BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                        SB 670|
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                                   THIRD READING 


          Bill No:  SB 670
          Author:   Jackson (D)
          Amended:  6/1/15  
          Vote:     21  

           SENATE GOVERNANCE & FIN. COMMITTEE:  6-0, 5/6/15
           AYES:  Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach
           NO VOTE RECORDED:  Pavley

           SENATE APPROPRIATIONS COMMITTEE:  7-0, 5/28/15
           AYES:  Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen

           SUBJECT:   Income taxes:  credit:  dependent care:  child care


          SOURCE:    Author


          DIGEST:  This bill reestablishes two employer tax credits  
          related to providing childcare.


          ANALYSIS:   


          Existing law allows taxpayers to claim tax credits designed as  
          incentives for taxpayers to incur certain expenses, such as  
          child adoption, or to influence behavior, including business  
          practices and decisions.


          This bill:









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          1)Allows a credit of 30% of the costs paid for the startup  
            expenses of establishing a child care program or constructing  
            a child care facility in California, that will primarily be  
            used by the children of the taxpayer's employees, tenants  
            leasing commercial or office space in the taxpayer's building,  
            or for contributions to California child care information and  
            referral services, capped at $50,000 per taxable year.

          2)Allows a credit of 30% of the costs paid for contributions to  
            a qualified care plan made on behalf of any qualified  
            dependent, not to exceed $360 for each qualified dependent.   
            Contributions must be direct payments to child care providers  
            and not pursuant to a salary reduction agreement.  

          3)Allows any credits in excess of tax liability may be carried  
            over for use in succeeding years, though the amount of the  
            credit that may be claimed by any taxpayer in any one year  
            cannot exceed $50,000.  This credit is available through the  
            2021 tax year, although unused credits may be carried forward  
            beyond the sunset date. 

          4)Takes effect immediately, and applies to taxable years  
            beginning on or after January 1, 2016 and before January 1,  
            2021.
           
          Background


          Prior to 2012, state law allowed two tax credit programs for  
          employers providing child care for employees:

          1)30% of the costs paid for the startup expenses of establishing  
            a child care program or constructing a child care facility in  
            California that will primarily be used by the children of the  
            taxpayer's employees, tenants leasing commercial or office  
            space in the taxpayer's building, or for contributions to  
            California child care information and referral services,  
            capped at $50,000 per taxable year.

          2)30% of the costs paid for contributions to a qualified care  
            plan made on behalf of any qualified dependent, not to exceed  
            $360 for each qualified dependent.  Contributions must be  
            direct payments to child care providers, and not pursuant to a  







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            salary reduction agreement.  

          Both credits could be carried over until exhausted.  

          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No

          According to the Senate Appropriations Committee, The Franchise  
          Tax Board (FTB) estimates that the bill's three changes to tax  
          law would result in an aggregate General Fund revenue loss of  
          $0.5 million in 2015-16, $4.3 million in 2016-17, and $4.8  
          million in 2017-18. FTB indicates that the bill's impact on  
          department operations would be minor.  This estimate was made  
          prior to the amendment made on 5/13/15


          SUPPORT:   (Verified5/29/15)


          Bay Area Council


          OPPOSITION:   (Verified5/29/15)


          None received


          ARGUMENTS IN SUPPORT:     According to the author, "Access to  
          affordable and quality child care has long been a challenge for  
          working families, where demand has consistently outpaced supply.  
           In California, the numbers are stark. 57 percent of women are  
          in the workforce, 64 percent have children under the age of six.  
           Many working single mothers also spend nearly half of their  
          income (44%) on child care.  Yet, the state only has the  
          licensed child care capacity to serve 16 percent of children  
          under the age of 12, this creates dire situations for working  
          families, where oftentimes it is the mother who is forced to  
          choose between remaining at home to care for her child or  
          leaving her child unattended or with a caretaker with whom she  
          may or may not be familiar so that she can work. 


          When the Employer Child Care Tax Credit expired, we lost a tool  







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          that not only helped to alleviate the challenges working  
          families face when trying to balance family and work, but also,  
          the ability of California companies and businesses to provide  
          supported child care programs.  By re-establishing the ECTC, we  
          can uphold the state's commitment to provide a supportive  
          business environment while also helping to provide working  
          mothers access to child care so that they can continue to pursue  
          their careers and strengthen California's economy." 



          Prepared by:Myriam Bouaziz / GOV. & F. / (916) 651-4119
          6/1/15 18:22:38


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