BILL ANALYSIS �
AB 2519
Page 1
Date of Hearing: May 21, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 2519 (Patterson) - As Amended: May 15, 2014
Policy Committee: Revenue &
Taxation Vote: 6-1
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill allows a tax credit, for each taxable year beginning
on or after January 1, 2015, and before January 1, 2020, equal
to 15% of the tuition paid or incurred by the taxpayer for
education and training obtained at a vocational institution,
subject to a maximum credit of $2,500 and the following
limitations:
1)The credit is not allowed to a taxpayer who deducts the
tuition paid or incurred as an ordinary business expense.
2)The credit is not allowed to a taxpayer who pays for the
tuition with distributions from the taxpayer's Golden State
Scholarshare College Savings Account.
The bill authorizes the taxpayer to carry forward the tax credit
to the following tax year, and succeeding seven years, if
necessary, until the credit is exhausted.
FISCAL EFFECT
1)Potentially significant GF costs to Franchise Tax Board (FTB)
to administer the changes to forms and systems.
2)Substantial GF revenue decreases, likely in the tens of
millions of dollars annually, over the duration of the
program.
COMMENTS
1) Purpose. According to the author, as California emerges from
AB 2519
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the recent recession, there is an increased need for skilled
labor. Certificate and associate's degree programs offered by
vocational institutions provide the training needed for these
jobs, and may be better suited for persons pursuing
professional qualifications as auto mechanics, vocational
nurses, and pharmacy technicians. This bill is intended to
incentivize attendance at vocational institutions to help meet
current demands in the job market provide students skills for
long-term employment.
2) Existing Education and Training Tax Incentives. Current state
tax law provides several incentives for individuals who invest
in continuing education and training. For example, expenses
incurred by employers for providing training to employees are
deductible as ordinary business expenses. The cost of
continuing education is often deductible as an ordinary
business expense or as an individual expense. Individual
taxpayers may also deduct certain other educational expenses
if those expenses are work related.
3) Tax Incentives vs Investment in Education. Opponents argue
both higher education and K-12 education have endured dramatic
budget cuts over the last few years, and that additional
revenues should be spent on restoring those budgets instead of
being used for tax incentives. Furthermore, there are several
workforce development programs in California, including
programs administered through the Labor and Workforce
Development Agency and the California Community College
System. One of the largest programs is the Employment
Training Panel (ETP), a business- and labor-supported state
agency that funds job skill development initiatives. The ETP
provides customized training to new and current workers of
California employers, particularly those facing out-of-state
competition. The Committee may wish to consider whether
increased funding to existing programs such as the ETP would
be a more efficient approach to achieving these goals.
Analysis Prepared by : Joel Tashjian / APPR. / (916) 319-2081