State Legislative - Week of June 4, 2010

A part of the State Budget approval process is for both houses of the legislature to review and approval proposed budget items.  Any items that are not agreed upon by both houses are set aside and considered by a conference made up of members from both houses.  This year’s Budget Conference Committee has been named and began meeting to resolve the differences between the Senate and Assembly versions of the state budget.  Members of this year’s Conference Committee are:

• Senators Denise Moreno Ducheny (D-San Diego), Chair, Bob Dutton (R-Inland Empire), Bob Huff (R-Glendora), Mark Leno (D-San Francisco), Alan Lowenthal (D-Long Beach)
 

•  Assembly members Bob Blumenfield (D-Van Nuys), Vice Chair, Connie Conway (R-Visalia), Felipe Fuentes (D-Los Angeles), Jim Nielsen (R-Biggs), and Nancy Skinner (D-Berkeley).
 

The committee will be on call every day from now until June 11, and are scheduled next week to address human services issues.  The California Constitution requires the Legislature to pass the state budget by midnight on June 15th of every year, which rarely happens.
 

Of particular interest in the two budgets is how each addresses corporate income tax and credit issues.  The Assembly budget includes a proposal to suspend the authorization for use of the net operating losses (NOLs) for three years, and delay new corporate tax treatments for NOL carrybacks, tax credits, and income apportionment.  The Senate budget proposes to suspend use of NOLs for two years, completely eliminate the carryback provision, and delay new corporate tax treatment for tax credits and the income apportionment.
 

CCTA provided testimony before the Senate budget subcommittee on tax issues that any delay of the SSF income apportionment methodology should also delay elimination of the “cost-of-performance.”  CCTA has argued that the statue authorizing the cost of performance apportionment of income should be reinstated for multistate businesses that can demonstrate that they make a significant contribution to California’s economy.  Both versions of the budget estimate that the proposed delay will save $2.1 billion in revenue.
 

The Senate budget also includes a proposal that would require Internet retailers to report to the state Board of Equalization certain information regarding sales to California residents.  This trailer bill language would also require Internet retailers to post a notice on their websites informing customers of their obligation to remit the Use Tax to the state.  The Senate estimates that this will generate $10 million in new revenue to the state.
If you are interested in following the conference committee’s agendas, they can be found at website.  Hearings can also be followed on The California Channel or the Senate and Assembly websites.
 

 

Cable Television Industry Procurement Practices.  Cable Television Industry Procurement Practices.  Assembly Bill 2758 (Bradford) would require any cable television corporation with annual revenues exceeding $25 million to comply with rules developed by the California Public Utilities Commission (CPUC) to procure or contract for 15 - 20 percent of products and services with women, minority and disable veterans businesses and to submit an annual report  to the CPUC.  The CPUC currently imposes the same requirement on electrical, gas, water, and telephone corporations.  This bill would also expand the utility purchasing requirement to include renewable energy, wireless communications, broadband, smart grid, and rail projects. 

 

On June 1, 2010, AB 2758 was amended to remove the cable industry from the bill.  The amended AB 2758 was approved on the Assembly Floor this week and now moves to the Senate.

 

Distribution of White Pages.  Senate Bill 920 (Yee) would allow consumers to opt out of receiving telephone directories delivered at their front doors. The bill would require language be printed on directories explaining how consumers could request to opt out.  SB 920 was heard on the Senate Floor this week and failed passage (12-18).

 

Trial De Novo.  Senate Bill 1113 (Wolk) would allow the Franchise Tax Board (FTB) to File a Notice of Action for a Trial De Novo in Superior Court for Tax cases involving disputes of $100,000 or more.  Under existing law, FTB decisions may be appealed to the Board of Equalization (BOE) with the BOE’s ruling considered final.  SB 1113 would give the FTB another opportunity to find taxpayers liable.

 

This proposal was largely opposed by the business community on the basis that it would limit taxpayer rights, force many taxpayers to settle meritorious claims and eviscerates important check on FTB action.  SB 1113 was heard on the Senate Floor this week and failed passage (15-20).