BILL NUMBER: SB 1160INTRODUCED BILL TEXT INTRODUCED BY Senator Dutton FEBRUARY 18, 2010 An act to amend Section 11346.3 of, and to add Sections 9143.5 and 13305.5 to, the Government Code, relating to state fiscal analysis. LEGISLATIVE COUNSEL'S DIGEST SB 1160, as introduced, Dutton. State fiscal analysis. (1) Existing law requires the Legislative Analyst, operating under the authority of the Joint Legislative Budget Committee, to provide the Legislature with specified fiscal analyses of matters affecting state finances. This bill would require the Legislative Analyst, to the extent that any fiscal estimate of the annual state budget involves one or more proposed changes in state tax law having a designated fiscal impact, to prepare the estimate, except as specified, on the basis of assumptions that estimate the probable behavioral responses of taxpayers and others to the proposed changes, and to include in the fiscal estimate a statement identifying those assumptions. (2) Existing law requires a state agency proposing to adopt, amend, or repeal any administrative regulation to assess the effect of the proposed regulation on jobs and businesses within the state. This bill would require the assessment to be performed using a dynamic revenue analysis technique. (3) Existing law requires the Department of Finance to perform various duties pertaining to the preparation and analysis of the annual state budget, and the fiscal analysis of legislative proposals before the Legislature. This bill would require the Department of Finance, to the extent that any fiscal impact estimate involves one or more proposed changes in state tax law having a designated fiscal impact, to prepare the estimate, except as specified, on the basis of assumptions that estimate the probable behavioral responses of taxpayers and others to the proposed changes, and to include in the fiscal estimate a statement identifying those assumptions. 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. It is the intent of the Legislature to ensure that, to the extent reasonable, dynamic estimating techniques are used in predicting the fiscal impact of proposals to enact laws and promulgate regulations. SEC. 2. Section 9143.5 is added to the Government Code, to read: 9143.5. To the extent that any fiscal estimate prepared by the Legislative Analyst regarding the annual state budget involves one or more proposed changes in state tax law, the Legislative Analyst shall prepare the estimate, except where it is unreasonable to do so, on the basis of assumptions that estimate the probable behavioral responses of taxpayers, businesses, and other citizens to those proposed changes, and shall include in the fiscal estimate a statement identifying those assumptions. The requirement set forth in this section applies only to a proposed change in state tax law determined by the Legislative Analyst, pursuant to a static fiscal estimate, to have a fiscal impact in excess of ten million dollars ($10,000,000) in any one fiscal year. SEC. 3. Section 11346.3 of the Government Code is amended to read: 11346.3. (a) State agencies proposing to adopt, amend, or repeal any administrative regulation shall assess the potential for adverse economic impact on California business enterprises and individuals, avoiding the imposition of unnecessary or unreasonable regulations or reporting, recordkeeping, or compliance requirements. For purposes of this subdivision, assessing the potential for adverse economic impact shall require agencies, when proposing to adopt, amend, or repeal a regulation, to adhere to the following requirements, to the extent that these requirements do not conflict with other state or federal laws: (1) The proposed adoption, amendment, or repeal of a regulation shall be based on adequate information concerning the need for, and consequences of, proposed governmental action. (2) The state agency, prior to submitting a proposal to adopt, amend, or repeal a regulation to the office, shall consider the proposal's impact on business, with consideration of industries affected including the ability of California businesses to compete with businesses in other states. For purposes of evaluating the impact on the ability of California businesses to compete with businesses in other states, an agency shall consider, but not be limited to, information supplied by interested parties. It is not the intent of this section to impose additional criteria on agencies, above that which exists in current law, in assessing adverse economic impact on California business enterprises, but only to assure that the assessment is made early in the process of initiation and development of a proposed adoption, amendment, or repeal of a regulation. (b) (1) All state agencies proposing to adopt, amend, or repeal any administrative regulations shall assess , by using a dynamic revenue analysis, whether and to what extent it will affect the following: (A) The creation or elimination of jobs within the State of California. (B) The creation of new businesses or the elimination of existing businesses within the State of California. (C) The expansion of businesses currently doing business within the State of California. (2) This subdivision does not apply to the University of California, the Hastings College of the Law, or the Fair Political Practices Commission. (3) Information required from state agencies for the purpose of completing the assessment may come from existing state publications. (c) No administrative regulation adopted on or after January 1, 1993, that requires a report shall apply to businesses, unless the state agency adopting the regulation makes a finding that it is necessary for the health, safety, or welfare of the people of the state that the regulation apply to businesses. SEC. 4. Section 13305.5 is added to the Government Code, to read: 13305.5. To the extent that any fiscal impact estimate prepared by the Department of Finance involves one or more proposed changes in state tax law, the department shall prepare the estimate, except where it is unreasonable to do so, on the basis of assumptions that estimate the probable behavioral responses of taxpayers, businesses, and other citizens to those proposed changes, and shall include in the fiscal impact estimate a statement identifying those assumptions. The requirement set forth in this section shall apply only to a proposed change in state tax law determined by the Department of Finance, pursuant to a static fiscal estimate, to have a fiscal impact in excess of ten million dollars ($10,000,000) in any one fiscal year.