Assembly Standing Committee on Revenue and Taxation

All right, good afternoon, and welcome to this hearing of the Assembly Committee on Revenue and Tax. I would like to remind the advocates here in the room and watching remotely to please submit position papers at least one week prior to the committee hearing in order for them to be reflected in the bill's analysis.

During bill presentations, we will take no more than two primary witnesses in support and two primary witnesses in opposition or with concerns. These witnesses will have two minutes each to provide testimony.

All subsequent witnesses should state their name and their organization, their position on the bill only. I will remind everybody that pursuant to the committee rules, bills with a fiscal impact of + or - 150,000 will not be eligible for a vote immediately after their presentation.

Instead, they will be referred to our suspense file, which we will take up at a later hearing. Item number six, AB 2006. Mathis has been removed from this hearing by the author. It looks like we have a quorum. Ms. Highland, please call the roll.

[Roll Call]

We have a quorum

All right, a quorum has been established. With that, we're going to move to the first item on our agenda, AB 1828, by Assemblymember Waldron. And without objection, I would also like to move our other vote item up to number two. That's item number five, AB 1983, Maienschein. So, Ms. Waldron, whenever you're ready, please beginning. Good afternoon.

Good afternoon, Madam Chair and members. Thank you for having me here today. I am here to present AB 1828 to extend the sunset dates on the native California Wildlife Rehabilitation Voluntary Tax Contribution Fund and the Rare and Endangered Species Preservation Voluntary Tax Contribution Program until January 1, 2032.

I am supporting the Committee's suggested amendments. Nonprofit rehabilitation organizations play a significant role in safeguarding California's native wildlife. They work tirelessly to rescue, rehabilitate, and care for injured, sick, or orphaned wildlife.

They provide vital medical treatment, nurturing, and protection to ensure these animals can return to their natural habitats. Back in 2017, I authored AB 1031, creating the Native California Wildlife Rehab Fund, allowing taxpayers to choose to donate when filing their taxes.

Since the inception of both of these funds, we have garnered nearly 5 million in voluntary contributions. As a trained native California songbird rehabilitator myself, I have rescued and raised countless injured or orphaned birds.

I can personally attest to the great work these nonprofit wildlife rehab organizations do to enhance the vitality of our precious native wildlife. The opportunity to contribute to these funds is currently set to expire this coming January 1, 2025.

Today, my Bill, AB 1828, will extend the opportunity for Californians to continue supporting the Native California Wildlife Rehabilitation Voluntary Tax Contribution Fund and the Rare and Endangered Species Preservation Voluntary Tax Contribution Program until January 1, 2032.

With me today are Kim Delphino, an advocate for conservation with the Defenders of Wildlife and Earth Advocacy, and Jennifer Fearing, an expert in Wildlife Policy and Advocacy.

Whenever you're ready.

Thank you so much. Good afternoon, Madam Chair and members. Jennifer Fearing, on behalf of San Diego Humane Society, who, along with dozens of other nonprofit native wildlife rehab orgs like our own project wildlife, have received grant funds from the Department of Fish and Wildlife made possible from the generosity of taxpayers through the Native California Wildlife Rehab Voluntary Tax Contribution Fund since 2018, as the sole government source of funding for our work, we strongly support extension of the fund for another seven years.

Project Wildlife has grown over the last decade and one of the largest wildlife rehab organizations in the country with 43 staff and 242 volunteers. Last year, we cared for 10,092 injured, orphaned and sick wildlife animal patients across 242 species.

This Fund has been an unquestionable success with taxpayers, resulting in grants totaling more than $2 million awarded to 55 licensed nonprofit rehab organizations to date.

The funding supports our diverse community of rehab work, going to things like facility operations, innovations in animal care, enclosure design improvements, dietary and behavioral enrichment, and wildlife education.

Lastly, I'll just mention our strong support for the inclusion of language authorizing advanced payments as an option to ensure grant funds can get out, expeditiously limiting administrative burden for both the state and these nonprofits.

Just given the very small size of each of these grant awards, this authorization is justified and will help ensure more equitable and timely distributions. We thank the author for her long standing personal and professional support for this work, and we urge your aye vote on AB 1828.

Thank you, Ms. Delphino

Thank you. Good afternoon, Madam Chair and Members. I'm here on behalf of Defenders of Wildlife and the California Native Plant Society, and I'm speaking to the Rare and Endangered Species Preservation Voluntary Tax Contribution Program.

This program has been in effect since 1983 and has provided important funding to protect rare, threatening and endangered plant animals within California. It funds, on average, about a $0.5 million a year to the Department of Fish and Wildlife.

