and introduces complexity and  
                      gamesmanship into the tax code and business  
                      decisions.  Norcross recommends that the state  
                      should instead set rules that encourage  
                      entrepreneurship without regard to firm size or  
                      business activity.

                             The Legislative Analysts' Office, which  
                                                                                                  recommends the program be eliminated or  

            C.  Targeted Employment Ares and Retro-Vouchering 

                 SB 974 makes two important changes to the enterprise  
            zone program: repealing the targeted employment area  
            criterion, and ending retro-vouchering.

                  Targeted Employment Areas  :  An individual meeting any  
            one of the existing criteria qualify an employer in an  
            enterprise zone for a tax credit; however, the TEA  
            criterion is the only one that allows an individual to  
            qualify an employer for a tax credit not based on who they  
            are, but where they live.  Zone administrators issue  
            vouchers based solely on residence within a zip code range  
            listed on his or her employment records.  Enterprise Zones  
            draw TEAs according to census data, and anyone inside  
            regardless of individual economic disadvantage or barrier  
            of employment qualifies their employer for a tax credit.   
            Until AB 1550 (Lowenthal, 2006), TEAs were based on the  

            <3> "Do Some Enterprise Zones Create Jobs?" by Jed Kolko  
            and David Neumark.  Journal of Policy Analysis and  
            Entrepreneurship, Vol 29, No. 1, 5-38 (2010).



                                              SB 974 - Steinberg Page 11
            census data at the time the zone was formed, not the most  
            recent census data available.  TEA opponents state that the  
            criterion allows tax credits for individuals who would be  
            hired anyway; proponents say that TEAs are necessary  
            because qualifying employees under other criteria requires  
            invasive questioning of an employee's economic  
            circumstances, and encourage local hiring.

                  Retro-Vouchering  :  Under current law, taxpayers can  
            receive a certification qualifying an employee for an  
            enterprise zone hiring credit at any time.  Taxpayers may  
            certify employees who worked for them in past years, then  
            submit claims for refunds for previous taxes paid to FTB  
            based on those certifications under California's general  
            four year statute of limitations for amending past returns.  
             Opponents of retro-vouchering state that employers are  
            essentially getting a check from the state for hiring done  
            years prior, undermining the intent of an incentive  
            program. In practice, retro-vouchering constitutes a  
            non-means tested grant program to businesses based on past  
            behavior.  Proponents state that retro-vouchering helps  
            taxpayers previously unaware of tax credits get benefits to  
            which they're lawfully entitled, and the attendant tax  
            refunds can be reinvested in productive capital and  
            additional employees.  Proponents also state that  
            retro-vouchering is necessary because small businesses that  
            hire qualified workers may not be profitable, and therefore  
            not have a tax liability, for several years; however, this  
            argument is not valid because enterprise zone hiring  
            credits have infinite carry-forward periods, meaning that  
            the taxpayer can apply the credit in any future taxable  
            year. SB 974 merely requires the taxpayer to seek  
            certification 21 says after hiring a qualified employee  
            instead of waiting for up to four years after the hire  

                 Taxpayers use the TEA criterion and retro-vouchering  
            together to check payroll records for zip codes of  
            employees employed in the last four years to identify  
            qualified employees, apply for certifications to the local  
            zone administrator, and then file claims for refunds with  
            the state.  Often times, this process will be performed by  
            payroll companies, accounting firms, or tax credit  



                                              SB 974 - Steinberg Page 11
            consultant who are paid on contingency arrangements based  
            on a percentage of the taxpayer's refund amount.  

            D. Tax Credit in Lieu of Program Funding

                 SB 974 enacts the Career Pathways Investment Credit  
            intended to draw additional investment into career pathways  
            programs, where taxpayers invest individually in programs  
            that provide middle and high school job skills relevant to  
            the modern economy.  Currently, taxpayers invest in these  
            programs because they enhance the future labor pool from  
            which these firms will draw, resulting in the attendant  
            public benefit of providing superior education and helping  
            enhance California's competitive advantage of an educated  
            workforce.   SB 974 complements the existing investments in  
            these programs by granting a tax credit, likely leading to  
            increased investment in career pathways programs.

                 According to the Senate Education Committee, "Regional  
            Occupational Centers and Programs (CROCP) conducted by the  
            School Improvement Research Group at the University of  
            California, Riverside and funded by the CDE, ROCP students  
            improve their high school grade point averages at a greater  
            rate than comparison students, enroll in post-secondary  
            education in large numbers, earn higher wages than  
            comparison group  peers, have more success in securing  
            raises and promotions on the job, prefer ROCP classes over  
            other subjects, and question the value and relevance of  
            many  of their high school courses.  A 2010 study conducted  
            by the Career Academy Support Network finds that, after  
            more than four decades of development and three decades of  
            evaluation, career academies (small learning communities  
            that provide a college-preparatory curriculum with a  
            career-related theme) have been effective in improving  
            outcomes for students during and after high school and  
            declares them a proven strategy to prepare high school  
            students for college and careers.

