Assembly Standing Committee on Revenue and Taxation

All right, good afternoon everybody and welcome to this hearing of the Assembly Committee on Revenue and Taxation. As always, please make sure to submit position letters at least one week prior to the Committee hearing in order for them to be reflected in the bill's analysis. Additionally, pursuant to our Committee rules, bills with a fiscal impact of plus or -150,000 will be referred to our suspense file, which will be taken up at a later meeting. It looks like we have a quorum, Mr. Ruff, please call the role.

Irwin.

Here.

Erwin Here. Ta?

Here.

Ta here. Bains. Gipson.

Here.

Gipson. Here. Grayson?

Here.

Grayson Here. Jim Patterson.

Here

Jim Patterson. Here. Luce Rivas. You have a quorum.

All right, we have a quorum in good timing. Mr. Mathis, you are up. This is file item two, AB 2006 by Assembly Member Mathis. Assembly Member, whenever you are ready, please begin.

All right, well, good afternoon chair Members. I'm here today to present AB 2006. AB 2006 is a common sense measure to address the increasing financial hardship facing many families across California. AB 2006 would expand the current state sales tax exemption for prescription medication to also encompass all over the counter medications. California has the highest statewide sales tax rate in the country at 7.25%, and is ranked 9th by the Tax Foundation in combined state and local sales tax rates.

The impact of such a high tax rate is compounded significantly by the increased cost of living crisis, with data from CalMatters showing that it costs 46.8% more to live in California on the national average and that California has the nation's highest rate of functional poverty as measured by the US Census Bureau, over the counter medications are an affordable alternative to prescription medications, offering consumers the option to self treat mild to moderate symptoms in place of visiting a healthcare provider.

This option has the net benefit of significantly reducing the cost incurred by our healthcare system. According to the Consumer Healthcare Products Association, every dollar spent on over-the-counter medication saves the US healthcare system $7.33, resulting in an overall annual savings of $167.1 billion. The recent affordability of some over-the-counter medications has become a barrier to access for some Californians. This barrier is compounded by the considerable state sales tax imposed during the purchase of these necessary products.

The state has a responsibility to provide the necessary relief for Low-income, disadvantaged, and vulnerable families and communities that are already struggling. AB 2006 helps alleviate the financial burden facing millions of Californians and ensures that families are not being placed in the predicament of forced to Forgo, providing potentially life-saving and life-changing medications for their families. With me today was supposed to be Lindsay Gullahorn of Capital Advocacy, speaking on behalf of CalRealtors. There she is. You called me up quick.

You'll need it

Can you hear me?

We move quickly in this Committee.

Good afternoon. Lindsay Gullahorn with Capital Advocacy here today on behalf of the California Retailers Association's Community Pharmacy Coalition, pleased to support AB 2006. One of the primary goals of the Community Pharmacy Coalition is to increase access to medications and healthcare services at pharmacies for Californians. And nearly 90% of Californians live within 5 miles of a community pharmacy.

This is where they get a lot of their health care services, medications, consultations, vaccinations, testing, number of other services, and many of them also obtain their over the counter medications at their local pharmacy. As has been discussed, California has the highest statewide sales tax rate in the nation, which has a disproportionate negative impact on Low income Californians. Every consumer in California pays the same sales tax rate regardless of their income level.

And we need more solutions that reduce financial pressure on Low income households and ensure that they can get the goods and services they need. And by expanding the existing sales tax exemption for prescription medications to over-the-counter medications. AB 2006 is one of these solutions and will help ensure Californians can obtain their necessary medications. So for these reasons, we are pleased to support AB 2006.

Thank you very much. Do we have any other witnesses in support? Any witnesses in opposition? All right, questions or comments from the Committee? I just have one question. The price tag on this looks like it's about 180 million. So what is your response to this policy being, obviously, we are having budget issues this year.

Well, madam, sure. That's very simple. There's two things. The overall annual savings is 167 billion. Our healthcare system is in dire need. We have ERs that are shutting down. We have hospitals that are shutting down. We have people that can't get in to see the Doctor.

And if we can reduce this tax and get rid of it so families shouldn't have to pay added taxes for if your kid needs a Tylenol, if your parent needs an aspirin, if you got a bum knee, why are you being taxed on that? And so I see this as a way to help the healthcare system overall and help reduce costs on families that are already out there struggling.

All right, thank you very much. And would you like to close?

I'll take that as my close.

All right, thank you. And so, without objection, this Bill is going to be referred to our suspense file. Thank you very much.