California has the most native animal and plant species in any other state in the nation, and the greatest number of endemic species means you can find them nowhere else but in California.

Some of the work funded through this program includes surveying for bobcats and tricolor blackbirds, as well as coordinating community science projects such as the short eared owl survey and the North American Breeding Bird Survey. It also supports efforts to restore habitat for pollinators, including the western monarch butterfly.

And the fund supports efforts to study, map, and conserve and protect California's native plants and natural communities. This is just a small sample of all of the work that has been funded through this particular fund. We'd like to thank the author for including the extension of the Rare and Endangered Species Preservation Voluntary Tax Contribution Program, and we would urge your aye vote for this bill. Thank you.

All right. Thank you very much. Do we have any other speakers in support?

Good afternoon. Lizzie Kutzona here on behalf of the Humane Society of the United States. In support. Thank you.

Thank you.

Hi, Nicholas Sackett for Social Compassion in Legislation. In support.

All right, do we have any witnesses in opposition? Questions or comments from the Committee? All right, Ms. Waldron, would you like to close, please?

Thank you. It's truly remarkable how generous California taxpayers are in supporting our wildlife preservation and also rehabilitation. So this is an important fund, and I urge an aye vote. Thank you.

All right. Very good. Thank you. Do I have a motion in a second? All right. Motion by Assemblymember Grayson. A second by Assemblymember Ta. And the motion is do pass as amended to appropriations. Please call the roll.

[Roll Call]

That Bill is out five to zero.

Thank you so much.

Thank you. And next up we have Assemblymember Maienschein. Whenever you're ready.

Thank you very much, Madam Chair and members, I'd like to start by accepting the Committee Amendments as proposed in the analysis, AB 1983 would reestablish the prevention of animal homelessness. I've reached a point where I need my glasses. I apologize.

And cruelty. Voluntary tax Contribution Fund. In the State of California, veterinary care is undergoing a concerning transformation, costs continue to rise as access to appropriate care becomes more elusive. Unfortunately, this has created a pet overpopulation situation, overburdening shelters citizens and the California community at large.

AB 1983 seeks to reintroduce a voluntary contribution that would play a crucial role in funding programs dedicated to addressing pet overpopulation. The contributions would help provide no fee and low fee spay and neuter services.

AB 1983 allows Californians to make a real impact in their community by voluntarily contributing a portion of their taxes to a cause that would address pet overpopulation and reduce the need for euthanasia or abandonment. I respectfully ask for your aye vote. And here to testify with me is Nick Sackett, social compassion and legislation director of Legislative Affairs.

Thank you, Mr. Maienschein.

Hi, Chair. Thank you, Committee Members my name is Nicholas Sackett, Director of Legislative Affairs for Social Compassion and Legislation, proud sponsor of this bill. First of all, I want to thank Assbemlymember Maienschein for taking up this measure.

I also want to thank the Chair and the Chair's staff for helping us get through this as an animal rights organization. This is the first time we've been in Revin tax, so getting used to how to navigate this Committee.

But I want to mention to you that our state spends over $400 million a year operating our animal control and animal shelters. And as many of you have seen, and I'm sure have heard from many of your constituents this year, our shelters are under a lot of stress.

And the only thing to really get this under control is preventative measures. And that's what this program does. It gets money for spaying neuter, and that's really the only thing that will get the pet overpopulation issue under control.

So we thank you for considering it. Thank you. Getting on the road. And I also want to mention we are crafting this legislation to allow CDFA to grant it out in conjunction with the Pet Lovers Fund, money that they get from the DMV. CDFA has said that they're granting this out to the same people for the same reasons, but in two different tracks.

So this bill tries to get rid of some of that overlap work and efficiency and let them grant it out in one grant proposal. Thank you.

Katie Pettybone, volunteer at large for a variety of animal organizations, including the Malinois and Dutch Shepherd Rescue, the Second Chance German Shepherd Rescue, the El Dorado German Shepherd Rescue, Grandma Betty's Animal Shelter, and the list goes on. I can't tell you how much we need this. It would be crucial. And I'm a huge supporter of this, so please vote aye. Thank you.

Thank you. Ms. Pettybone, I know how passionate you are about this issue, driving all over California to pick up strays. So we really appreciate all the work that you do. Do we have any other speakers in support?

Lizzie Kutzona here on behalf of the Humane Society of the United States in support. Thank you.

Right. Any speakers in opposition, questions or comments from the Committee?

