BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                  AB 2332|
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                                    CONSENT


          Bill No:  AB 2332
          Author:   Monning (D)
          Amended:  4/12/12 in Assembly
          Vote:     21

           
           SENATE GOVERNANCE & FINANCE COMMITTEE  :  9-0, 6/28/12
          AYES:  Wolk, Dutton, DeSaulnier, Fuller, Hernandez, Kehoe, 
            La Malfa, Liu, Yee

           SENATE APPROPRIATIONS COMMITTEE :  Senate Rule 28.8

           ASSEMBLY FLOOR  :  70-0, 5/25/12 (Consent) - See last page 
            for vote


           SUBJECT  :    Income taxes:  deductions:  disaster losses:  
          County of Santa 
                      Cruz

           SOURCE  :     Author


           DIGEST  :    This bill provides that any losses sustained in 
          the County of Santa Cruz as a result of the severe storms 
          that occurred in March 2011 (2011 Storms) may, at the 
          taxpayers election, be taken into account for the taxable 
          year immediately preceding the taxable year in which the 
          disaster occurred.

           ANALYSIS  :    

          Existing law: 
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          1. Allows individual and corporate taxpayers to utilize net 
             operating losses (NOLs) to offset their tax liabilities. 
              For NOLs incurred in taxable years beginning on or 
             after January 1, 2008, existing law provides a carryover 
             period of 20 years. 

          2. Allows NOLs attributable to taxable years beginning on 
             or after 
          January 1, 2013, to be carrybacks to each of the preceding 
             two taxable years, as provided. 

          3. Disallows the deduction for NOLs and NOL carryovers in 
             the 2008 to 2011 taxable years for specified taxpayers. 

          This bill: 

          1. Provides that Internal Revenue Code (IRC) Section 165(i) 
             shall apply to any losses sustained in the County of 
             Santa Cruz as a result of the 2011 Storms. 

          2. Provides that the election under IRC Section 165(i) may 
             be made on a return or amended return filed on or before 
             the due date of the return, determined with regard to 
             extension, for the taxable year in which the disaster 
             occurred. 

          3. Provides that, unless otherwise specified, any law that 
             suspends, defers, reduces, or otherwise diminishes the 
             deduction of an NOL shall not apply to a NOL 
             attributable to losses described above. 

          4. Takes immediate effect as a tax levy. 

           Comments  

          According to the author, "Between March 15 and 27, 2011, 
          California was struck by a storm that brought snow, heavy 
          rain, high winds, flooding and flow of debris and mud, 
          destroying and damaging public facilities and private 
          property throughout the state.  Statewide there was more 
          than $50 million in damages and Santa Cruz County sustained 
          $15 million in damage, 30 percent of the statewide total.  
          In April 2011, Governor Brown issued an Emergency 

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          Proclamation regarding this and requested the federal 
          government to declare the event a major disaster.  A 
          Presidential Declaration of a Major Disaster by Federal 
          Emergency Management Agency (FEMA) would pay for 75% of the 
          recovery costs, offsetting the recovery costs incurred by 
          the effected communities and local governments that are 
          struggling to address the damage with extremely limited 
          fiscal resources.   Unfortunately, California's request to 
          FEMA that the March 2011 storm be declared a major disaster 
          was denied, along with the state's subsequent appeal of 
          this decision.  In addition, because the Governor did not 
          invoke the California Disaster Assistance Act (CDAA), state 
          financial assistance was not made available to counties for 
          disaster recovery and economy recovery efforts.  The 
          residents of Santa Cruz County have been struggling to make 
          repairs and recover from the severe March 2011 storm and 
          this measure is intended to provide a small amount of 
          financial relief."  

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

           SUPPORT  :   (Verified  8/6/12)

          County of Santa Cruz


           ASSEMBLY FLOOR  :  70-0, 5/25/12
          AYES:  Achadjian, Alejo, Allen, Ammiano, Beall, Block, 
            Blumenfield, Bonilla, Bradford, Brownley, Buchanan, 
            Butler, Charles Calderon, Campos, Carter, Cedillo, 
            Chesbro, Conway, Cook, Davis, Dickinson, Donnelly, Eng, 
            Feuer, Fong, Furutani, Beth Gaines, Galgiani, Garrick, 
            Gatto, Gordon, Gorell, Hagman, Halderman, Harkey, 
            Hayashi, Roger Hernández, Hill, Huber, Hueso, Huffman, 
            Jeffries, Jones, Lara, Logue, Bonnie Lowenthal, Mansoor, 
            Mendoza, Miller, Mitchell, Monning, Morrell, Nestande, 
            Nielsen, Norby, Olsen, Pan, V. Manuel Pérez, Portantino, 
            Skinner, Smyth, Solorio, Swanson, Torres, Valadao, 
            Wagner, Wieckowski, Williams, Yamada, John A. Pérez
          NO VOTE RECORDED:  Atkins, Bill Berryhill, Fletcher, 
            Fuentes, Grove, Hall, Knight, Ma, Perea, Silva



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          AGB:m  8/7/12   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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