BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chairman
x6 19 (Florez)
Hearing Date: 08/02/2010 Amended: 06/30/2010
Consultant: Mark Mckenzie Policy Vote: Rev&Tax 3-0
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BILL SUMMARY: SBx6 19 would require the Franchise Tax Board
(FTB) to annually compile specified information on corporate tax
expenditures claimed by publicly traded companies that receive
$20,000 or more in credits. The information would be included
on the state Reporting Transparency in Government website in a
searchable database and available for download by the public in
spreadsheet format.
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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 or General Fund (see staff
comments)
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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.
SBx6 19 would require FTB to annually compile the following
information, beginning with the 2010 taxable year: (1) the
name, mailing address, and California corporation number of a
publicly traded corporation receiving credits against the
Corporation Tax of $20,000 or more; and (2) the amount of tax
credits claimed. The information would be included in a timely
manner on the state Reporting Transparency in Government
website. The bill would also require the following information
to be compiled on a credit-by-credit basis and searchable by the
corporation's name, corporation number, expenditure type, and
keyword: (1) corporation name; (2) California corporation
number, when available; (3) name of the tax credit claimed; (4)
amount of tax credit claimed; and (5) a description of the
initial justification for the expenditure. Lastly, all data
would be available for download by the public in spreadsheet
format.
Page 2
SBx6 19 (Florez)
FTB indicates costs to develop, program, and test system changes
required to segregate and compile information on tax
expenditures claimed specifically 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.
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. SBx6 19 would result in one-time costs
for 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 AB 2666 (Skinner), which is also scheduled for
hearing in this Committee, would require FTB to report corporate
tax expenditure information from the returns of publicly traded
corporations to the CIO for inclusion on the state Reporting
Transparency in Government website in a searchable database. AB
2666 would require FTB to compile information on any corporate
tax expenditure claimed by publicly traded corporations and
specifies that the database would only be searchable by company
name and amount of tax expenditures claimed.