Assembly Revenue And Taxation Committee

Want to say good afternoon. Was a good afternoon and welcome to this hearing on the Assembly Committee on Revenue and Taxation. As the chair, I want to start

Vice Chair Sanchez and also member Rodriguez.

all to consider bills under our jurisdiction before we take up this before we take up bills on the agenda today, want to address a few housekeeping items. First, would like to remind advocates that the deadline for position letters is one week prior to the hearing. Please submit support opposition letters through the

I want to make sure everyone understands that the assembly has rules to ensure we maintain order and run efficiently and f in a fair hearing, both support and opposition will be allowed to primary

Each primary witness will be allowed two minutes to provide testimony. All subsequent witnesses should state their name, their organization and their position on the bills only. That's all we will have time for. We will apply these rules consistently to all people who participate in these proceedings, regardless of their viewpoints they express. We will not permit conduct that would disrupt or disturb others and or impede the orderly procedures proceedings of this legislative proceedings. We will not accept any disruptive behavior or incite any threatening or violence in this hearing. Please be aware the violence of these rules. The violation of these rules may be subject to removal or enforce or other enforcement action. I want to remind everyone that the committee has a suspense file and that the details will be on the website for your review. So take a look on the website and you will act accordingly. In summary, bills with revenue impact of more than 150,000 will not be eligible for a vote immediately after the presentation. Instead, we will refer to the suspense file to reinstate. If the bills increase or decrease revenue by more than 150,000, it will be automatically referred to the suspense file. This enables the committee to holistically consider the proposal before us and to better prioritize policy changes, which is especially important to to this year's given the projected budget conditions. Accordingly, no bills on today's agenda will be eligible for a vote. It will automatically be referred to our suspense file. With that, I will call on our secretary, Ms. Highlander to please call the

Gibson Present Gibson. President Sanchez. Sanchez. President Carrillo. Carrillo. President DeMayle.

President McKinner. Crook Silva. Michelle Rodriguez. We have a quorum.

A quorum has been established. We will now move to our first item on the agenda which is AB 1565. Our former Vice Chair, Mr. TA Assembly Member, would you Please come and have a seat and you may proceed when ready. Again, File item number one, AB 1565 TA and your witnesses are present?

Great. I just want to advise your witnesses.

presentations in support of AB 1565. You may proceed when ready.

Thank you very much.

Good afternoon chair and members. Remember driving around with you in LA a few years ago on one of your bills. It's nice to see you again. So since then I think some of you remember from I represent the California Civil Liberties Advocacy. I'm Maddie Hyatt. I also have my own small firm now Capital Access and we are actually I'm taking on small business clients now. I've actually been telling them about this bill so I'll just say that I'll speak for CCLA for this bill. But I'll say that our organization has been actively engaging with the business stakeholders and the conversations that we've had, even with Chamber of Commerce, National Federation of Independent Business, and other small groups, even right here in Sacramento, we're hearing that people want practical tools that make it easier to hire people who are trying to rebuild their lives after incarceration. Many employers have told us directly that they would use this tax credit if it were available. They like the federal tax credit. And I've talked to them about, hey, you know, we've got these incarcerated problems, and, you know, we have a workforce problem, too. People with records, it's hard for them to get jobs and we can't hire them as well. So, you know, we want something that gives people second chances. But small businesses also understand that this carries a lot of risk when they hire people that were formerly incarcerated. But I really do feel that this bill helps offset the risk, and it makes it a lot easier to give them the opportunity while still upholding the principles of public safety. What I think makes AB 1565 especially compelling is it's not just a compassionate policy, but it's also good on the fiscal side of things. So let's just try to break some of these things down. According to the California Department of Corrections and rehabilitation, employment dramatically changes outcomes for people returning home from prison. We've been talking about this for years, actually. When a formerly incarcerated person finds a job within one year of release, the likelihood of recidivism drops from 60% to just 16%. So in other words, having a job reduces the chance of going back to prison by more than 2/3. So it would reduce the prison population, reduce crime, and et cetera. Right now, the same department reports that about 60% of people released from prison are unemployed within their first year back in society, and that more than 60% will reoffend within three years if nothing changes. These are the numbers that CDCR pretty much undisputed at this point. So these are the costs that we have, according to cdcr, based basically incarcerating one person in the state cost us about $133,000 per year. So offering a $5,000 tax credit to micro businesses for hiring formerly incarcerated persons that keeps them employed for six months if that job helps that person stay out of prison. The math is pretty simple.