Yes. Thank you, Madam Chair, I just had a question that I like to thank the author for bringing it with me. I just had a question that I just want to clarify that the money that raised by this fund can only use or spend in neuter effort, and none of it will be going toward animal neuter nation. Right. So the money that raised by this fund can only be used for spay and neuter.

Yeah. All the money will go to organizations to conduct spay and neuter surgeries.

Okay, thank you.

Would you like to close?

Thank you very much, Madam Chair and members. And I would respectfully request an aye vote.

All right, very good. That bill has been moved by Assemblymember Bains, seconded by Assemblymember Gipson. And the motion is do pass to appropriations, as amended. You are taking the Amendment to revert back to the original name?

Correct.

Okay, good. Ms. Highland, please call the roll.

The motion is do pass is amended to appropriations.

[Roll Call]

That Bill is out 6-0.

Thank you, Madam Chair, members.

All right, thank you very much. All right. Why don't we go ahead and get Mr. Patterson's vote while Assemblymember Bauer Cahem is up with AB 1860. Assemblymember Patterson.

The bill number is AB 1828, item number one. It's to pass, submitted to appropriation, and the bill has passed.

[Roll Call]

All right, whenever you're ready.

Thank you, Madam Chair and members. First, I want to thank the Committee staff for their excellent work and ongoing help on this legislation. I'm here today. Present AB 1860, which ensures medical and student debt bought and forgiven by nonprofit organization, is exempt from California personal income tax.

Currently, California residents hold $142 billion in student debt. The burden falls disproportionately on marginalized groups like women, low income communities, and communities of color.

Debt forgiveness by churches and other nonprofits has become an exciting and critical way communities come together to alleviate this financial burden. California law does not currently specify how this type of canceled debt should be taxed.

AB 1860 is a simple bill that will clarify state law ensuring debt canceled by a nonprofit is not taxed as income. With me today supporting the bill is Dani Kando-Kaiser, representing the California Low Income Consumer Coalition.

Yes. Good afternoon and thank you, Chair and members. Dani Kando-Kaiser. I'm the policy advocate for California Low Income Consumer Coalition as well as the National Consumer Law center, both in support.

I'm here to respectfully urge your aye vote on AB 1860 to create a personal income tax exemption on student and medical debt that's been canceled by a nonprofit. As the Assemblymember has already said, this type of debt is a financial burden carried disproportionately by low income consumers and borrowers of color.

These are the communities that click and NCLC serves directly. These communities continue to face barriers to financial well being due to a lack of resources, language, access, and a history of discrimination. As people around the country in California continue to struggle with significant debt, we're now seeing this nonprofit community organizations coming together to relieve this tremendous burden.

For example, one church in Southern California was able to use donations from parishioners to erase the debt for 5,555 low income households in their community.

This bill would support the work these nonprofits are doing and ensure individuals are not being penalized with a high personal income tax. The truth is that most of us know the burden of student debt, and it's not hard for any of us to imagine being hit with a bill for tens of thousands of dollars in emergency medical expenses. And for many Californians, this is a debt that they simply will never be able to pay back.

If a nonprofit organization somehow raises the money to forgive that debt, it does not make any sense for the government to therefore tax someone and saddle them all over again with another unpayable debt. For the reasons I've stated, I respectfully urge your aye vote. Thank you.

Okay. Do we have any other speakers in support?

No. I mean, not that I know of.

Yes. Someone surprised.

Hi. Andrea Rivera, on behalf of the California Pan Ethnic Health Network, in support. Thank you.

Hi. Good afternoon. Janice O'Malley with APSME California in support.

Any speakers in opposition? Question or comments? I do have a question. So I know that there's. What is rip is one of the nonprofits. Obviously, the biggest issue is that people have, or one of the big issues is that their credit scores go way down. Do these nonprofits work at removing that debt from their credit reports? Because that would be, often. These folks don't know that that's a possibility.

That's an excellent question. I don't know with specificity if these nonprofits, how they're taking into that. So let me get back to you, if that's okay, because I know that it changes from nonprofit to nonprofit. Some are based, some are church based, some are community based, and they may have different ways of handling this and sharing that information with consumers.

Yeah, I think that would be, might even be a good part of the bill to make sure that they help with that second part so they really are getting the true benefit of their debt being canceled.

It's a great idea.

Ms. Bauer-Kahan, would you like to close?

Well, respectfully ask for an aye vote. Is that what you say when it's going on suspense?

I don't know. Well, without objection, this bill is going to be referred to our suspense file. And we will be voting at a later date. Thank you very much.

Then I will ask for an aye vote at a later date. Thank you.

Very good. So we are on item 3/4. Mr. Peterson Patterson sorry about that.

