Assembly Standing Committee on Revenue and Taxation

Well, 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 heard reflected in the Bill analysis. Additionally, pursuant to our Committee rules, bills with a fiscal impact of plus or -150,000 will be referred to to our suspense file, which will be taken up at a later briefing. A couple of housekeeping items.

First, Assembly Member Pacheco will be replacing Assembly Member Luz Rivas on our Committee for this hearing only. Additionally, file item four, AB 1879 by Assemblymember Gibson is a proposed consent item. Finally, file item three, AB 2274 by Assemblyman Berg Dixon has been pulled by the author. Looks like we have a quorum. Miss Hyland, can you please call the roll?

[Roll Call]

A quorum has been established and now we will take up our consent calendar. All right. All right. And that is file item four. Four, AB 1879 which has been moved by Assemblymember Grayson and seconded by Assemblymember Pacheco. And the motion is do pass to appropriations. Miss Hyland, please call the roll.

[Roll Call]

And that Bill is out 520 and I do not see Miss Baines here. So who do we have? All right, Miss Boerner, next up is file item two, AB 2564 by Assemblymember Boerner. Assemblymember, whenever you are ready.

Good afternoon chair Members. Sponsored by the California State Controller, AB 2564 seeks to secure a permanent funding source for the senior citizens and disabled Citizens Property tax postponement program.

This program allows homeowners who are seniors or have a disability to defer current year property taxes on their principal residence if they meet certain income and home equity criteria. Established in 1977, the program received General Fund support until the program was suspended in 2009 due to the recession. In 2016, a significantly different version of the program was restored, removing any General Fund support and making the program entirely self funded using collections on existing program accounts.

Collections have decreased due to no new loans being made between 2009 and 2016 when the program was suspended, resulting in the state controller collecting on a dwindling number of old loans or waiting until recent loans become due and payable.

AB 2564 will require transfer from the General Fund to the program on June 30 to bring the program's Fund balance to 15 million in years that the balance is less than 15 million, in years where the Fund is over 15 million, the state controller would continue to transfer balances in excess of 15 million to the General Fund as required under current law. AB 2564 helps seniors and disabled individuals, most of them on a fixed income, stay in their homes.

I respectfully ask for an aye vote at the appropriate time, and I have here with me Evan Johnson, on behalf of the state controller's office, the sponsor of this Bill.

Thank you and your primary witness, may begin.

Thank you very much. And I regret the comptroller isn't able to be here today herself, but she is a big supporter of this program. Madam Chair and Members, thank you for the opportunity to testify today on behalf of this legislation.

My name is Evan Johnson, deputy controller for legislative affairs at the Controller's Office for California State Controller Malia Cohen. Controller Cohen is pleased to sponsor AB 2564 which will provide a permanent funding source for the property tax postponement program. The PTP program is a limited but critical tool to enable certain vulnerable segments of our population to remain in their homes. The program allows eligible elderly and disabled individuals to defer payments on their current year property taxes.

The program is in danger of running out of funding. Recent statutory changes have reduced the interest repayments coming into the program while expanding the pool of eligible applicants. Additionally, economic volatility, as we've seen of late, leads to fluctuations in program participation, which then leads to unpredictability in the program funding. In the 23-24 cycle of the program, that's this year, we unfortunately needed to turn away some eligible manufactured home applicants due to lack of funding, and we'll likely need to do so again next year.

We're concerned that in fiscal year 25-26 we will need to turn away a larger number of applicants, including those in the real property program, potentially causing more harm to those vulnerable individuals who have come to rely on this assistance. This Bill, as mentioned, would secure reliable funding to ensure the program can continue to help vulnerable Californians. And in flush years, the General Fund would even contribute nothing to the program or even receive a benefit, potentially.

Finally, this Bill is a reintroduction of last year's AB 2265, which received broad legislative support. Thank you for the opportunity to testify. And I have with me today Lindsey Ross, who oversees the PTP program, and we're happy to answer any questions.

Certainly.

Lindsay Ross, bureau chief of the Bureau of Tax programs at the state comptroller's office, request your I vote. Happy to answer any questions you have.