The state spends $5,000, but avoids roughly $133,000 in incarceration costs. That's a net savings of more than $128,000 for a single person. So this. This fiscal analysis, you know, we've got the Franchise Tax Board, and I'll try to wrap it up and say that I think that this rare bill gives us a. A chance to improve public safety, reduce recidivism, reduce the prison populations. And we're in a budget crisis right now. So if this can help save the state some money, why not?

Thank you very much.

Good afternoon, chairmembers. My name is Elizabeth Kim. I currently serve as the policy director at Initiate justice. I bring 20 years of legislative and public policy experience to my role. I am also a professor of social justice, a lawyer, and former Ledge staffer. I am also formally incarcerated. I came home after serving time for a felony conviction for possessing something that is now legal to possess in California. I am also a daughter of longtime small business owners. And because of that, I bring a unique perspective to this issue. I understand the real risks that go into hiring decisions for small businesses. And I also understand the hope of someone coming home who just needs to be given a second chance to rebuild their life. People with felony records face enormous barriers to employment. Studies show that having a criminal record can reduce the likelihood of receiving a job callback by nearly 50%. I know this personally. I remember sitting across from employers time after time after coming home, knowing that the moment they saw the felony on my record, that I might not just. I might not get that job. But I'm also living proof of what happens when someone who is formally incarcerated is given a second chance and meaningful employment. Because employers were willing to take that chance on me, I was able to expunge my record, return to school, earn a law degree, and my career to public service. Today, I pay more than a lot of taxes, and I've dedicated my life to public service. None of that would have been possible without employers who are willing to look beyond my record and see my potential. And that's why this bill is important.

Thank you very much.

Thank you very much.

room that's wishing to speak in support of. I need your name, your organization. And this is just in support of. Please approach the microphone. Name an organization in support of AB 1565.

of Commerce and support. Thank you very much. Hearing and seeing no one else wishing to speak in support. Anyone a primary witness in opposition. Would you please come forward and if. If. Okay.

Afternoon. You have two minutes that you can proceed when ready. Thank you.

Thank you.

Anyone in the room that wishing to speak in opposition, would you please post a microphone? Your name, organization, opposition hearing and seeing none. I want to bring it back to the committee.

Okay, Mr. DiMaio. And then Ms. McKenna.

Yeah. I myself worked with an organization called crop, creating Response. Oh, Restorative Opportunities and Programs. A very successful program that started in the Bay Area and I believe is rolled out throughout the rest of the state. I'm no longer representing them, but I did that in the past.

I wish I could remember.

But we did it through the budget and oh, my gosh, it was an uphill battle, but it's been really successful. And there are similar programs like. Like that that are in existence as well.

Thank you, Mr.

Appreciate that.

Yes.

Thank you very much.

Well, really appreciate the question and that is really, really important and that really good question.

Thank you very much.

Yeah.

I want to thank the chair for being my principal co author and I want to thank the comment from my college. I think this is bipartisan bill and I think that the bill really, really

for our community and for our society. So I respectfully ask for your. I vote.

This bill will refer to our suspense file. We thank the witnesses and also the author for coming forward.

Next we will move to File item number two.

No.

You may proceed when ready.

Mr.

Thank you very much.

Good afternoon. My mic on. Good afternoon. Danny Candle Kaiser. Again, on behalf of cta, we're regretfully we do have to oppose this bill. We absolutely appreciate the intent of the bill, but tax exemptions for car infant car seats are far more costly and less efficient than targeted benefits. We believe California has multiple programs in counties that are mandated by the state and financed by traffic safety funds, court fines and public health budgets. These programs include education and installation of car seats which are provided by county health departments and numerous nonprofit organizations to make sure that no family is without a car seat. If California's current programs are found to be efficient, we believe that they can be enhanced far more efficiently than with this tax exemption. And we ask for a no vote.

Thank you very much.

A sales tax exemption. Benefits. Benefits, everyone, even those who can easily

So, Ms. Davies, for a car seat,

The savings or the. Right now they're going for around 200 to 550. For a car seat.

Yes.

And a lot of families obviously have more than one child that need to be in a car seat.

assist those who really needs them? And that's the question that I have. Is there a targeted way?

Okay, got it. No other questions. Mr. DeMaio, I see the wheels turning. No.

Ms. Davies, thank you very much for your presentation. You may close at this time.

Thank you very much.

Thank you very much.

number three, AB 1668. Ms. Pelleran, thank you very much.

Hello. You may begin with.

You have primary witness.

Hi.

Chair and members.

Thank you very much.