Thank you, Madam Chair. I appreciate the opportunity to present AB 1865. As we all know that the California real estate market does present some very significant affordability hurdles for first time home buyers. When Sharon and I were married in 1967, we were able to buy our first home in 1968.

All three of our children, it took from the time they were married to getting their first home almost a decade. We were at a time when affordability and the access of home ownership for two working people was a reality.

And 10 years of lost equity, 10 years of lost homeownership. But thank goodness they all three are in homes. But what once was seen as something that was a symbol of stability, a financial achievement, many people find that homeownership is almost a burden to figure out ways to try to achieve an unachievable goal. According to the California Association of Realtors, in quarter four, the reported median home price was $833,170.

With only 15% of households in California able to afford that financial achievement, AB 1865 seeks to reclaim the very essence of what buying a home used to represent, a tangible step towards financial security, stability, and a pathway to generational prosperity.

By introducing homeownership savings accounts and providing tax relief for qualified individuals, this bill aims to offer a helping hand to those who are navigating an increasingly unaffordable housing market.

AB 1865 serves as a vital step toward bridging the wealth gap by providing tangible support for aspiring homeowners. This is offering them a pathway to accumulate generational wealth and fostering financial equity in our unserved and underserved communities.

Here to testify and support is Vanessa Chavez of the California Association of Realtors. But I would like to also put on the record that not only the realtors, but the California Building Industry Association, Habitat for Humanity, and the California Catholic Conference are all in support.

Vanessa Chavez the California Association of Realtors.

Madam Chair Members Vanessa Chavez with the California Association of Realtors here in support of AB 1865. This measure simply seeks to provide more tools for emerging homeowners to use for down payment or closing costs on their home.

Just this last year, the Legislature committed funding, as noted in the analysis, for the Dream for All program, which is a shared equity program that allows first time homebuyers to gain access to the down payment of their first home.

While the program serves as a great resource when there is ample funding to sustain the program, there is also a need of other sources of investment to continue to preserve the dream of home ownership within the state. This is ever more important as California currently ranks third lowest in the nation for homeownership.

AB 1865 would also work in tandem with those who apply for the Dream for All program by covering all, if not most, of the closing costs that are associated with the transaction. As the Dream for All program typically only covers 20% of the home purchase, which allows for a lower monthly payment to borrowers.

As we continue to explore ideas on how to encourage wealth building opportunities for the next generation, it is important to provide resources to bridge the widening wealth gap that persists among our diverse communities. We respectfully ask for your aye vote on this measure. Thank you.

Thank you very much. Any other witnesses in support?

Hello, Madam Chair, members. Thank you, assemblymember, for introducing this important measure, testifying on behalf of the Habitat for Humanity California in support.

Thank you. Any witnesses in opposition?

Hi. Good afternoon. Katie Hardeman with the California Teachers Association. Unfortunately, in opposition to this measure due to the impacts on General Fund revenues and Proposition 98. Thanks.

Any other witnesses? Questions or comments from Committee?

Question.

Assemblymember Grayson.

Just for clarification, I thought I heard it from the witness's testimony, but I wanted to clarify because I didn't see it in the language. Is this program you're suggesting limited to only first time home buyers?

I don't believe it is. I think just depending on how the Committee chooses to refine the impact of the program, it might be beneficial to limit it to first time home buyers. Just like the Dream for All program has been limited to just first time home buyers.

I guess. I have similar questions in the bill, as it stands, there's no income limits. Was that what was desired?

I'll defer to the author of the measure. I don't want to speak for him.

Okay. So it's the preceding three years. You just need to not have had an ownership in the last three years. So it's not first time home buyers. As long as you haven't owned a home in the last.

Which is similar to FHA guidelines that you can apply for the FHA loan, so long as you haven't owned a home or bought home within the last three years. So I'm assuming it's coupling it to that.

Thank you for that clarification.

Okay. And then I did have one other question, and hopefully we can answer that. This is modeled after individual retirement accounts, but the tax benefits are actually both at the front end and at the back end. What was the reason for that? That's more generous than the other retirement accounts.

Well, I think the reason is that the need is great, and we want to be able to present an opportunity and a possibility for people to be able to, of all income stratas and to be able to know that when they put it in, it's tax exempt and when they take it out, they're not going to be having to bear a tax burden.

Because to not do this, I think, defeats the entire purpose of a significant effort to help future homebuyers provide for that down payment. I don't know. That ought to in some way give us heartburn. I'm hoping we could see it as another example of an encouragement.