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

Good. Chair, Members, Clifton Wilson, Michelle Yoder, Mildred and Lang. On behalf of the California Association of County Treasurers and Tax collectors and support. Thank you.

Vanessa Chavez with the California Association of Realtors in support. Thank you.

Eric Laurie with the California State Association of Counties in support.

Ben Travo with the League of California cities and support.

Do we have any witnesses in opposition? Questions from the Committee? I just have one question. This Bill was vetoed last year and the year before, I believe. So, how have you been working with the Administration to make sure that's through this time?

We continue to have a difference of opinion between the comptroller's office and the Department of Finance, and they've been working over the interim to recognize that this program is really important. As you all know, a large portion of those becoming homeless are seniors, and keeping them in their homes is a really valuable program, which this program does.

But with this gap of over 50 million having to go back to the General Fund but not upping it when it goes below 50 million, we're creating a system that will not sustain seniors and disabled Californians who are Low income staying in their homes.

All right, thank you. Thank you. Miss Boerner, would you like to close?

Respectfully of the appropriate time ask for an I vote.

All right. And without objection, this Bill will be referred to our suspense file. Thank you.

All right, we're going to go ahead and let Miss Quirk-Silva go next since Miss Bains is on the Committee and that is file item 6 AB 2555, whenever you are ready.

Good afternoon, Madam Chair and Members. Please read these talking points. Sorry. Good afternoon, Madam Chair and Members. Today I present Assembly Bill 2555 and will be working on the committees suggested amendments in the Bill analysis. This Bill extends current tax exemption laws on medical cannabis product donations for chronically ill medical patients and veterans.

Back in 1996, California voters passed Proposition 215, which allowed individuals with chronic medical conditions to lawfully obtain cannabis for medical purposes. This allowed people suffering from HIV AIDS, glaucoma, cancer, and post traumatic stress disorder to use medical medicinal cannabis to help alleviate their debilitating symptoms from chronic medical conditions. 20 years later, in 2016, California voters again passed the adult use of Marijuana act known as Proposition 64, this act introduced new taxation policies for recreational and medicinal cannabis operations.

Regrettably, the 2016 act neglected to include the needs of compassionate care programs who donate unsold cannabis to low income patients and veterans that cannot afford their medicine. Donations of cannabis and cannabis products from compassionate care programs and cannabis retailers became possible in early 2020 thanks to SB 34. Authored by Senator Wiener. His Bill allowed for cannabis licensees to donate cannabis and cannabis products to veterans and medicinal cannabis patients and exempted the medical donations from taxation until January 2025.

With the sunset date rapidly approaching, this cleanup Bill for veterans and medical patients would allow the Legislature to continue its compassionate stance toward medical cannabis donations set by SB 34. The Bill will help keep vulnerable medical cannabis patients and veterans out of the illicit cannabis market, where products are often untested and unsafe.

With me today to provide testimony and answer any questions that for the Committee is Shannon De Grooms, Executive Director and co founder of this is a Jane project, and Lindsey Comey, US Navy Horseman, veteran Member of the compassionate veterans and former Director of Oakland Feminist Women's Health center and women's choice.

Thank you. Please. Good afternoon. My name is Shannon De Grooms. I'm the founder and Executive Director of this is Jane Project. We're an organization committed to empowering women and non binary trauma survivors, many who have been bravely served in the military. Today, I'm here to express our unwavering support for AB 2555. Through our work, we've seen firsthand the profound impact access to medical cannabis has on our community, providing not just relief, but a sense of belonging and support for over 1000 janes nationwide. The programs facilitated by SB 34 have been instrumental in this journey, offering a vital source of healing and empowerment.

However, the sunsetting provisions of SB 34 present a real threat without the continuation that AB 2555 promises. Excuse me, I'm nervous. The very foundation.

Don't be nervous. You're doing fine.

Thank you. The very foundation of care and support we've built for our veterans and community members is at risk. The loss of these compassionate cannabis donations would create a significant barrier, potentially severing a lifeline for those who found solace and strength through these programs.

