BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  SB 1335
                                                                  Page  1

          Date of Hearing:   August 6, 2014

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

                     SB 1335 (Leno) - As Amended:  June 30, 2014

          Policy Committee:                              Revenue &  
          Taxation     Vote:                            6-3

          Urgency:     No                   State Mandated Local Program:  
          Yes    Reimbursable:              No

           SUMMARY  

          This bill requires future bills introduced on or after January  
          1, 2015 that establish new tax credits under either the personal  
          income tax or corporation tax law to identify specific goals,  
          purposes, and objectives for the credits as well as define  
          performance indicators and specify data collection requirements  
          in order to evaluate the effectiveness of those tax credits in  
          achieving the identified goals, purposes, and objectives.

           FISCAL EFFECT  

          No immediate fiscal impact; potentially significant costs to the  
          Franchise Tax Board and other state departments to implement the  
          data collection and performance evaluation requirements for  
          future tax credit bills.

           COMMENTS  

          1)  Purpose.   The author contends tax credits should be evaluated  
            alongside direct spending programs as both constitute public  
            initiatives and investments of public funds intended to  
            accomplish specific goals.  The author asserts tax credits  
            typically do not include the accountability measures,  
            oversight, and transparency common to direct spending  
            activities.  The Legislative Analyst's Office has noted that  
            resources are allocated to tax expenditure programs (including  
            tax credits) automatically, often without legislative review  
            since there is no periodic appropriation or budget process for  
            those programs.

          2)  Advisory Legislation.   Courts in California have long held a  








                                                                  SB 1335
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            legislature may not limit or bind successive legislatures, and  
            future legislatures are under no legal obligation to comply  
            with the requirements of previously-enacted statutes.   
            Although its policy aims are laudable, this bill is not a  
            constitutional measure, and there is nothing to prevent a  
            future legislature from disregarding its requirements.

          3)  Previous Legislation.   This bill contains nearly identical  
            provisions to those contained in SB 508 (Wolk) of 2011 and SB  
            1272 (Wolk) of 2010, except that those bills also contained  
            mandatory sunset provisions for new tax credits.  Both bills  
            were vetoed, although the veto messages for each focused more  
            on the mandatory sunset provisions than the performance  
            criteria provisions, which are the sole focus of this bill.


           Analysis Prepared by  :    Joel Tashjian / APPR. / (916) 319-2081