BILL ANALYSIS Ó SB 90 Page 1 Date of Hearing: June 27, 2013 ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT K.H. "Katcho" Achadjian, Chair SB 90 (Committee on Budget and Fiscal Review) - As Amended: June 26, 2013 SUBJECT : Economic Development: taxation: credits SUMMARY : Specifies that for the purposes of the hiring credit that is proposed in AB 93 (Budget Committee) of the 2013-14 Regular Session, a qualified employee also may be a person who is on CalWORKs or general county assistance and specifically prohibits a sexually oriented business a from receiving hiring credits proposed under the bill. Specifically, this bill : 1)Specifies that a CalWORKs recipient or a person receiving general assistance would meet the pre-hiring condition as a "qualified full-time employee" under the hiring credit as proposed in AB 93 of the 2013-14 Regular Session. 2)Prohibits a sexually oriented business from receiving the hiring credits proposed in AB 93 of the 2013-14 Regular Session. 3)Defines "sexually oriented business" as a nightclub, bar, restaurant, or similar commercial enterprise that provides for an audience of two or more individuals live nude entertainment or live nude performances where the nudity is a function of everyday business operations and where nudity is a planned and intentional part of the entertainment or performance. 4)Defines "nude" as clothed in a manner that leaves uncovered or visible, through less than fully opaque clothing, any portion of the genitals or, in the case of a female, any portion of the breasts below the top of the areola of the breasts. 5)Specifies that the prohibition applies to all business receiving the credit, including small businesses with gross receipts of less than $2 million annually. 6)Specifies that this bill shall become operative only if Assembly Bill 93 of the 2013-14 Regular Session is chaptered and becomes operative. SB 90 Page 2 7)Contains an urgency clause. EXISTING LAW : For a full discussion of existing law regarding Enterprise Zones, please see the AB 93 (Budget Committee) analysis. FISCAL EFFECT : Unknown COMMENTS : 1)The language as proposed in AB 93 (Budget Committee) of the 2013-14 Regular Session, which is currently back in the Assembly for concurrence, is ambiguous on whether or not sexually oriented businesses are expressly prohibited from receiving a hiring tax credit as proposed in that bill. AB 93 calls out specific North American Industry Classification System (NAICS) codes that are prohibited from receiving the proposed credit, including bars, night clubs, casinos, lounges, and casino hotels. However, not all sexually oriented businesses fit within these classifications. Moreover, if a business receiving the hiring tax credit is a small business, and has under $2 million in gross receipts annually, then there is no specific prohibition in AB 93 on what types of businesses can receive the credit. 2)The provisions added by SB 90 will specifically prohibit any business, no matter the size, from receiving the hiring credit if the business is a sexually oriented business. 3)AB 93 contains various pre-hiring conditions that an employee must meet in order to qualify for the credit. These include that the person must meet one of the of the following categories: a) long term unemployed (at least 6 months); b) a veteran that had not been employed since separation from service in the Armed Forces of the United States; c) was a recipient in the previous taxable year of a Federal Earned Income Tax Credit (EITC); or d) an ex-offender, as defined in code. 4)SB 90 adds CalWORKs recipients and those who receive general assistance from the county to the pre-hiring qualifications. Although the EITC covers many persons who are at or near the poverty level it does not include everyone. By adding CalWORKs and general assistance SB 90 is offering the opportunity of job placement and hiring credit for more SB 90 Page 3 Californians. REGISTERED SUPPORT / OPPOSITION : Support None on file Opposition None on file Analysis Prepared by : Debbie Michel / L. GOV. / (916) 319-3958