All right.

Next up, we have file item one, and that is Assembly Member Addis, AB 2197, welcome.

Well, thank you chair, staff, and advocates that are here today. I am here to present 2197 the Whale Tail Grant Act, which helps foster coastal protection, preservation, and stewardship. The Protect Our Coast and Oceans Voluntary Tax Fund allows Californians to directly contribute to the California Coastal Commission's Whale Tail Grant Program. This grant is used to support experiential education and stewardship of California's coasts and watersheds through projects such as educational programs, climate change awareness, and shoreline cleanup and enhancement with community involvement.

Additionally, the California Coastal Commission aims to include communities that have historically had few opportunities to engage with these kinds of projects due to geographic or systemic barriers. For example, of the 56 grants awarded in the 2022-2023 fiscal year, 13 went to inland communities, 49 went to groups focused on Low-income and socioeconomically disadvantaged communities, and 39 went to groups focused on black, indigenous, and people of color or BIPOC communities.

The tax Fund provides a significant amount of money for the grant, with it generating over $3.3 billion from around 248,000 individual donations since its creation in 2013. And without further action, the fund is set to expire on January 1, 2025, causing the Whale Tail Grant Program to potentially lose hundreds of thousands of dollars of support each year.

So 2197, AB 2197, the Whale Tail Grant Act will extend the operative date of the Protect Our Coasts and Oceans Voluntary Tax Fund through January 1, 2032, and we have two witnesses here today, Sarah Christie of the California Coastal Commission and Chris Mawad of the West Marin Environmental Action Committee, and I'll turn it over to them.

Good afternoon, Chair and Members. I'm Sarah Christie with the California Coastal Commission, and I'd like to thank the author for her support of the Protect Our Coast and Oceans Tax Checkoff, or POCO as we like to call it. As you heard, this voluntary option provides a simple way for Californians who love and appreciate our state's magnificent coastline to make an annual contribution toward it.

At tax time, 100% of the funds go directly to the nonprofit schools and tribes through the Commission's Whale Tail grant program, which is California's longest-running outdoor environmental education grant program. POCO funds augment monies raised through the sale of Whale Tail license plates to support ocean science education, coastal habitat restoration, beach camps and day trips, surf lessons, and countless other ways to connect with and learn about the coast and ocean.

Whale Tail Grants don't just benefit coastal groups, they prioritize underserved and inland communities because the coast belongs to everyone, not just those fortunate enough to live there or able to visit regularly with their own resources. All California voluntary tax checkoffs must get reauthorized by the Legislature every eight years. This will be the second reauthorization for POCO, which has raised over $3 million since 2013. The Commission is looking forward to eight more years of funding innovative outdoor experiences through POCO and respectfully ask for your I vote.

Thank you.

Dear honorable Members, thank you for hearing our testimony on AB 2197. My name is Christopher Mouawad and I'm a legislative fellow with the Environmental Action Committee of West Marin, or EAC. And today I'm speaking in support of AB 2197 which renews the opt-in tax program for the affectionately named Whale Tail Grants. And I'd like to start with a personal note.

I am 24 years old and the Whale Tail Grant program has been active for 25 years and I am proud to be speaking on this Bill today because I'm the product of an organization who has received Whale Tail Grant funding in the past.

I grew up in an inland community on the border of Los Angeles and San Bernardino counties and when I was an 8th grader at Ramona Middle School, I got the chance to participate in a class trip to Catalina Island through an educational program by the Catalina Island Marine Institute Ursimi, and to this day, that experience is one of the two times that I visited Catalina Island and is the first time that I put on a wetsuit.

And I remember our field teachers bringing us to an old car, a Beetle model and that was painted red and I was in awe as I sat inside of it and they explained that that was the size of whale heart. And speaking specifically about this program, EAC is familiar with the work, the Will Tail Grants Fund. This is demonstrated by our work by providing for educational field trips for K through 12 students to visit and learn about Duxbury Reef and Roys Redwoods Preserve

Importantly, and as my colleague from the Coastal Commission shared, the Whale Tail Grants bring in inland communities such as those living in Kern County and Coalinga to recreate and experience the coast. And I would like to add that even while serving coastal communities, the Whale Tail Grants exemplify the promotion of equity by serving historically excluded groups.

In 2022 and 2023 alone, 82% of the projected participants were from BIPOC communities and examples of such programs include in Oakland and Richmond, the Commission supported a self-directed marine research project for 9th grade students and separately funded the entire Roosevelt middle school to take a field trip to the coast to learn how sea level rise impact International Pacific Islander Communities.

