BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
2666 (Skinner)
Hearing Date: 08/02/2010 Amended: 06/30/2010
Consultant: Mark McKenzie Policy Vote: Rev&Tax 3-0
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BILL SUMMARY: AB 2666 would require the Franchise Tax Board
(FTB) to compile information on tax expenditures claimed under
the Corporations Tax Law by publicly traded companies, and
annually submit the information to the State Chief Information
Officer (CIO) beginning on March 30, 2012 for publication on the
Reporting Transparency in Government website in a searchable
database.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Compile/report tax information $111
$46General
Develop/maintain database $70
$15Special*
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* Technology Services Revolving Fund. Database costs likely
provided by reimbursements from FTB deposited into the Revolving
Fund from the General Fund.
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
Existing state and federal laws provide various tax credits and
other tax benefits designed to provide relief for taxpayers who
incur certain expenses, such as those related to child adoption,
or to influence behavior, including business practices and
decisions by providing benefits such as research credits or
economic development area hiring credits. These benefits
generally are designed to provide incentives for taxpayers to
perform various actions or activities that they may not
otherwise undertake. Existing law requires the Department of
Finance to annually report to the Legislature on tax
expenditures exceeding $5 million. Taxpayer information and
records are generally confidential, but AB 1418 (Horton),
Chapter 716 of 2006, requires FTB to annually publish a list of
the top 250 tax delinquencies over $100,000.
AB 2666 would require FTB to compile information on any tax
expenditure authorized under the Corporation Tax Law that is
claimed and reported by a publicly traded corporation on annual
returns filed for taxable years after January 1, 2010. FTB
would submit this information to the CIO on March 12, 2012 and
annually thereafter for publication on the Reporting
Transparency in Government website. The bill would require the
CIO to develop a database on the website that is searchable by
company name and the amount of corporate tax expenditures
claimed.
FTB indicates costs to develop, program, and test system changes
required to segregate and compile information on tax
expenditures claimed by publicly traded corporations would be
approximately $111,000. Ongoing annual costs to maintain the
system, and report information to the CIO would be $46,000.
Page 2
AB 2666 (Skinner)
The Office of the Chief Information Officer (CIO) launched the
state Reporting Transparency in Government website in April of
2009 pursuant to an executive order issued by Governor
Schwarzenegger as an effort to provide more transparency and
accountability to state government. The website includes
information on state contracts, audit reports, statements of
economic interest filed by government officials, and government
travel expense claims. AB 2666 would impose one-time costs on
the CIO to develop a searchable database from information
provided by FTB and create a "tax expenditure" tab on the
website are estimated at approximately $70,000. Ongoing
database management and storage costs would be about $15,000
annually. The CIO generally provides information technology
services to other state entities on a reimbursement basis.
While CIO costs related to this bill would technically come from
the Technology Services Revolving Fund, it is likely that these
costs would ultimately be funded by the General Fund through a
reimbursement from FTB. Alternatively, the CIO costs could be
paid through the Office's state operations budget, which is
funded through an annual General Fund appropriation.
Staff notes that SBx6 19 (Florez), which is also scheduled for
hearing in this Committee, would require FTB to compile
specified corporate tax expenditure information from the returns
of publicly traded corporations and would require the
information to be included on the state Reporting Transparency
in Government website in a searchable database. SBx6 19
requires compilation of information on taxpayers claiming
credits of $20,000 or more, and requires more specific
information to be reported and included in the database.