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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          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


          








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