And then with the permission of the Chair and the author. So I think one of the things that we need to take into consideration when we're moving through some of these policies, while the IRA does provide an exemption for the withdrawal, there are specific limitations.

So you have to pay back the loan when you move jobs. You have to pay that loan back within 60 to 90 days. Typically there is interest that needs to be paid back.

Typically, you have to pay that loan back within 10 years, and then you could pretty much only withdraw, depending on your provider, $50,000 at a time. And so when you're talking about someone who's within the age range of potentially 27 and 35, removing that money from their IRA is going to be detrimental to them later on because the compounding interest is going to be beneficial for those periods.

So I think when we're talking about different tools in the toolbox, this is obviously another resource that's available because there aren't many resources for down payment or closing costs that are available at this time.

All right. Thank you. Would you like to close?

Would like to just note that my staff and staff of this Committee have had some conversations about technical fixes and some of those kinds of things. And I want you to know that we're certainly open to some of those kinds of technical fixes and would be willing to accept Amendments to those particular concerns. But we have not seen language for it. But we welcome that help.

We want to make this as perfect as we can, but we also want to make sure that we provide an opportunity for this to pass.

All right. Well, I really appreciate it. Obviously, housing affordability is a huge issue in California, and we all want our children to be able to buy homes and start being invested in their communities. So appreciate you bringing this forward. Thank you.

Appreciate the staff working on this as well. And we're certainly open to the technical fixes suggested to my staff.

All right, and with that

And thank you.

This bill will be referred to our suspense file. All right. Assemblymember Sanchez, whenever you are ready, you may begin.

Thank you Madam Chair and members. I want to thank the Committee today for hearing this Bill. I am proud today to present AB 1867, a measure that would make homeownership more affordable for working and middle class families. California is in the midst of a homeowner's insurance affordability and availability crisis. Major insurance providers are being forced out of the state by unreasonable regulations and expectations from Sacramento. This has left California property owners with fewer, but more expensive options and in some cases, bare bones coverage.

Under the fair plan, though the insurance Commissioner is committed to needed reforms, his planned initiatives will likely increase premiums in the short run to offset this cost and make home ownership more affordable. I've introduced AB 1867 to allow taxpayers to deduct the full cost of homeowners insurance premiums for their primary residents in California from their tax income. Doing so will help many Californians achieve and maintain the dream of homeownership. Testifying with me today is Scott Kaufman of Howard Jarvis Taxpayers Association.

Hello, as was stated, I'm Scott Kaufman, the Legislative Director for the Howard Jarvis Taxpayers Association. I'm here today in support of AB 1867, which would allow California taxpayers to deduct the full cost of homeowners insurance premiums for their principal residents from their income tax. Homeowners insurance premiums have been steadily increasing over the past few years and currently show no signs of stopping.

Additionally, the exodus of insurers from the market and restrictions on new policies have left many homeowners with no choice but to resort to costly and limited coverage options. For many, especially those in high wildfire risk areas, the exorbitant costs of home insurance have prompted them to sell their homes and to leave California altogether. AB 1867 offers a reasonable intervention in the tax code that would offset the cost of homeowners insurance premiums for Californians starting in 2025 and sunsetting in 2029.

By providing California homeowners a tax deduction for their homeowners insurance premiums, AB 1867 offers tangible relief to homeowners grappling with escalating insurance expenses and a lack of availability. Thank you for your time and I ask that you support AB 1867 at the appropriate time.

Thank you very much. Are there any other witnesses in support? And we'll go to witnesses in opposition.

Hi, Katie Hardeman with the California Teachers Association. In opposition again due to the impact on General Fund revenues and Proposition 98. Janice O'Malley. With AFPSME California in respectful opposition as well. Thank you.

Thank you. Questions from the Committee. I just had one clarification. You mentioned that it would be restricted to middle and lower income taxpayers. I didn't see that in the language, but is that the intention?

It is, and we're happy to work with the Committee on any Recommendations as well.

Okay. All right. Would you like to close?

Thank you. AB 1867 is a reasonable measure that will provide much needed relief to California homeowners. I respectfully ask for your.

I vote.

I appreciate you working on this problem. Obviously, insurance has been a huge issue here in California with a lot of homeowners in my district unable to get fire insurance anymore and others paying extremely high costs. So appreciate you trying to tackle the issue.

Thank you.

Thank you. And with that. Yes.

Okay. You said that already.

No, I'm moving to that. So without objection, we are going to refer that to our suspense file.

Thank you.

Thank you.

Sorry.

That's okay. All right. Okay. All right. With that, we are adjourning our meeting of the Revenue and Taxation Committee.