BILL ANALYSIS Ó
AB 2877
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Date of Hearing: May 4, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2877 (Committee on Human Services) - As Introduced February 22,
2016
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|Policy |Human Services |Vote:|7 - 0 |
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Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill makes technical and clarifying changes to existing law
to encourage counties to inform California Work Opportunity and
Responsibility to Kids (CalWORKs) applicants and recipients
about the State Earned Income Tax Credit (EITC). This bill also
makes technical and clarifying changes to existing law to be
consistent with the federal Workforce Innovation and Opportunity
Act (Workforce Act).
FISCAL EFFECT:
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No state fiscal impact.
COMMENTS:
1)Purpose. According to the author, "The federal Earned Income
Tax Credit (EITC) has proven to be an important tool for
low-income workers and their families, enabling them to
increase their income and savings as they work to move out of
poverty or near-poverty. In the 2015-2016 budget, California
joined many other states by adopting its own state EITC;
starting in tax year 2015, eligible households may now apply
for this state tax credit. This bill seeks to educate some of
the lowest-income Californians about the state EITC, and to
inform them that they will not be inadvertently harmed by
receipt of the state EITC because the new refundable state tax
credit will not be considered income for purposes of
determining CalWORKs eligibility or benefit amounts; this
conforms to current state law which treats the federal EITC in
the same manner. This bill also seeks to maximize low-income
individuals' ability to invest in their retirement by
including references to the recently-established California
Secure Choice Retirement Savings Plans alongside references in
current statute to permitted savings accounts into which
CalWORKs recipients may invest their EITC benefits without
impacting their eligibility or grant amounts."
2)Background. The 2015 Budget Act established a state EITC,
beginning with the 2015 tax year, that focuses on the lowest
income Californians. This bill makes technical and clarifying
changes to existing law to encourage counties to inform
CalWORKs applicants and recipients about the state EITC.
On July 22, 2014, the Workforce Act was signed into law by
President Obama to serve as federal guidance for distributing
workforce development funding to state and local governments.
This bill conforms state law to federal law by deleting
references to individuals with the most severe disabilities
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and instead refers to individuals with the most significant
disabilities. Additionally, this bill deletes references to an
individualized written rehabilitation program and instead
refers to an individualized plan for employment.
3)Current Legislation. SB 1234 (De Leon), 2016, seeks to
implement the California Secure Choice Retirement Savings
Program provided for in SB 1234 (De Leon), Chapter 734,
Statutes of 2012. This bill pending hearing in the Senate
Appropriations Committee.
4)Prior Legislation.
a) SB 80 (Senate Committee on Budget and Fiscal Review),
Chapter 21, Statutes of 2015, created the State Earned
Income Tax Credit (EITC) which was later adopted in the
2015-16 Budget.
b) SB 1234 (De Leon), Chapter 734, Statutes of 2012,
created the California Secure Choice Retirement Savings
Program, which is a voluntary retirement savings program
for private industry workers without access to other
retirement options through work.
Analysis Prepared by:Jennifer Swenson / APPR. / (916) 319-2081
AB 2877
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