California Assembly Bill AB2641 Latest Draft

 BILL NUMBER: AB 2641AMENDED BILL TEXT AMENDED IN ASSEMBLY APRIL 27, 2010 AMENDED IN ASSEMBLY APRIL 13, 2010 INTRODUCED BY Assembly Member Arambula (Coauthor: Assembly Member Solorio) FEBRUARY 19, 2010 An act to add Section 41 to the Revenue and Taxation Code, relating to taxation. LEGISLATIVE COUNSEL'S DIGEST AB 2641, as amended, Arambula. Tax expenditures. Existing laws imposes various taxes and allows specified credits, deductions, exclusions, and exemptions in computing those taxes. Existing law requires the Department of Finance to provide an annual report to the Legislature on tax expenditures by no later than September 15 of each year, and requires that annual report to include, among other things, a comprehensive list of tax expenditures exceeding $5,000,000 in annual cost. This bill would require the Legislature, on and after January 1, 2014, to review each "tax expenditure subject to limitation" and each "tax expenditure not subject to  limitation",   limitation,"  as defined, for the purpose of ensuring that only tax expenditures with a measurable benefit  ,   as defined,  are provided by the state. The bill would require the Legislature, based on the information from the review, to assess whether each tax expenditure not subject to limitation meets stated objectives and for each not meeting its objectives, to restrict or eliminate that tax expenditure not subject to limitation in accordance with specified procedures. The bill would specify that each tax expenditure subject to limitation shall cease to be operative and shall be repealed on January  1, 2015, and on January 1 of every 5th year thereafter   1 of the 5th calendar year after th   e calendar year of enactment  . Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 41 is added to the Revenue and Taxation Code, to read: 41. (a) On and before January 1, 2014, and every fifth year thereafter, notwithstanding any other law, the Legislature shall review each tax expenditure subject to limitation and each tax expenditure not subject to limitation, for the purpose of ensuring that only tax expenditures with a measurable benefit are provided by the state. The review shall include, but not be limited to, all of the information required pursuant to subdivision (a) of Section 13305 of the Government Code, except that the list required pursuant to paragraph (1) of subdivision (a) of Section 13305 shall be provided for all tax expenditures, regardless of the annual cost of the tax expenditure. (b) (1) Based on the information contained in the review, the Legislature shall assess whether each tax expenditure not subject to limitation meets the objectives provided in the statute adding or amending that tax expenditure and provides a measurable benefit. (2) For each tax expenditure not subject to limitation that fails to meet the objectives provided, the Legislature shall determine whether to restrict or eliminate that tax expenditure not subject to limitation. (3) If the Legislature chooses to restrict or eliminate a tax expenditure not subject to limitation pursuant to paragraph (2), it shall do so by enacting a statute in which any expected revenue increase resulting from that restriction or elimination is offset by another tax expenditure or multiple tax expenditures of an amount equal to or greater than the expected tax increase resulting from that tax expenditure not subject to limitation, so as to ensure that the statute is revenue neutral. (c) Each tax expenditure subject to limitation shall cease to be  operative and shall be repealed on January 1, 2015, and on January 1 of every fifth year thereafter,   operative and shall be repealed on January 1 of the fifth calendar year after the calendar year of enactment,  unless a later enacted statute that is enacted before that date deletes or extends the date on which it becomes inoperative and is repealed. (d) For purposes of this section, the following definitions apply:  (1) "Measurable benefit" means a metric that can quantify the measurable social, economic, or other public benefit to the state attributable to the tax expenditure.   (1)   (2)  "Tax expenditure subject to limitation" means any credit, deduction, exclusion, exemption, or any other tax benefit provided by the state that is enacted on or after the effective date of this section.  (2)   (3)  "Tax expenditure not subject to limitation" means any credit, deduction, exclusion, exemption, or any other tax benefit provided by the state that was enacted prior to the effective date of this section.