BILL ANALYSIS Ó SB 35 Page 1 Date of Hearing: July 8, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair SB 35 (Wolk) - As Amended June 16, 2015 ----------------------------------------------------------------- |Policy |Revenue and Taxation |Vote:|9 - 0 | |Committee: | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: Yes State Mandated Local Program: NoReimbursable: No SUMMARY: This bill allows, for taxable years beginning on or after January 1, 2014 and before January 1, 2024, a deduction under the Personal Income and Corporation Tax Laws for certain losses sustained from a disaster occurring in California that is proclaimed by the Governor to have resulted in a state of emergency. FISCAL EFFECT: 1)Minor and absorbable administrative costs to the Franchise Tax SB 35 Page 2 Board. 2)Minimal expected GF revenue decrease. COMMENTS: 1)Purpose. According to the author, this bill allows taxpayers that suffered from the 2014 Napa earthquake to apply losses to their tax returns filed the previous year, and expands state disaster loss treatment for state tax purposes to taxpayers in Sonoma County. The author contends the Legislature has enacted identical treatment for almost every significant disaster that has occurred in California for the past 25 years. 2)Sonoma County Relief. Currently, a taxpayer may elect to file an amended return to deduct a disaster loss in the year the loss occurred, resulting in an expedited refund, if the President has declared a disaster. The election is not available for disasters declared only by the Governor unless the Legislature has enacted specific legislation with respect to that disaster. On August 24, 2014, the Governor declared a state of emergency for Napa, Solano, and Sonoma Counties; however, the President's declaration on September 11, 2014 included only Napa and Solano Counties. This bill extends state tax relief, but not federal relief, for disaster losses to taxpayers in Sonoma County. 3)Lasting Solution. While this bill effectively provides disaster loss relief to Sonoma County, it also provides a broader, automatic disaster loss relief to any area proclaimed by the Governor to be in a state of emergency. As a result, special legislation for Governor-declared disasters would no longer be necessary to enable taxpayers to claim disaster SB 35 Page 3 losses, expediting economic assistance to affected areas and, hopefully, hastening recovery. Analysis Prepared by:Joel Tashjian / APPR. / (916) 319-2081