BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 114|
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UNFINISHED BUSINESS
Bill No: SB 114
Author: Florez (D), Hollingworth (R), et al
Amended: 8/31/07
Vote: 27 - Urgency
SENATE REVENUE & TAXATION COMMITTEE : 6-0, 2/28/07
AYES: Oropeza, Cogdill, Alquist, Machado, Runner, Scott
NO VOTE RECORDED: Harman, Vacancy
SENATE APPROPRIATIONS COMMITTEE : 17-0, 3/19/07
AYES: Aanestad, Ashburn, Battin, Calderon, Cedillo,
Corbett, Correa, Cox, Dutton, Florez, Kuehl, Oropeza,
Ridley-Thomas, Runner, Torlakson, Wyland, Yee
SENATE FLOOR : 36-0, 3/28/07
AYES: Aanestad, Ackerman, Alquist, Ashburn, Calderon,
Cedillo, Cogdill, Corbett, Correa, Cox, Denham, Ducheny,
Dutton, Florez, Harman, Hollingsworth, Kehoe, Kuehl,
Lowenthal, Machado, Maldonado, Margett, McClintock,
Migden, Oropeza, Padilla, Perata, Ridley-Thomas, Romero,
Runner, Scott, Steinberg, Torlakson, Wiggins, Wyland, Yee
NO VOTE RECORDED: Battin, Negrete McLeod, Simitian,
Vincent
ASSEMBLY FLOOR : 78-0, 9/5/07 - See last page for vote
SUBJECT : Disaster relief: 2007 Freeze: tax relief
SOURCE : Author
CONTINUED
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DIGEST : This bill provides income tax, corporation tax,
homeowners exemption property tax, and state reimbursement
of local property tax losses relief as a result of the
January 2007 severe freezing condition for the following
counties: El Dorado, Fresno, Imperial, Kern, Kings,
Madera, Merced, Monterey, Riverside, San Bernardino, San
Diego, San Luis Obispo, Santa Barbara, Santa Clara,
Stanislaus, Tulare, Ventura, and Yuba.
Assembly Amendments add double-jointing language to
incorporate provisions from SB 38 (Battin) and AB 62 (Nava)
that allow taxpayers affected by the fires, which occurred
in Riverside and Ventura Counties in 2006, disaster loss
treatment for their losses. These amendments resolve
chaptering conflicts among this bill, SB 38, and AB 62.
ANALYSIS : Existing law allows for tax and local grant
property tax losses relief in the event of disasters of
such disaster are so proclaimed by the President of the
United States or the Governor.
According to the author's office, "Currently, the law
allows non-business taxpayers to deduct uninsured losses,
less 100 dollars, to the extent the loss exceeds ten
percent of adjusted gross income. Business taxpayers may
use losses to offset income. If losses exceed the year's
income, 50 percent of the remaining business losses may be
carried forward to offset up to five years of income.
When the President declares a disaster, taxpayers may amend
their prior-year returns and deduct the current disaster
losses against prior-year income. This allows many
taxpayers to receive a refund. In previous disasters,
legislation has allowed all taxpayers to carry forward 100
percent of their excess disaster losses, instead of 50
percent, for five years.
Existing law also allows for downward reassessment of
property damaged in a disaster. In previous disasters,
legislation has provided a one-year reimbursement to local
governments for the property tax revenues lost as a result
of the reassessment.
On January 12, 2007 Governor Schwarzenegger proclaimed a
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state of emergency for ten counties that experienced severe
freezing temperatures and damaged crops. Since then, the
list of counties has expanded to 18. Policy was passed in
1991 and 1999 to provide relief for farmers and based on
the severe conditions under this year's freeze; steps
should be taken to help out once again.
This bill provides income and property tax relief for those
who suffered losses as a result of the January 2007 freeze.
Specifically, this bill extends the same disaster
assistance to individuals, businesses, and local
governments which suffered losses as a result of the
January 2007 freeze. Individual and business taxpayers
could carry forward 100 percent of excess losses for five
years. Local governments will be reimbursed for one year
for the property tax lost as a result of reduced
assessments."
Typically, the state enacts legislation to reimburse local
governments for property tax revenue losses resulting from
reduced property values in the year following a disaster.
By providing relief for counties with taxpayers who
experienced losses attributable to the severe freezing
conditions that began on January 11, 2007, this bill
follows in that longstanding tradition.
Other Disaster Freeze Related Legislation
SB 114 (Florez), SB115 (Florez), SB 116 (Maldonado), SB
1449 (Hollingsworth), SCR 6 (Florez), AB 49 (Arambula), AB
287 (Nava), AB 287 (Maze), ACR 12(Parra), ACR 6 (Nava), and
ACR 7 (Arambula).
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: Yes
The Board of Equalization (BOE) estimates minimal
administration costs, and likely no cost to extend the
homeowners' exemption to homes that are uninhabitable on
the lien date. Additionally, BOE estimates minimal costs
to the state due to the state backfill of first-year
property tax revenue loss.
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The Franchise Tax Board estimates insignificant income tax
losses of in FY 2006-07, and insignificant gains in FY
2007-08 and 2008-09, due to accelerated claims on amended
returns.
SUPPORT : (Verified 9/5/07)
American Federation of State, County, and Municipal
Employees
Board of Equalization
California Chamber of Commerce
California Farm Bureau Federation
California Labor Federation
California State Association of Counties
County of Kern
Franchise Tax Board
League of California Cities
Regional Council of Rural Counties
Western Growers Association
ASSEMBLY FLOOR :
AYES: Adams, Aghazarian, Anderson, Arambula, Bass, Beall,
Benoit, Berg, Berryhill, Blakeslee, Brownley, Caballero,
Charles Calderon, Carter, Cook, Coto, Davis, De La Torre,
De Leon, DeSaulnier, DeVore, Duvall, Dymally, Emmerson,
Eng, Evans, Feuer, Fuentes, Fuller, Gaines, Galgiani,
Garcia, Garrick, Hancock, Hayashi, Hernandez, Horton,
Houston, Huff, Huffman, Jeffries, Jones, Karnette, Keene,
Krekorian, La Malfa, Laird, Leno, Levine, Lieber, Lieu,
Ma, Maze, Mendoza, Mullin, Nakanishi, Nava, Niello,
Parra, Plescia, Portantino, Price, Sharon Runner, Ruskin,
Salas, Saldana, Silva, Smyth, Solorio, Soto, Spitzer,
Swanson, Torrico, Tran, Villines, Walters, Wolk, Nunez
NO VOTE RECORDED: Strickland, Vacancy
DLW:do 9/6/07 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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