BILL ANALYSIS Ó
SENATE COMMITTEE ON BUDGET AND FISCAL REVIEW
Mark Leno, Chair
Bill No: AB 106
Author: Committee on Budget
As Amended: September 6, 2013
Consultant: Mark Ibele, Brady Van Engelen and Joe
Stephenshaw
Fiscal: Yes
Hearing Date: September 9, 2013
Subject: Revenue and Taxation, General Government, and
Public Safety
Summary: The bill makes technical and clarifying changes to
tax incentive programs that are scheduled to change
effective December 31, 2013, by expanding the ability to
claim certain credits for sales taxes paid by businesses.
The bill clarifies the designation of census tracts that
would be eligible for the new hiring tax credit and
specifies the make-up of the California Competes Tax Credit
Committee. The bill makes technical changes in laws
related to public safety and allocations for law
enforcement activities.
Background: The bill makes changes and clarifications to
existing law:
1. Allows for an income tax credit, equivalent to the
sales tax paid on qualified capital equipment, to be
claimed if the equipment is purchased prior to the end
of the calendar year and placed in service prior to
January 1, 2015, and provides other clarifications to
existing enterprise zone tax credits. Under current
law, businesses located in enterprise zones, and/or
certain other targeted tax areas, are allowed to claim
the credit if the purchase is made and the equipment
is placed into service prior to the end of the
calendar year ending December 31, 2013.
2. Provides clarification to provisions related to the
designation of eligible census tracts for purposes of
the hiring credit. The hiring credit recently enacted
by the Legislature is available to businesses located
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in certain census tracts of high unemployment and
poverty rates.
3. Specifies that the Director of the Governor's
Office of Business and Economic Development serves as
chair of the California Competes Tax Credit Committee,
and that Senate and Assembly appointees may not be
members of the Legislature. The committee is
authorized to award specified tax credits according to
written agreements between taxpayers and the state.
4. Expands the definition of "remote interest" so that
board or commission members that were a member of a
501(c)(5) will still be required to recuse from voting
on issues that they may have a remote interest in, but
will not be in violation of state conflict of interest
code.
5. Updates the Enhancing Law Enforcement Activities
Subaccount allocation (ELEAS) percentages to ensure
that all funds ($489.9 million) are allocated as
intended.
6. Removes the requirement that counties collect
information on the number of felons who would have
been subject to certain sentencing provisions if
felony probation had not been granted. SB 75 (Budget
and Fiscal Review Committee), Chapter 31, Statutes of
2013, required counties to provide this data in order
to be eligible for certain grant moneys. However,
counties are not otherwise required to collect this
information. If this requirement is not removed,
numerous counties would be ineligible for grants
provided pursuant to SB 678 (Leno and Benoit), Chapter
608, Statutes of 2009, and SB 75.
7. Extends the sunset date for the Juvenile Interstate
Compact from July 1, 2014 to July 1, 2016. The
Juvenile Interstate Compact ensures the supervision of
juvenile offenders placed outside of California.
8. Includes an appropriation of $100,000 from the
General Fund to the Governor's Office of Economic
Development to provide staff support for the
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California Competes Tax Credit Committee.
Fiscal Effect: Regarding the provisions related to
enterprise zone tax credits, these revenue effects were
incorporated in the estimates for AB 93 and SB 90, both
adopted by the Legislature in June of this year.
Department of Finance (DOF) therefore indicates that these
provisions of the bill have zero revenue impact relative to
the 2013 Budget Act revenue baseline. According to DOF, a
preliminary analysis indicates that if the bill is not
enacted, additional revenues of approximately $20.0 million
would be received as a result of increased income tax
liabilities.
Support: Unknown
Opposed: Unknown
Comments: NA
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