As a constituent of Assembly District 42, I urge you to consider the critical importance of AB 2555. This isn't just about maintaining access. It's about upholding our commitment to compassion, care, and community for those who have served our country and those healing from trauma, like myself. Your support for AB 2555 will ensure that the spirit of compassion continues to guide California's medicinal cannabis policies, affirming our collective commitment to the well being of every Californian in need.

Thank you for your time and for the opportunity to share the impact and necessity of AB 2555. Your backing is crucial for us to continue providing transformative care and support. Thank you.

Thank you. Very good job.

My name is Lindsay Comey, and I really appreciate Chairman Irwin and the Committee Members testimony. I am a United States veteran of the Navy, and I spent 15 months with the Marines, so I have a real understanding about need for veterans, and that when I left the service, I ran a women's health center Reproductive Healthcare Clinic for 32 years in Oakland. So I am a businesswoman that understands the need of poverty class patients, and that I ran a certified community health clinic here at the State of California. So I understand the requirements of legislation.

But what I don't understand is why we thought it was okay to leave veterans behind with Prop 64, why we thought that it was okay for a compassion program to be left out of the loophole, and to be told that we can wait two years for this. So, AB 34, that was a way to remedy this horrific loss of compassion. We saw the transition from 215 to Prop 64 being hurtful to medical patients. We saw loss of access, and the remedy was 34.

We're asking you with AB 25 and 55 to ensure that that remedy continues to continue the work that you've shown to supporting veterans and seniors and health patients that need alternative medicine to survive. We are asking not only for your support, but understanding that you have continued to provide care and support for veterans across the board. We have no reason to believe that this Committee or any Committee in the State of California is not supported.

We have seen you do that again and again and again, and we've shown by the application of this process that we are not a burden on the state in terms of providing this medical service to patients in need. So I thank you for your service, and I want you to continue to be the supportive environment that veterans can be proud of.

Thank you. And thank you for your service. Are there any other witnesses in support?

My name is Bonnie Metcalf, and I am in support of AB 2555.

Sarah Neracito, on behalf of origins counsel and support.

My name. My name is Etienne Fontan with Berkeley Patients group, the oldest medical cannabis dispensary in the United States, and we support this fully.

Good afternoon. My name is Selena Martinez, and I'm 100% disabled veteran. I am fully dedicated to compassionate cannabis work with our veterans. I've seen it work, so thank you so much for your time.

Nate Lando with the Veterans Action Council, and we're here with 100% support of this. Thank you.

My name is Sharon Pendarvis, and I'm a passion and advocate for the compassion program, and I'm in support of SB 2555. Thank you.

Hello. I'm Christine Spurgeon, and I'm a patient of cannabis and a daughter of a veteran that used it, and I feel that this program is very beneficial. Thank you.

Hello, I'm Dale Garner. I'm one of the co authors of Proposition 215, the compassionate use act of 1996, and I urge your support. Thank you.

Hi, my name is Adiola Adipe, a founder of Adiola's advocacy. Compassion came into my life when a loved one was diagnosed with cancer. Given three days to live, I had to choose between my mortgage or paying for cannabis, and I was blessed with cannabis. So I do support this Bill. Thank you so much. And we have a cancer survivor.

Hi, my name is Sue Colombe, and I am for the Bill. I'm one of the original patients with the compassionate act, and it's really important. All these people here absolutely believe in it like I do. It saved my life like most of the people. So please consider that. Thank you so much.

Richard Miller, on behalf of American alliance for Medical Cannabis and Americans for safe access in support of AB 2555. Thank you.

My name is Royce Kohler. I'm a retired therapist social worker, and I'm pleading to increase the support of 2025. Thank you.

My name is Kristen Spangerberg, aka reef arranger, and I run a veterans free and safe access program here in Sacramento, and I fully endorse and support AB 2555, and it's really helped my small little program move forward and. Yeah.

Hello, my name is Nicole Redler, CEO of recompass and in support of this Bill. Thank you.

Hi, my name is Mary A. I'm a current California MMIC patient for the last three years, and I support this Bill. Please support all of us. AB 2555. Thank you.