Good afternoon, members of the committee. Chair Gibson. My name is Caroline Godkin, and I am the executive director of the California Council of Land Trusts. We're really grateful to Assemblymember Pellerin for bringing forth this bill today. The California Council of Land Trust is a member organization, and we represent the interests of the Some hundred, over 100 land trusts throughout the state of California. Land trusts are nonprofit organizations who protect land of all types and ecosystem, deserts, farmlands, working lands and everything else throughout the state, and have protected close to 5.7 million acres. This exemption has worked really well and as the assembly member said, has really allowed those precious funds to be used to steward and to maintain these lands. This. This exemption has been in place since 1971, I believe, and it really has freed up vital resources for Land Trust to be able to continue to do their work. We respectfully ask for your support to continue this great program and certainly happy to answer any questions.

Thank you very much.

Good afternoon. Jeff Darlington, Placer Land Trust in support.

a member of the CCLT and here to request your support.

Good afternoon. John Henry Drew, member of the public

on the bill, but I. I do support the bill.

I think it's pretty common sense and

you know, think that this should be seen as a bipartisan effort. I just want to note that there are some lobby groups that, you know, seem to be against certain bills because of loss of revenue, and then they're silent on other bills. That's certainly within your, you know, prerogative, but it really diminishes, I think, the credibility of your argument when it's selective. So I'm glad that there is no opposition to this bill and I hope that we can get it passed and I hope that the opposition to the other bills evaluate whatever criteria that you're using to oppose.

Absolutely.

Great.

Seeing no further questions from the dais.

You may close if you wish.

Thank you very much.

Thank you very much.

We have some witnesses here.

Thank you, Mr. Chair and members. AB 1690 aims to ensure that future generations of California's children and young families receive the support that they critically need during this cost of living crisis and into the future. Under current law, the young child tax credit is applicable to families with children under the age of six. But the cost of raising a child persists well past that age. As we know, having experienced homelessness, insecurity, food insecurity, and I know firsthand the struggles that many of our families are facing trying to afford the high cost of living in California, parents should not have to choose between necessities and having to access essential resources should be a standard for right for everyone. Joining me today is Jamie Bender, who has lived experience as a recipient of the Young Child Tax Credit. Anisha Nair, an analyst from the California

Good afternoon, Chair Gibson and members of the committee. My name is Nishi Nair and I'm a policy analyst at the California Budget and Policy Center, a nonpartisan research and analysis nonprofit that works to expand opportunities and promote well being for all Californians. As affordability pressures grow and debilitating federal cuts to the safety net from HR1 begin to materialize, already high poverty rates are likely to rise. This is why expanding California's Young Child Tax Credit to support more families with low incomes is especially important. Right now. Refundable tax credits like the state and federal Earned Income tax Credits are proven tools for pulling families out of poverty. California's YCTC reinforces these impacts by reaching roughly 400,000 families across the state each year. Most families receive the maximum credit, which is enough to cover the cost of six months of utilities for a family living in LA County. Currently, however, about 60% of families with low incomes are excluded from the credit. For a parent with one child making $15,000 per year, they qualify for about $1,700 worth of benefits in combined YCTC and Cal EITC credits when their child is five. However, when their child turns six, the family is only eligible for the Cal EITC, which results in an almost 70% decrease in benefits. On top of this benefits cliff, many families with the lowest incomes, in addition to mixed status households, are excluded from the full federal Child tax Credit. The YCTC fills in crucial gaps left by the federal CTC but does not reach enough California families. Extending the credit to families with older children would help reach more low income families left behind. California currently spends six times more on corporate tax breaks than on tax credits for low income families. This shows that California has the resources to better meet the needs of communities facing affordability pressures and federal threats. The state has the opportunity to use the tools already at its disposal and expand the YCTC to all low income families with dependent children. Thank you for your time.

Next witness, two minutes.

Thank you very much.

Hi, Amy Costa, Full Moon Strategies on

Thank you very much.

United Ways of California as well as the Prosper California Coalition, a proud coastal sponsor of AB690 and strong support. Thank you.

Hi. Thank you so much. Chair Sam Wilkinson with Grace and Child Poverty in California as well as the National Council of Jewish Women California and Equal Rights Advocates.

Thank you so much.

Laura Muther with the Lutheran Office of Public Policy in California.

Thank you.

Law and Poverty and the Friends Committee on Legislation.

Thank you.

Thank you very much.

Thank you.

Thank you. Mr. Chair.

exactly what our constituents want us to focus on. This is exactly the type of bill that helps alleviate the high cost of living, helps alleviate poverty. For every dollar invested in this program, we get $2 back in economic activity. This is an investment in our economy and there's nothing more bipartisan than saying take the money away from the government and put it back in individual people's hands. They know how to raise their children better than the government does. This should be bipartisan and unanimous out of this committee. Thank you so much for the consideration and I respectfully ask for your I vote.