Queer Surf received funds for community surf lessons and the Commission also partnered with Justice Outside when distributing grant funds in order to offering training on leadership. In addition, the Whale Tail Grants have increasingly included programs aimed at indigenous community education and connection. For example, the Big Lagoon Union School District in Humboldt and Del Norte Counties receive funds to connect native students with the eurocultural practices.

The Dry Creek Rancheria, Band of Pomo Indians in Sonoma, Mendocino and Lake counties receive funds for traditional harvesting and community wetland restoration techniques. The Stockton Unified Native American Indian Center received funds for a summer program which engages indigenous students with cultural knowledge on managing the delta and the coast. And finally, the Atsum Poom Kwan in San Diego County received funds to engage youth and their family in coursework related to climate change and wetlands.

And on a final note, over the life of the Whale Tail Program, 501(c)(3) nonprofit organizations, individual schools, entire school districts, federally recognized and non-federally recognized California tribes have benefited immensely from this program. The goals of those organizations who receive these grants are to connect California community to youth and their families to our shared coast. The coast is a magical place and something that we should all have the opportunity to experience.

As demonstrated by the grant program's recipients, the Whale Tail grants create those opportunities, especially for communities who may not be able to otherwise. As a result, we respectfully ask you to vote yes to advance. AB 1297. Thank you.

Thank you very much. Do we have any other witnesses in support? Any witnesses in opposition? Comments from the Committee? All right. Would you like to close?

I respectfully ask for your "I" vote on AB 2197.

Okay. All right, so we have a motion by Assembly Member Grayson and a second by Assembly Member Gipson. The motion is do pass to appropriations. Mr. Reff, please call the rolls.

AB 2197. The motion is due pass to appropriations. [Rollcall]

That Bill is out. Congratulations.

Thank you.

Thank you.

All right, Mr. Wallace, your timing was almost perfect. I think you were off by about 30 seconds, so sorry about that. But we are now on file item three, AB 20219. Whenever you're ready.

All right.

Good afternoon, Madam Chair and Committee Members. I have before you today Assembly Bill 20219. As we all know, Californians face some of the highest costs of living in our country. Many also face the increased financial burden of living in high risk natural disaster zones across the state. And overall safety is a big concern for families. To remedy these issues, many residents install security cameras so they can monitor their homes while they're away to help deter property crimes or quickly detect natural disasters.

However, home security cameras can be costly to purchase and install, and many mainstream systems include membership or subscription fees to access footage. AB 20219 will address these concerns by giving residents of single family homes up to $250 in a tax credit to offset the cost of purchasing and installing a security camera for their homes. The Bill will make home security more affordable and accessible, and it will allow both homeowners and renters to claim the credit.

It was our intent to make this a one time tax credit, and while the bill's on suspense, we'll amend the language to clarify that. I'd like to say thank you to the Committee staff for their analysis, and I look forward to continue our work on this Bill together for any other potential issues that arise while this Bill is on suspense.

Thank you very much, Mr. Wallace. Do we have any other witnesses in support? Witnesses in opposition.

Hi, Katie Hardwin with the California Teachers Association. Unfortunately, in opposition due to the impact.

On General Fund revenues and Prop 98. Thank you, Ms. Hardman. Questions or comments from the Committee? All right, Mr. Wallis, would you like to close?

I just respectfully ask for an aye vote when the time's appropriate.

All right, thank you. And with that objection, this Bill will be referred to our suspense file. Thank you. All right, we are on our last item.

Just. It's over in transportation. She should be okay.

She knows that's. Thank you. Someone running your Committee?

Yes. I'm thankful to Assembly Member Carillo, who is filling in for me right now.

Okay, whenever you are ready on AB 2061.

Thank you. Well, good afternoon, everyone. Thank you so much for your patience.

You can catch your breath.

Yeah, I know, right? Thank you, Madam Chair. So I'm pleased to present AB 2061. This will establish a new exemption from the state portion of the sales and use tax for the purchase of zero emission ferries by public transit agencies such as Long beach transit, WIDa and Golden Gate ferry through 2030. This will reduce the cost to deploy zero emission ferries and to help them comply with the California Air Resources Board's commercial harbor craft regulation.

