BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1154|
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THIRD READING
Bill No: SB 1154
Author: Cedillo (D)
Amended: 4/27/10
Vote: 21
SENATE ENERGY, U.&C. COMMITTEE : 10-0, 4/20/10
AYES: Padilla, Dutton, Corbett, Florez, Kehoe, Lowenthal,
Oropeza, Simitian, Strickland, Wright
NO VOTE RECORDED: Cox
SENATE APPROPRIATIONS COMMITTEE : 10-0, 5/27/10
AYES: Kehoe, Alquist, Corbett, Denham, Leno, Price,
Walters, Wolk, Wyland, Yee
NO VOTE RECORDED: Cox
SUBJECT : Public Utilities Commission: Earned Income Tax
Credit
SOURCE : Author
DIGEST : This bill requires the Public Utilities
Commission (PUC) to ensure that all applications for the
California Alternate Rates for Energy (CARE) and the
Universal Lifeline Telephone Service (ULTS) programs
include information about the applicant's eligibility to
qualify for the federal (EITC). This bill also requires
the Low-Income Oversight Board to make recommendations on
whether CARE and ULTS programs could assist with outreach
regarding the EITC in a manner that would not detract from
the primary goals of these programs and would minimize
CONTINUED
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negative ratepayer impacts.
ANALYSIS : Current law establishes the CARE program,
administered by the investor-owned utilities, which
provides eligible low-income customers a 20 percent
discount on their electric and natural gas bills.
Current law establishes the ULTS program, administered by
the PUC, which provides eligible low-income customers a 50
percent discount on the rate of basic telephone service.
Current federal law provides for the EITC, a refundable
federal income tax credit for low- to moderate-income
working households.
This bill requires the CPUC to ensure that all applications
for the CARE and ULTS programs include information about
the applicant's eligibility to qualify for the EITC.
Background
Tax Credit Refunds . According to a March 2010 report of
the New America Foundation, an estimated 2.4 million
California residents will claim $4.95 billion in EITC
refunds in 2009. However, the report predicts an
additional 800,000 Californians will fail to claim the
credit, thereby leaving an estimated $1.2 billion in EITC
refunds on the table. On average, families not claiming
the credit would have received a refund amounting to
$1,400. The report states: "The families and individuals
who miss out are not the only losers when these refunds go
unclaimed. Local economies never benefit from this money.
These dollars are never spent at local businesses, so fewer
jobs are created, fewer wages are paid, and eventually less
tax revenue goes to state and local governments. These
refunds are a foregone economic stimulus for California."
According to the Internal Revenue Service Web site, income
eligibility for the EITC and the amount of credit varies
with the number of children in the household, ranging from
a maximum tax credit of $5,657 in a household with three or
more qualifying children and adjusted gross income of less
than $43,279 to a maximum tax credit of $457 in a household
with no qualifying children and adjusted gross income of
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less than $13,440.
CARE Program . A customer can be eligible for the CARE
program based on (1) household income, ranging from less
than $30,500 for a household of one or two persons to less
than $58,000 for a household of six persons, or (2)
enrollment in public assistance programs such as
Medicaid/Medi-Cal, Supplemental Security Income, etc. The
costs of the CARE programs are paid by ratepayers. Each
investor-owned utilities is authorized to recover its cost
of administering the CARE program through a surcharge on
each customer's bill. The utilities offer customers a
variety of procedures for applying for CARE, including
mail, telephone, and online applications and
recertifications. The utilities are required to submit
annual reports on the program to the PUC.
ULTS Program. A customer can be eligible for ULTS, also
known as Lifeline service, based on (1) household income
ranging from less than $24,000 for a household of one or
two persons to less than $34,000 for a household of four
persons, or (2) enrollment in public assistance programs.
The ULTS is funded through an all end-user surcharge on
intrastate telecommunications service, with funds going to
the PUC, which administers the program. The PUC pays an
outside contractor, Solix, for handling all initial
application forms and annual recertification applications.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
The Senate Appropriations Committee staff estimated that
the Public Utilities Commission would require a modest
amount of additional staff time to develop information on
the Earned Income Tax Credit for inclusion with program
applications and to support the Low Income Oversight Board
as it considers potential recommendations. In addition,
Senate Appropriations Committee staff estimated that there
will be additional state costs for the contractor managing
the Universal Lifeline Telephone Service program to produce
copies of the required information and include them with
program applications. (In the last year, the program
administrator sent out almost four million applications or
renewal forms.) Because the California Alternate Rates for
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Energy Program is managed by the investor owned utilities,
with costs covered by ratepayers, there would be no direct
state cost to include this additional information in
program applications. However, any additional costs to the
utilities to produce and distribute this information would
be paid for by natural gas and electricity ratepayers. (The
state is a significant consumer of electricity, thus the
state will share in these costs. However, the total cost to
the state as a ratepayer is likely to be minor.)
SUPPORT : (Verified 5/27/10)
TURN
ARGUMENTS IN SUPPORT : According to the author's office,
one of the main reasons eligible Californians do not apply
for the EITC is that they do not know about the program.
"Partnering with an established program like CARE and
Lifeline to do outreach about the federal EITC will allow
information about the EITC to reach target populations that
would most likely qualify for the EITC."
DLW:nl 5/28/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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