State Legislature - Week of October 5, 2009

 

Regulatory Update
Commission Begins “Phase 2” of Safety OIR Proceeding.  This week CCTA joined other communications infrastructure provider (CIP) representatives in filing a joint prehearing conference statement at the CPUC in preparation for the Phase 2 prehearing conference on Friday in San Francisco. Among other things, the statement by CIPs urges that any rules developed in Phase 2 be based on specific, identified hazards; that the rule would reduce the hazard;   that the Commission balance cost and benefits of proposed rules, and that the proposed rules be in the public interest. The statement also insists that any workshop be conducted by a neutral facilitator and that the GO 95 Rules Committee should be used were appropriate. To that same end, CCTA also served parties with a letter by the GO 95 Rules Committee wherein the Committee offers expertise to the Commission on technically-related Phase 2 issues.   The ALJ will determine the scope of Phase 2 based on the PHC Statements and the prehearing conference.
SDG&E Resurrects De-Energization Plan.  This week San Diego Gas and Electric Company (SDG&E) announced that it will hold a “stakeholder collaboration meeting” to discuss fire prevention in the San Diego region.  The initial meeting is scheduled for Friday, October 16 in San Diego. CCTA plans to attend.  SDG&E says that the purpose of meeting is to “ensure steady progress in reducing the fire hazard of overhead power lines” and to attempt consensus on the development of a joint fire-prevention program, including a cost-benefit assessment of such a program. SDG&E’s meeting is in response to the Commission’s Order rejecting the proposed de-energization plan.  The Commission urged SDG&E to work collaboratively with other parties if it plans to pursue a power shut-off plan.
The Energy Division issued a Resolution denying an Advice Letter filed by San Diego Gas & Electric. The Energy Division issued a Resolution denying an Advice Letter filed by San Diego Gas & Electric to establish a memorandum account for monies spent to resolve alleged GO 95 infractions on networks owned by third party attachers to SDG&E poles. SDG&E planned to inspect cable and telecommunications networks, resolve alleged GO 95 infractions, and recover the costs from either the third party or ratepayers. CCTA, joined by AT&T, objected, noting that the Commission, not SDG&E, is responsible for enforcing GO 95 infractions, and that pole attachment agreements with SDG&E require the third parties to resolve their own infractions and maintain their networks in compliance with GO 95. Cox also filed to document the poor record SDG&E has in misidentifying GO 95 infractions. Comments are due on the Resolution October 19th.             
 
State Legislative Update
 
Legislature to reconvene January 4, 2010
 
 
Legislative Hearing on the Commission on the 21st Century Economy’s Tax Proposal.  In July 2009, Governor Schwarzenegger issued an executive order establishing a bipartisan commission to re-examine and modernize California’s out-of-date revenue laws that contribute to California’s feast-or-famine state budget cycles. After conducting several public meetings and some delay, the Commission on the 21st Century Economy finally released its final report and tax policy recommendations on September 28, 2009. http://www.cotce.ca.gov/documents/reports/documents/Commission_on_the_21st_Century_Economy-Final_Report.pdf
 
The final report recommends the Legislature consider and study the following:
 
·         Partially flatten the personal income tax, reducing the number of brackets to two and reducing the top tax rate from 10.3% to 6.5%
·         Eliminate the corporate income tax.
·         Eliminate the state portion of the sales and use tax.
·         To replace the lost revenue, establish a new business net receipts tax, phased in over five years, up to a rate of approximately 4%.
·         Constitutionally establish a “rainy day budget reserve.”
·         Create an independent tax body to replace the state Board of Equalization for taxpayer appeals.
 
The Assembly Revenue and Taxation Committee held a two-day informational hearing on the Commission’s report with the participation of several of the Commissioners. It should be noted that only 9 of the 14 commissioners support the final report.
 
After Commissioner Chairman Gerald Parsky presented the proposal to the Committee, Commissioners Jennifer Ito and Fred Keeley both began to discredit the report. Commissioner Ito expressed her concern that the proposal would shift a large portion of the tax burden from the rich to the poor. Commissioner Keeley expressed his dismay at the process that was used to develop the final recommendations.  Commissioner Keeley felt that the final recommendation had already been decided by the Governor and the Commission was essentially being used to give the appearance of public participation.
 
The following panels and public comments essentially pointed out problems and concerns with the proposal. Business, labor and non-profit associations spoke out against the proposal.  Entities speaking against the proposal included:
 
o   California Budget Project
o   California Pan-Ethnic Health Network
o   California Tax Reform Association
o   California Chamber of Commerce
o   CalTax
o   National Federation of Independent Business
o   National Steel and Shipbuilding Company
o   SEIU, Local 1000 (state employees union)
 
Business was concerned that this type of proposal has never been tried and that the business tax burden could actually be significantly higher than projected in the report. Labor was concerned that the proposal would not generate a reliable revenue stream to fund government services. And the non-profits felt that flattening the personal income tax schedule shifted a larger tax burden, as a percentage, to the poor or working class.
 
The non-partisan Legislative Analyst, Mac Taylor, made the comment, which several others agreed in their testimony as well, that he didn’t’ believe California’s tax system is really that bad. While it may not be perfect, it has a very strong foundation.  The Legislative Analyst stated that California needs to focus on its spending.
 
Additional Upcoming Legislative Hearings on the Report of the Commission of the 21st Century Economy:
 
·        Monday, October 12, 2009 - 1:30 p.m.
Senate Revenue & Taxation Committee
“Overview of California Tax Commission”
 
·         Wednesday, October 14, 2009 – 1:00 p.m.
Assembly Revenue & Taxation Committee
“Academic Perspectives on the Tax Recommendations of the Commission on the 21st Century Economy”
 
·        Monday, November 2, 2009 - 1:30 p.m.
Senate Revenue & Taxation Committee
“Academic Panel on Tax Commission: BNRT, Tax Court & Sales Tax Services”
 
·        Monday, December 7, 2009 - 1:30 p.m.
Senate Revenue & Taxation Committee
“Tax Commission Response from Corporations and Organizations”