BILL NUMBER: AB 2641 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 13, 2010
INTRODUCED BY Assembly Member Arambula
(Coauthor: Assembly Member Solorio)
FEBRUARY 19, 2010
An act to amend Section 13305 of the Government Code,
relating to state government. An act to add Section 41
to the Revenue and Taxation Code, relating to taxation.
LEGISLATIVE COUNSEL'S DIGEST
AB 2641, as amended, Arambula. State government:
Department of Finance: reporting requirements: tax expenditures.
Tax expenditures.
Existing laws imposes various taxes and allows specified
credits, deductions, exclusions, and exemptions in computing those
taxes. Existing law requires the Department of Finance to
provide an annual report to the Legislature on tax expenditures by no
later than September 15 of each year, and requires that annual
report to include, among other things, a comprehensive list of tax
expenditures exceeding $5,000,000 in annual cost.
This bill would modify that reporting requirement to
instead require the annual report to include a comprehensive list of
tax expenditures exceeding $2,500,000 in annual cost.
require the Legislature, on and after January 1, 2014, to
review each "tax expenditure subject to limitation" and each "tax
expenditure not subject to limitation", as defined, for the purpose
of ensuring that only tax expenditures with a measurable benefit are
provided by the state. The bill would require the Legislature, based
on the information from the review, to assess whether each tax
expenditure not subject to limitation meets stated objectives and for
each not meeting its objectives, to restrict or eliminate
that tax expenditure not subject to limitation in accordance with
specified procedures. The bill would specify that each tax
expenditure subject to limitation shall cease to be operative and
shall be repealed on January 1, 2015, and on January 1 of every 5th
year thereafter.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 41 is added to the
Revenue and Taxation Code , to read:
41. (a) On and before January 1, 2014, and every fifth year
thereafter, notwithstanding any other law, the Legislature shall
review each tax expenditure subject to limitation and each tax
expenditure not subject to limitation, for the purpose of ensuring
that only tax expenditures with a measurable benefit are provided by
the state. The review shall include, but not be limited to, all of
the information required pursuant to subdivision (a) of Section 13305
of the Government Code, except that the list required pursuant to
paragraph (1) of subdivision (a) of Section 13305 shall be provided
for all tax expenditures, regardless of the annual cost of the tax
expenditure.
(b) (1) Based on the information contained in the review, the
Legislature shall assess whether each tax expenditure not subject to
limitation meets the objectives provided in the statute adding or
amending that tax expenditure and provides a measurable benefit.
(2) For each tax expenditure not subject to limitation that fails
to meet the objectives provided, the Legislature shall determine
whether to restrict or eliminate that tax expenditure not subject to
limitation.
(3) If the Legislature chooses to restrict or eliminate a tax
expenditure not subject to limitation pursuant to paragraph (2), it
shall do so by enacting a statute in which any expected revenue
increase resulting from that restriction or elimination is offset by
another tax expenditure or multiple tax expenditures of an amount
equal to or greater than the expected tax increase resulting from
that tax expenditure not subject to limitation, so as to ensure that
the statute is revenue neutral.
(c) Each tax expenditure subject to limitation shall cease to be
operative and shall be repealed on January 1, 2015, and on January 1
of every fifth year thereafter, unless a later enacted statute that
is enacted before that date deletes or extends the date on which it
becomes inoperative and is repealed.
(d) For purposes of this section, the following definitions apply:
(1) "Tax expenditure subject to limitation" means any credit,
deduction, exclusion, exemption, or any other tax benefit provided by
the state that is enacted on or after the effective date of this
section.
(2) "Tax expenditure not subject to limitation" means any credit,
deduction, exclusion, exemption, or any other tax benefit provided by
the state that was enacted prior to the effective date of this
section.
SECTION 1. Section 13305 of the Government Code
is amended to read:
13305. (a) The department shall provide an annual report to the
Legislature on tax expenditures by no later than September 15 of each
year. The report shall include each of the following:
(1) A comprehensive list of tax expenditures exceeding two million
five hundred thousand dollars ($2,500,000) in annual cost.
(2) The statutory authority for each credit, deduction, exclusion,
exemption, or any other tax benefit as provided by state law.
(3) A description of the legislative intent for each tax
expenditure, if the act adding or amending the expenditure contains
legislative findings and declarations of that intent, or that
legislative intent is otherwise expressed or specified by that act.
(4) The sunset date of each credit, deduction, exclusion,
exemption, or any other tax benefit as provided by state law, if
applicable.
(5) A brief description of the beneficiaries of the credit,
deduction, exclusion, exemption, or other tax benefit as provided by
state law.
(6) An estimate or range of estimates for the state and local
revenue loss for the current fiscal year and the two subsequent
fiscal years. For sales and use tax expenditures, this would include
partial year exemptions and all other tax expenditures when the State
Board of Equalization has obtained that information.
(7) For personal income tax expenditures, the number of taxpayers
affected and returns filed, as applicable, for the most recent tax
year for which full year data is available.
(8) For corporation tax and sales and use tax expenditures, the
number of returns filed or business entities affected, as applicable,
for the most recent tax year for which full year data is available.
(9) A listing of any comparable federal tax benefit, if any.
(10) A description of any tax expenditure evaluation or
compilation of information completed by any state agency since the
last report made under this section.
(b) For purposes of this section, "tax expenditure" means a
credit, deduction, exclusion, exemption, or any other tax benefit as
provided for by the state.
(c) This section shall become operative on January 1, 2007.