                 While funding career pathways programs lead to reduced  
            drop out rates and a more educated workforce, are tax  
            credits the appropriate tool to use?  In a time of less  



                                              SB 974 - Steinberg Page 11
            fiscal stress, the state could provide a match of  
            private-sector investment or direct investments in the  
            program instead of the inherently inefficient means of  
            using the tax system to achieve policy goals.   
            Additionally, CPICs may be awarded to firms that would make  
            investments in these career pathways programs anyway  
            because they already see a tangible return on investment  
            given the success of current programs.

            E. For Those About to Swap

                 Legislative Counsel keyed SB 974 as a majority-vote  
            bill because it repeals portions of one tax credit, which  
            increases taxes, and grants a new tax credit, that fully  
            offsets the revenue gained from the repealed portions.  The  
            Legislative Counsel key serves as an interpretation of that  
            office regarding the meaning of Section 3 of Article XIIA  
            of the State Constitution, which states that "any changes  
            in state taxes for the purposes of increasing revenues  
            collected pursuant thereto whether by increased rates or  
            changes in method of computation" must be approved by 2/3  
            vote of each house of the Legislature.  However, no statute  
            or case law exists that provides any clarity about what the  
            passage actually means.  The Legislature has enacted two  
            measure this year by majority vote that increased some  
            taxes whilst decreasing others, SB 401 (Wolk) the federal  
            tax conformity bill, and ABx6 6 (Committee on Budget) which  
            eliminated the sales tax on gasoline but commensurately  
            increased the gasoline excise tax, but neither has yet been  
            challenged on the basis that the Constitution required a  
            2/3 vote for the bills.  While the Legislative Counsel key  
            allows the Legislature to enact "revenue neutral tax swaps"  
            today by majority vote, the Legislature should proceed with  
            caution because a Court could subsequently interpret the  
            Constitution in a way that conflicts with Legislative  
            Counsel's determination.   

            F.  Join the Party



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                 Enterprise Zones are but one of four kinds of  
            Geographically Targeted Employment Area.  State law allows  
            almost identical tax credits for employers in Manufacturing  
            Enhancement Areas, Local Agency Military Base Recovery  
            Areas, and Targeted Areas.  SB 974 only affects Enterprise  
            Zones, but leaves the others out.  Other than having to  
            change six other parts of statute (a personal income tax  
            and corporation tax section for each), thereby pushing the  
            bill's length to around 100 pages, is there a good reason  
            to allow TEAs and retro-vouchering for these areas but not  
            EZs?  The Committee may wish to consider amending the  
            measure to ensure consistency in the law.

            G.  Squaring the Circle

                 To achieve revenue neutrality, SB 974 must be amended  
            in the following ways:

                   Eliminate the sales and use tax credit provisions;

                   Revise the annual allocation to $78 million in year  
                 1, and $100 million thereafter; 

                   Define the allocation period as a calendar year  
                 versus a fiscal year;

                   Eliminate the 5 year spread for applying the credit  
                 (allow the entire allocated credit in the year of  

            H.  Suggested Amendment

                 Committee Staff recommend the following additional  



                                              SB 974 - Steinberg Page 11

                   Specify that CDE shall allocate the credit on Page  
                 6, Line 2
                   Delete all references to "Committee."

                   Replace references to "qualified taxpayer" to  
                 applicant in sections detailing the application  

                   Replace the prohibition on zones certifying tax  
                 credits after 21 days with 28 days to account for  
                 changes to the federal Work Opportunity Tax Credit.

                   Extend the time for taxpayers to obtain a credit  
                 from 21 days to 42 days to allow sufficient time for  
                 zones to verify eligibility documentation.

                 Committee Staff and FTB recommend additional  

                   For purposes of eliminating retro-vouchering,  
                 clarify that the bill applies to employees hired after  
                 January 1, 2011.  
                   Require the taxpayer to provide FTB with the CPIC  
                 certification from DOE upon request.

                   Instead of requiring all taxpayers to submit the  
                 CDE certificate to FTB, direct CDE to annually provide  
                 FTB with a list of certified CPIC taxpayers and the  
                 relevant taxpayer identification numbers.

                   Replace Revenue and Taxation Code references to  
                 "taxable year" with "fiscal year."

            Support and Opposition

                 Support:California Association of Regional  
            Occupational Centers and Programs, California Association  
            of School Business Officials



                                              SB 974 - Steinberg Page 11

                 Oppose:California Association of Enterprise Zones, 


            Consultant: Colin Grinnell