Hi, thanks for having me. I'm Charles McClellan. I'm a patient. I'm living with PTSD in stage four cancer, and it is one of my major parts of my well being. Thank you. I'm in support.

Hi, I'm Jeff Martin. I'm a compassion patient at a therapeutic alternative here in Sacramento. I'm supporting this Bill, and I appreciate you all being here. I just want to thank you.

Hello, my name is Sandra Bacon-Tessero. I support this Bill. I did 21 years in the military. I have six grown kids, 19 grandkids, and two great granddaughters. So I need the medication, please. Thank you.

All right, well, there you have it. Are there any witnesses in opposition, questions or comments from the Committee? All right, I appreciate all the witnesses that showed up today. I know it's not always easy to get to the the Capitol. There were some issues raised in the Bill and we assume while the Bill is on suspense, you'll continue to work with the Committee on those?

Yes.

All right. And would you like to close?

Just respectfully ask for your. I vote right.

And without objection, this Bill will be referred to our suspense file. Thank you.

Thank you, Members.

All right, we will call up Mister Low and that is item number five. Yes.

AB 2238 Assemblymember, whenever you're ready.

Thank you very much Madam Chair and colleagues, for allowing me to present Assembly Bill 2238 which would add the state treasurer and CDTFA to the Franchise Tax Board. With me today in support is Patrick Henning, Chief Deputy treasurer on behalf of State Treasurer Fiona Ma. I respectfully ask for your aye vote.

Hello Madam Chair, Members of the Committee, I am Patrick Henning, Chief Deputy Treasurer for Treasurer Fiona Ma, who is the sponsor of this legislation and capacity as the state's banker. AB 2238 would, as Mister Low said, add the treasurer and the director of CDTFA to the Franchise Tax Board.

Excuse me, Board of Equalization. The State of California created the Franchise Tax Board in 1950 with the mission to help taxpayers file timely and accurate tax returns and pay the correct amount of state tax to fund important services for California's. Membership of FDB consists of the comptroller, the member of the State Board of Equalization and the Director of Finance. In General, the Director of Finance, controller and the treasurer are seated at the vast majority of boards that affect the state's General Fund and financial boards.

FDB, however, is unique and unlike those other financial boards, it admits the treasurer while having the largest contribution to the General Fund. The treasurer is responsible for the state's daily cash management and in this responsibility, the treasurer's office works with FTB to determine the daily revenues collected by the Franchise Tax Board that flow through the treasurer's bank accounts, which feed the centralized treasury system and are invested daily. Recently, we have had unforeseeable changes during these difficult times because of emergencies.

In fact, in 2022, the tax filings were delayed for 55 out of 58 counties and again, we find ourselves in this situation with San Diego County having their taxes delayed. The alteration of tax filing deadline negatively impacts the state's revenue collection timeline, affecting the traditional tax flow patterns for the state's centralized treasury system, and introduces uncertainties in revenue production's fiscal budgeting and planning.

The treasurer would provide value in developing future Franchise Tax Board policies as the state's banker with direct oversight to the state's cash management system. Investment activities, which include tax revenues administered by the FDB, the treasurer has a unique perspective to contribute to the board and its deliberations. As a board member, the treasurer would be in a unique position to provide expertise on how FTB decisions impact California's financial operations and condition. Given the current State of the.

Given the current State of the state's budget, and more importantly, having her on the board is more important than ever. The treasurer's involvement would help ensure that future of FTB decisions are made with a thorough understanding of the impacts on the state's cash management program. Her expertise and perspective would add a layer of insight to decisions affecting the state's revenue, foster an environment where tax policies align with broader fiscal objectives and financial expectations. For these reasons, the treasurer asked for your support of this legislation.

Thank you very much. Are there any other witnesses in support? Okay, witnesses in opposition. Are you the primary witnesses in opposition?

I am not, but I don't see others here who are. Thank you, Madam Chair and Vice Chair and Committee Members. My name is Sally Lieber and I'm the Chair of the State Board of Equalization. We submitted a letter opposed unless amended. And we do plan to have this on our upcoming agenda to potentially change our position on that.

