BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                   SB 974|
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                                 THIRD READING


          Bill No:  SB 974
          Author:   Steinberg (D), et al
          Amended:  4/5/10
          Vote:     21

           
           SENATE EDUCATION COMMITTEE  :  8-0, 4/21/10
          AYES:  Romero, Huff, Alquist, Hancock, Liu, Price,  
            Simitian, Wyland
          NO VOTE RECORDED:  Maldonado

           SENATE REVENUE & TAXATION COMMITTEE  :  3-1, 5/12/10
          AYES:  Wolk, Alquist, Padilla
          NOES:  Ashburn
          NO VOTE RECORDED:  Walters

           SENATE APPROPRIATIONS COMMITTEE  :  7-3, 5/27/10
          AYES:  Kehoe, Alquist, Corbett, Leno, Price, Wolk, Yee
          NOES:  Denham, Walters, Wyland
          NO VOTE RECORDED:  Cox


           SUBJECT  :    Career Pathways Investment Credit

           SOURCE  :     Author


           DIGEST  :    This bill eliminates an existing Enterprise Zone  
          hiring tax credit and establishes a new Career Pathways  
          Investment Credit administered by the California Department  
          of Education to business entities that partner with local  
          education agency programs to develop and support career  
          pathways, as specified.
                                                           CONTINUED





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           ANALYSIS  :    The California Tax Credit Allocation Committee  
          (CTAC) administers two low-income housing tax credit  
          programs, a federal program and a state program.  Both  
          programs were authorized to encourage private investment in  
          affordable rental housing for households meeting certain  
          income requirements.

          Responsibility for administering the federal program was  
          assigned to CTAC which has seven members, including three  
          voting members and four advisors.  The voting members  
          include the State Treasurer, the State Controller, and the  
          Governor, who may choose to designate the Director of the  
          Department of Finance as his representative.  The  
          non-voting members are the Executive Director of the  
          California Housing Finance Agency, the Director of the  
          Department of Housing and Community Development, and two  
          representatives of local governments.  One local  
          representative must be associated with a city and is  
          appointed by the Speaker of the Assembly.  The other member  
          is a county representative appointed by the Senate Rules  
          Committee.

          This bill:

          1.Requires, on or after an unspecified date, CTAC to  
            administer the Career Pathways Investment Credit,  
            applicable to taxable years on or after January 1, 2011.   
            More specifically it requires CTAC to:

             A.   Determine and allocate the investment credit  
               ceiling, as specified.

             B.   Establish application filing deadlines, and give  
               priority in allocating the credits to local education  
               agencies (LEAs) meeting specified criteria including,  
               among other things, specified unemployment and high  
               school graduation rates, or serving of  
               socioeconomically diverse student populations.

             C.   Allocate the credits to LEAs that enter into  
               enforceable contracts or memorandums of understanding,  
               as specified, with CTAC and meet any additional  
               requirements the CTAC deems necessary or appropriate.







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             D.   Adopt allocation criteria that award credits to  
               LEAs that demonstrate specified elements in their  
               application.

             E.   Develop and provide forms to inform LEAs and  
               taxpayers of the purpose of the credit and certify to  
               an LEA (which must provide a copy to the business  
               entity receiving the credits) the amount of the  
               allocated tax credits.

             F.   Consult with the California Department of Education  
               to develop forms, procedures for submission and review  
               of applications, and to require the application to  
               include, but not be limited to, specified components.   


          2.Authorizes CTAC to:

             A.   Contract with other entities to process and review  
               applications.

             B.   Charge fees of applicants, as specified, and  
               authorizes the borrowing of money to cover  
               administrative costs, to be repayable solely from  
               these fees. 

          3.Authorizes a business entity that partners with an LEA to  
            provide career technical education, as specified, to  
            claim a career pathways investment credit against  
            qualified state sales and use taxes, as specified, and  
            imposes a number of related administering duties on the  
            Franchise Tax Board and the State Board of Equalization.

          4.Changes a definition within enterprise zone tax credit  
            provisions within the Revenue and Taxation Code.

          5.Defines various terms for purposes of the bill.

          6.Makes a number of technical and clarifying changes to  
            Revenue and Taxation Code provisions.

          7.Makes a number of related declarations and findings. 








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           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

          According to the Senate Appropriations Committee: 

                          Fiscal Impact (in thousands)

          Major Provisions                2010-11     2011-12     
           2012-13   Fund  
          Hiring credit changes         ($20,000)            
          ($75,000)($100,000)                     General
          New CPIC credit                $20,000   $75,000    
          $100,000General

          CDE regs & startup                                     $150  
          to $225, repaid in future fiscal year                   
          General
                                 by CPIC applicant fees 
          FTB administration                                Initial  
          costs unknown, ongoing costs                      General
                                 covered by CPIC applicant fees 

          Appropriations staff notes that the bill authorizes CDE to  
          charge a fee on CPIC applicants that is reasonably  
          sufficient to cover CDE and FTB administrative costs.  It  
          is unclear whether an appropriate fee level can be  
          established to fully offset costs to develop and administer  
          the CPIC program.  Initial costs would be paid from the  
          General Fund until sufficient fees are collected to  
          reimburse CDE for startup costs.  

           SUPPORT  :   (Verified  5/28/10)

          Association of CA School Administrators
          CA Association of School Business Officials
          California Association of Regional Occupational Centers and  
          Programs
          California Association of School Business Officials
          California Catholic Conference
          California Regional Occupational Centers and Programs
          California State Parent Teachers Association
          Clovis Unified School District
          Elk Grove Unified School District
          Los Angeles Unified School District







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          Metropolitan Education District
          San Diego Unified School District
          The Ranger Group

           OPPOSITION  :    (Verified  5/28/10)

          California Association of Enterprise Zones

           ARGUMENTS IN SUPPORT  :    According to the author's office,  
          new research by the Public Policy Institute of California  
          raises serious questions about the effectiveness of the  
          enterprise zone tax credit in contributing to economic and  
          job development.  At a time when California's General Fund  
          is shrinking, it is more important than ever to prioritize  
          investments and ensure that tax credits are producing a  
          beneficial return on the state's investment.  California  
          suffers from too many high school dropouts, too little  
          meaningful career pathway programs at the middle and high  
          school levels, and shortages of skilled workers to fuel  
          high-need sectors of our economy. Investments in high  
          quality career pathway programs at the secondary school  
          level would bring a greater return on the state's tax  
          expenditure investment. 

           ARGUMENTS IN OPPOSITION  :    Opponents argue that this bill  
          does not improve the Enterprise Zone program; it does not  
          encourage business growth; it does not encourage the  
          creation of jobs; it does not provide the means for some of  
          our most disadvantaged citizens to get the hand up they  
          need to enter the job market.  They state it does just the  
          opposite and will ensure that California remains the least  
          business friendly state in the union.


          PQ:nl  5/28/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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