BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 974|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
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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 6/1/10)
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 6/1/10)
7-Eleven Franchise Owners of San Diego
ACE Parking
All American Plastics, Inc.
Aloha Restaurants, Inc.
Amazon Consultants
American National Investments, Inc.
Atlas Transportation, LLC
Baja Mex Currency Services, Inc.
Barbosa Cabinets, Inc.
Basic Urban Kitchen
Blum and Clark Accounting Firm
Brawley Chamber of Commerce
C&I Tax Consultants
C&M Motors, Inc.
Caf? 222
Caf? Sevilla, Inc.
Cal Tax Group, Inc.
California Aerospace Technology Association
California Association of Enterprise Zones
California Bankers Association
California Business Properties Association
California Chamber of Commerce
California Employment Opportunity Network
California Grocers Association
California Independent Grocers Association
California Manufacturers and Technology Association
California Retailers Association
California Space Authority
California Taxpayers Association
Caterpillar Inc.
Chambers of Commerce Alliance of Ventura & Santa Barbara
Counties
Chung and Company, LLC
Cinder Block, Inc.
Citymark Development, LLC
Clovis Chamber of Commerce
Commercial Transport Concepts, Inc.
Community Bank of the Bay
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Compete Consulting, LLC
Contractors Wardrobe, Inc.
Courtney Tires, Inc.
Cowboy Star
Cozad Trailer Sales, LLC
Custom Woodworking Products
CustomEyes Optometry
Dairy Institute of California
Dallo Enterprises, Inc.
Dana Point Chamber of Commerce
Del Monte Foods
Dos Amigos Distribution, Inc.
Easy Cash Community Pawn Centers
Economic Development Corporation of Oxnard
Edgewater Grill
El Centro Chamber of Commerce & Visitors Bureau
Evapco West
EZ Tax Credits, LLC
Gatto, Pope & Walwick, LLP
Golden Image Window Coverings
Greater Fresno Area Chamber of Commerce
Grocery Outlet
Harbor House Restaurant
HP Hood LLC
Integrated Marine Services, Inc.
Interactivate, Inc.
International Paper
International Surf Ventures, Inc.
Jillson & Roberts
Kieran Label Corp.
Long Beach Area Chamber of Commerce
Los Angeles Area Chamber of Commerce.
Los Angeles Cold Storage Company
Marcus & Millichap
Marine Service Commercial Diving
Marza Consulting
MD&CD, Inc.
Means and Associates
Merced County
Metal Supply Inc.
Michael L. Dworkin and Associates
MIRA California USA Center, LLC
Mission Caf?
Modesto Chamber of Commerce
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Multimodal Esquer
National City Chamber of Commerce
National Federation of Independent Business
National Mechanical Services
O'Brothers Restaurant
Oakland Metropolitan Chamber of Commerce
Orange County Business Council
Otay Mesa Chamber of Commerce
Oxnard Chamber of Commerce
Pacific Gas & Electric
Pacific Lift and Equipment
Pacific Real Estate
Palm Desert Chamber of Commerce
Paramount Windows and Doors
Paul Mitchell Partner Schools
Peppertree Distributors, Inc.
Pier Caf?
Porterville Chamber of Commerce
Portfolio Realty Management, Inc.
Professional Solutions Group LLC
Proper Gastropub
Rainbow Mart
Riverview Systems Group Inc
San Diego Desserts
San Diego Pretzel Co.
San Diego Regional Chamber of Commerce
San Francisco Center for Economic Development
San Ysidro Chamber of Commerce
Sandicast
SC Design, Inc.
Seat Advisors, Inc.
Sempra Energy
sfparty
Side Bar
Sixth Avenue Bistro
Southwest Airlines
Stingaree San Diego
Summit Bank
Tactical Assault Gear
Targeted Management Company, Inc.
Tenacore Holdings Inc.
The Enterprise Zone Co.
The Fleetwood
The Kebab Shop
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The Tin Fish
The Walt Disney Company
Tilted Kilt
Tittle & Company, LLP
Tooth Fairy Dental Group
Troll Systems Corporation
TUFF Acoustical and Thermal
Unity Forest Products
Urban Industries Embroidery
Valley Industry & Commerce Association
Vermont Outlet, Inc.
Walton Management Services, Inc.
Waterfront Bar and Grill
Western Growers Association
Wincentive Corporation
Windsor Mortgage and Capital
Wine Institute
Wine Steals
World Wide Petroleum
WW Wholesale
Yreka Chamber of Commerce
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
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opposite and will ensure that California remains the least
business friendly state in the union.
PQ:nl 6/1/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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