BILL ANALYSIS                                                                                                                                                                                                    �




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                          SB 11 (Anderson)
          
          Hearing Date: 5/26/2011         Amended: 5/3/2011
          Consultant: Bob Franzoia        Policy Vote: G O 12-0
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          BILL SUMMARY: SB 11 would prohibit a state entity from assessing 
          a fine, interest, or penalty, based on a debt owed to the state 
          by an individual who, or entity that is a payee named in a 
          registered warrant, from the date the state issued the 
          registered warrant until at least 30 days after the date the 
          registered warrant is payable by the state.
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          ____
                            Fiscal Impact (in thousands)

           Major Provisions         2011-12      2012-13       2013-14     Fund
           Registered warrant prohibition

            - Administration     Unknown, likely significant      General

            - Payment of tax liabilities    Estimated $1,300 to $13,000 
          (revenue loss)         General                in fiscal years 
          when registered warrants are
                                 issued     
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          ____

          STAFF COMMENTS: SUSPENSE FILE. 

          This bill is silent regarding the hierarchy for penalty and 
          interest relief, including relief for debts of multiple state 
          entities.  If, for example, a taxpayer was issued a registered 
          warrant on June 30, 2011, for $500 and owed a Franchise Tax 
          Board (board) tax debt of $600 and a Board of Equalization (BOE) 
          debt of $800, would the first $500 of both debts have the 
          interest and or associated fees waived?  Staff recommends the 
          bill be amended to indicate the hierarchy of relief and require 
          the taxpayer to submit the registered warrant.  

          This bill would require the board to secure data from the 
          Controller to determine which individuals and business entities 
          that were issued registered warrants were also subject to a 








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          penalty or interest on a debt imposed by the board.  Board 
          systems would need to be reprogrammed to reverse previously 
          assessed penalties or interest and issue appropriate refunds.  
          Notices to advise the affected taxpayers would need to be 
          developed, tested, and issued.  The BOE would likely incur 
          similar costs.


          Information is not readily available that would enable the board 
          to match registered warrant amounts against taxpayer 
          liabilities.  If, for example, registered warrants are issued in 
          June, 2011, and one to ten percent of the registered warrant 
          holders have outstanding tax liabilities equal to the average 
          amount of warrants previously issued in 2009, abatement of 
          interest and penalties for this group would result in a one-time 
          revenue loss of approximately $1.3 million to $13 million in 
          fiscal year 2010-11.