And we very much appreciate the author's March 21 amendments to retain the State Board of Equalization as a Member of the FTB. The remaining concern that we have that's outstanding is the governance questions and concerns that are raised by the inclusion of CDTFA on the board. And that would essentially put the Director of one Tax Board sitting in judgment of the leadership of another Tax Board. And so it's a bit mechanically awkward in that sense.

I understand wanting to have five members there and bringing on the treasurer. Although the treasurer has very different jurisdiction, it is complementary in the ways that you heard earlier, but that's the remaining concern that we have. And so we'll be taking it up again at our next meeting and hoping to receive any changes from this Committee. Thank you.

All right, thank you. Are there any other witnesses in opposition? I just. I appreciate Miss Lieberman's. Lieber's comments and the - what we were trying to do, as with the Committee amendments, is to make sure that the BOE was not left off the board. And so adding the treasurer, obviously, that you ended up with four Members. We are certain the Committee is certainly open to any other suggestions for the fifth member. We just wanted to make sure there were five Members. So just to clarify, since the Committee did make the amendments. All right, do we have any questions from the Committee, Miss Pacheco.

So I had a question as to the Director of CTFA. Is there another member that the Board of Equalization would be more agreeable to accepting?

We have not grappled with those specifics yet. We may at our next meeting and can definitely communicate with the Committee our thoughts. One that has been mentioned would be the lieutenant Governor and, but we realize that those decisions are made at your level and not at ours.

But we do think that there's something that's not favorable structurally to have one tax agency over another tax agency in that sense when it's not elected representation.

I can see that. I was just wondering if there was anyone else that you had in mind. But I appreciate that there's dialogue happening and I'm looking forward to seeing the final outcome. So thank you so much for being here. And I do want to mention you do have a board member here as well. Tony Vasquez walked in.

Thank you, Assemblymember Gipson.

Thank you very much. And certainly appreciate the author and have great respect for the author who brought this Bill before us. I guess my concern has already been echoed and that is with CTFA being on the board. My concern is that, one, when you look at all the elected individuals on this body and then to place someone who is not elected and having that person as a voting Member on tax matters, that concerns me.

And I speak from someone who worked for the Board of Equalization and also has been elected. And we also, when I'm putting my former counsel hat on, we had when I was in City Council commissioners, those are recommendations to the elected body. And if there was an issue, then that elected body would make that decision. That elected body is elected by the people. It's provided transparency and accountability. Right now, no one could controls CTFA. They're not elected.

It's my understanding those individuals don't return people's calls even by elected individuals. That's concerning. When those individuals make decisions for taxpayers, for taxpayers, when you have those kinds of positions, then they need to be held accountable to some elected body who we can hold as citizens of the state accountable. We can vote for them or not vote for them. And to have this person be on this board, I have a concern. And so, Madam Chair, I would just ask how would today this item will go on suspense.

Today we're voting on this item to move it forward.

We're voting on it as it was written. Right now I'm not able to support this Bill because of this glaring concern that I have. And again, if this was not a tax matter. And we're all accountable to the people we represent. They can reach out and touch us and talk to us about whatever the situation may be. But to have someone sit on this body who has great influence and great responsibility, and no one is accountable, and there's no transparency. I'm concerned with it.

All right. Miss Bains.

No, I wanted to echo Assemblymember Gi[son's concerns as well. You know, just. This is a powerful position. And when it comes to taxing the people, having people that are not elected on this is very concerning. So I just wanted that.

May I, through the Chair. And just to be responsive, as the members of the Committee currently also understand, the Franchise Tax Board consists of three members elected themselves at the controller, the board of organization, and then the non elected Department of Finance. So just to reaffirm that that already exists. That is the current structure now. And acknowledging. So, former member, Miss Lieber, as well as our - the Chair of the Board of Equalization, it is my full desire and intent to address the issue of equity and representation.

If the Committee and Chair feels otherwise, that perhaps CDTFA is not the appropriate person. And Board of Equalization would like to be able to work with the BOE as well, too, in finding an appropriate person and making sure that there's equity should this Bill move forward and addressing the concerns that I also agree with as well. So I hope that you'll interpret that as wanting to work with the Board of Equalization and acknowledging the concerns that have been addressed.

