BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 1963|
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THIRD READING
Bill No: AB 1963
Author: Huber (D)
Amended: 8/7/12 in Senate
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 5-3, 7/3/12
AYES: Wolk, DeSaulnier, Hernandez, Kehoe, Liu
NOES: Dutton, Fuller, La Malfa
NO VOTE RECORDED: Yee
ASSEMBLY FLOOR : 56-18, 5/31/12 - See last page for vote
SUBJECT : Income tax: sales and use tax: Legislative
Analysts office:
report
SOURCE : Author
DIGEST : This bill requires the Legislative Analysts
Office (LAO), on or before July 1, 2013, to submit a report
to the Legislature assessing potential changes to the state
income and sales and use tax laws.
ANALYSIS : Existing law requires the Department of
Finance (DOF) to submit a tax expenditure report to the
Legislature each year by September 15th. Tax expenditures
are defined to be "a credit, deduction, exclusion,
exemption, or any other tax benefit as provided by the
state." As part of the Budget, DOF must provide to the
Legislature total recommended General Fund expenditures and
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estimated, including any proposed, General Fund revenues.
This bill requires the LAO, on or before July 1, 2013, to
submit a report to the Legislature assessing potential
changes to the state income and sales and use tax laws.
The report must include:
1.A review of California's current and historical revenue
volatility, including the percentage of the gross state
product that is made up by the General Fund budget over a
period of 10 years;
2.Proposals for tax reforms that would end California's
revenue volatility, are sum revenue neutral, and do not
require amendments to the California Constitution. To
the extent possible, the LAO must use dynamic revenue
modeling in determining viable proposals;
3.An explanation of the calculations needed to determine
revenue neutrality;
4.An analysis of the effect a reduction of taxation on
individual income would have upon state revenues and
revenue volatility; and,
5.An analysis of the effect of imposing a tax on the sale
or use of services, concurrent with a reduction of the
SUT rate. This analysis must include whether a credit or
exemption to the services tax should apply to the sale of
services between businesses. This analysis must also
include the revenue impact of excluding certain services
from taxation.
This bill also repeals obsolete provisions.
Comments
This bill provides the Legislature a report that assists it
in making an informed decision about how to reduce revenue
volatility. More specifically, this bill requires the LAO
to analyze how lowering the personal income tax and the
sales and use tax, along with taxing services, could affect
revenue and budget stability and predictability. By making
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the state's revenue stream more static, California's
revenue trends will correspond with economic trends. A
more static revenue stream may also alleviate some of the
pressure on future Legislatures to significantly increase
spending in good economic years. A more stable revenue
stream ensures that private vendors, schools, public safety
groups, and various state programs will be able to rely on
more stable and predictable budgets.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 8/8/12)
- - - -
OPPOSITION : (Verified 8/8/12)(on prior version)
Roofing Contractors Association of California
ASSEMBLY FLOOR : 56-18, 5/31/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Campos, Carter, Cedillo,
Chesbro, Davis, Dickinson, Eng, Feuer, Fletcher, Fong,
Fuentes, Furutani, Galgiani, Gatto, Gordon, Hall,
Hayashi, Roger Hern�ndez, Hill, Huber, Hueso, Huffman,
Lara, Bonnie Lowenthal, Ma, Mitchell, Nestande, Norby,
Olsen, Pan, Perea, V. Manuel P�rez, Portantino, Skinner,
Smyth, Solorio, Swanson, Torres, Wieckowski, Williams,
Yamada, John A. P�rez
NOES: Conway, Donnelly, Beth Gaines, Garrick, Gorell,
Grove, Hagman, Halderman, Harkey, Jeffries, Jones,
Knight, Logue, Miller, Morrell, Nielsen, Silva, Wagner
NO VOTE RECORDED: Charles Calderon, Cook, Mansoor,
Mendoza, Monning, Valadao
AGB:n 8/8/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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