BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1973
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          Date of Hearing:   May 19, 2010

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                    AB 1973 (Swanson) - As Amended:  May 12, 2010 

          Policy Committee:                              Revenue and  
          Taxation     Vote:                            9-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY  

          This bill provides, for taxable years 2011 through 2015, an  
          employer hiring credit against income or corporation taxes for  
          firms that hire ex-offenders that have been convicted of a  
          felony. Specifically, the bill:

          1)Provides a credit of 20% of gross salary, up to $5,000 for the  
            first and second complete year of employment, and allows  
            unused credits to be carried forward for up to eight years.

          2)Does not apply to the hiring of an ex-offender who is required  
            to register as a sex offender under Penal Code Section 290,  
            (or equivalent laws for other states, the federal government,  
            or the military. Also does not apply to ex-offender convicted  
            of a violent felony.

          3)Requires that deductions or alternative credits allowed under  
            existing law for wages paid be reduced by this credit. 

           FISCAL EFFECT
           
          According to preliminary estimates by the Franchise Tax Board,  
          the bill will result in revenue losses of $20 million in  
          2011-12, $40 million in 2012-13, $80 million in 2013-14, and $90  
          million in 2014-15. 
           
          COMMENTS
            
           1)Rationale  . The bill is intended to help ex-offenders find  
            employment upon returning to their communities.  The author  
            asserts that formerly incarcerated individuals have an  








                                                                  AB 1973
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            extremely difficult time finding employment, which he  
            indicates is a major factor contributing to California's high  
            recidivism rate.

           2)Background  . California provides hiring tax credits for  
            employers operating in enterprise zones, manufacturing  
            enhancement areas, targeted tax areas, and local agency  
            military base recovery areas. The 2009-10 budget package also  
            provides for a $3,000 per full time employee hiring credit to  
            small employers (less than 20 employees). The credit is  
            limited to small businesses (20 or fewer employees), and is  
            capped at $400 million for all taxable years.

           3)Opponents  question whether the credit would stimulate new  
            hiring of ex-offenders, or result in revenue losses related to  
            hiring that would have taken place anyway.
           Analysis Prepared by  :    Brad Williams / APPR. / (916) 319-2081