The California Air Resources Board approved amendments to the commercial harbor craft regulations in 2023 and it would require public transit agencies to deploy zero emission ferries by 2026 when California public transportations transit ferry operators face impeding transit operations funding shortfalls due to the pandemic's impact on partnership. This Bill would provide capital outlay cost savings, allowing additional funding to be maintained for transit operations exhibiting zero emission ferries purchased by public agencies from state cells.

And use tax is estimated to save California public transit ferries operators millions of dollars, and it would help us reach California's greenhouse gas reduction goals. We recognize the budget environment we're in and how this would save our operators at some costs to the state. But really we push to have early adopters when we have goals, and this allows for them to have early adoption.

By witness Lauren Gallarti with the Water Emergency Transportation Authority Board, which I've been calling WITA, is here to be able to provide testimony.

Thank you.

Yep, okay, it's on. Afternoon chair Irwin and Committee Members my name is Lauren Gardi, manager of government and regulatory affairs for the Water Emergency Transportation Authority, the agency that operates San Francisco Bay ferry services. WETA is a regional public transit agency tasked with operating and expanding ferry service in the San Francisco Bay and with coordinating the water transit response to regional emergencies. We carry about 3 million passengers a year using 17 high speed passenger only ferry vessels.

We are a co sponsor of AB 2061 which would establish a new partial sales and use tax exemption for zero emission ferries purchased by public by California transit agencies. This proposed sales tax exemption would assist the three transit agencies in the state that operate a total of 28 ferries in accelerating the transition to zero emission technology and reduce the cost to comply with CArbs, CHC, or commercial harbor craft regulations.

Transitioning to zero emission technology requires significant capital investment at a time when ferry operators are working to recover from the devastating financial impacts of the pandemic. In fact, WETA has estimated that it will take about $500 to $700 million to upgrade electrical capacity at ferry terminals, replace older diesel vessels with new zero emission vessels, and convert some newer diesel vessels to zero emission technology.

We are working hard to secure competitive grant funding, advocating for new or expanded Grant Fund sources, and other means to reduce the cost of implementation of our plan, including seeking this tax exemption. If this Bill were enacted, it would go into effect in 2025 and sunset in 2030. WTA is expecting the delivery of 50 emission vessels during this time frame. If this Bill was approved, the estimated savings for WETA would be approximately $4 million.

These savings could be used to purchase additional zero emission vessels to provide even greater emission reductions for the state in 2019 and 2022. Similar bills, AB 784 and AB 2622 were passed to provide public transit bus operators with the same sales tax exemption for the purchase of zero emission buses. Through this Bill, WETA is proposing to make the same benefit available for public transit ferry operators. Thank you for your consideration of this proposal, and I'd be happy to answer any questions you have.

All right, thank you. Do we have any other witnesses in support.

Good afternoon. I'm Eric Lerr. On behalf of the California State Association of Counties, representing all 58 counties in this state. We're proud to support this Bill. Thank you.

Good afternoon. Ben Trippo with the League of California Cities in support.

All right. Any witnesses in opposition? Hi, Katie Harden with the California Teachers Association. In opposition due to the impacts to the General Fund and Prop 98. All right. Do we have any comments from the Committee? I just have one question. This Bill did pass through our Committee the last go around. Are you doing anything to lower the price given the current budget situation? I know it was held in appropriations.

Recognizing that, and been talking about the year that this wouldn't impact our budget till 2025. So we're still a couple. It's not this budget year or the next, it's the one thereafter that it would really impact based on the timing of the purchases. So we think that because it's basically a deferred action to our budget. What am I trying to say?

Because it's a deferred action, we didn't think the impact to this year's budget or what we could expect next year in terms of a continuing deficit to be as large and looming.

All right. And then would you like to close?

Well, thank you for the question, Madam Chair. And this is extremely important when we think about our goals in terms of zero emissions. We've done this already for our other transit operators, and so it's bringing in line what we've done for our other transit operators. And so it's extremely important when you think about our mission goals, but also we want to be consistent and we want our operators to be able to recover from the pandemic.

Our ferry operators, and they struggled in that they do have some resources, but this would give them a boost to be able to ensure that not only do we meet our goals, but they allows them to continue to recover. And with that, I respectfully ask for an aye vote.

All right. So without objection, this Bill then will be referred to our suspense file. Thank you very much.

Thank you.

And we are going to move back to allow Assembly Member Reese to register her vote on file item one.

Add ons on file item one, AB 2197. The motion was due passed to appropriations, and the measure is passed. Luce Rivas? [Roll Call]

Thank you. Okay. All right. And with that, this meeting of the Revenue and Taxation Committee is adjourned.