This bill will refer to our suspense file.

Thank you.

Next up is file line number five, AB 1698.

All right.

Chair.

Thank you very much.

Appreciate it. Pat Joyce on behalf of the California Restaurant association in support of AB 1698, which would permit a qualified employer, which is a restaurant with 50 or less employees to claim a tax credit in an amount equal to the employer cost associated with with the employees food handler certification up to $250 a year over the next three years. Prior to 2024, restaurant employees typically completed the required food safety course, completed the test and paid the $15 fee. And the underlying law was deliberately set up this way with stakeholder input from the restaurant health department and labor community. As Assemblymember mentioned in 2023, the legislature took what was designed as a manageable set of conditions for an individual and shifted those onto restaurant employers by requiring those employers to compensate employees for the exam costs and the time it takes for them to complete the multi hour food training and test. While obtaining a food card is relatively small and inexpensive investment, it's less than $15. Requiring restaurant employers to pay for the training time and testing has been costly as restaurant employers have continued to grapple with pandemic related policy outcomes, record high inflation tariffs and so many other challenges. For the state's restaurant employers to now shoulder the cost of the state's 1.4 million food service workers is an added economic challenge. AB 1698 seeks to help offset some of these new mandated costs. Neighborhood restaurants continue to face unrelenting operating challenges. The existing food card training requirement is one that caters to the interests of food service professionals by offering them numerous choices of training providers, capping the cost of training and making the food card their own portable property they can take from job to job, even to competitors. Given that restaurant employers now bear those costs. A small offset as proposed under this bill is an incredibly modest approach and one that comes at a critical time. For these reasons, we ask you for your support when the time comes.

Thank you very much.

Good afternoon again, Danny Kanda Kaiser here on behalf of the California tax reform association. A 100% in respectful opposition. A 100% tax credit represents a direct payment by the state with virtually no precedent in state tax policy. The costs for food handling certification are fully deductible as business expenses, as are compliance with other health and safety regulations as well as other regulatory costs as recently mandated by the legislature. There are necessary costs of doing business and therefore a credit in any form would have no real incentive effect. We ask for a no vote.

Anyone in a room wishing to speak in opposition of AB 1698, would you please approach the microphone? Name and organization.

Matt Lachet with SEIU California. As part of the coalition here and

It can support.

You want that, Pat?

I'll take a start. And you can add, I would just Note Again, before 2023, this was something that was a very manageable cost for employees to handle. We're talking $15 or less. And then when you shift that cost onto the employer who has to cover all the costs for all the employees, that's just another cut that they've experienced year after year. So this is a modest approach to provide a little bit of relief to the small business owners.

And if I could just add to that, I know we in this building talk about small businesses and talking about affordable everything. We didn't want to refund 100% as was brought up. We just wanted them to get a tax credit on this one. 250 bucks is actually not much in my opinion. But to just help these businesses grow and be able to actually be able to hire more people on I think is great for everybody, for the customer, for the employee, for the employer. And so again, I respect your eye.

Thank you very much.

Just ask for an I vote. Thank you very much.

This bill will refer to our suspense file. Thank you and your witnesses for coming before this committee. Thank you. Our vice chairman, Sanchez, File item number six, AB 1620. And if you have any primary witnesses, they may also approach as well. And you may proceed when ready.

Thank you very much. Thank you very much for appearing.

Yes, sir.

Thank you.

Anyone in the room wishing to speak in support of AB 1620, would you please step forward? Your name and your organization.

Thank you.

Good afternoon. Danny Kando Kaiser, again, on behalf of the California Tax Reform association, respectfully opposed to the bill. Providing deductions for insurance premiums means state taxpayers are Called on to subsidized well off homeowners in high risk areas. While we understand that the insurance market has many problems, it is a problem which will have to be resolved in the insurance market, not by tax taxpayers. In particular, with the progressive income tax, it is clear that higher income home homeowners will benefit disproportionately from this deduction. We ask for a no vote.

Anyone in the room wishing to express their opposition to AB 1620, would you please come to the microphone. Hearing and seeing none. Bring it back to the. To the D. That's my villain.

Hearing and seeing none. I have a question for you, Ms. Sanchez. Can you please explain why this is a structure as an itemized deduction that would be available to those who would take a standard deduction? Not available. Excuse me.

Got it.

And you may close if you wish.

AB 1620 is a reasonable measure that will provide much needed relief to our California homeowners. I respectfully ask for an eye on this measure.

This bill will refer to our suspense file.

To witness for appearing and giving your presentation. So thank you very much.

With no further business being before this committee, the Revenue and Taxation Committee stands at adjournment.