All right. Are we taking that as your close.

Please and thank you.

Do I have a motion and a second? Assemblymember Pacheco moves. Assemblymember Grayson, seconds. Can we have the vote, please?

The motion is due pass to appropriations. [Roll Call]. It's. Well, it's three to two, unless someone wants to change their.

All right. Okay. All right. Miss Bains?

Miss Bains. Abstain to not voting.

Okay, so that Bill is on call.

Thank you.

Thank you.

I want to thank the Committee staff for their thoughtful analysis of AB 2689. The current program reflected in this measure sunsets at the end of this year. AB 2689 would extend the California Alzheimer's Disease and Related Dementia Research Voluntary Tax Contribution Fund to January 1st, 2032. Since 1997, the California Franchise Tax Board has included the option for voluntary contributions by taxpayers to contribute to the Research Fund.

For the previous six years, the fund has raised more than a half million dollars annually to provide research dollars to California scientists to help bring an end to the disease. Funds collected by the FTB are administered by the California Department of Public Health, who awards grants through a competitive process. As a practicing physician, I am keenly aware of the devastating power of Alzheimer's disease and other related dementias have on the lives of those who are impacted and on those who care for them.

I also know research shows diagnosis varies greatly within communities of color. Research is needed to better understand how we will narrow the divide in diagnosis and treatment moving forward. This voluntary tax contribution expands what can be done in the fields of research to better understand and ultimately end this disease. Older age does not cause Alzheimer's, but it is the most important known risk factor for the disease.

The number of people of Alzheimer's disease doubles about every five years beyond age 65, and about one-third of all people age 85 and older may have Alzheimer's disease. Jason Gabhart is with me today representing the sponsor, the Alzheimer's Association.

Thank you. Jason Gabhart with the Alzheimer's Association. I first want to thank Dr. Bains for authoring this bill and also her continuing fight to help end Alzheimer's. As she'd mentioned before, since 1997, the California Franchise Tax Board has included the option for this voluntary contribution by taxpayers to contribute to this fund. And just recently, in 2024, the California Department of Public Health Alzheimer's Disease Program awarded approximately 20 million dollars to seven different recipients for research projects to run from 2024 through 2028.

So AB 2689 will continue to allow the California Department of Public Health to grant research funds to California researchers, such as those that UCLA, UCF, and USC, so they can keep investigating a variety of aspects of this disease. Thank you, and I request your aye vote.

Very good. Do we have any other witnesses in support?

Hi. Jennifer Snyder, Capitol Advocacy, on behalf of the California Life Sciences, in support.

Selena Coppi Hornback with the California Assisted Living Association, in support.

Do we have any other witnesses in opposition? All right. Do we have questions or comments from the Committee? Okay. So who moved that? Mr. Patterson moved and Mr. Gipson seconded. Ms. Bains, would you like to close? And I do appreciate you. This is a very important issue. Appreciate your work on it.

Absolutely. Love being the Chair of Aging and Long-Term Care, and respectfully ask for your support on this.

All right. And the motion is 'do pass to Appropriations.' Miss Highland, please call the roll.

On AB 2689, the motion is 'do pass to Appropriations.' [Roll Call].

Okay. That bill is out seven/zero. Congratulations. I think we are on to Mr. Gipson. Oh, no, that's on consent. Okay. Mr. Ta.

We do want to catch Mr. Gipson and Ms. Bains for consent before we're done.

I'm sorry? Ta's goes to--but actually, before you leave, we do--why don't we go ahead and do a vote on suspense--I mean, I'm sorry--consent. For adds.

Add-ons to the consent calendar. [Roll Call].

How you doing? Okay. And this is all right. Our last Bill for this hearing. File item seven, AB 2128. Yes. You want to give that to the by Vice Chair? Ta.

Good afternoon, chair and Members of the Committee. I'm here today to present AB 2128, a bipartisan measure to ensure formally incarcerated people will be able to secure employment within a year of their release. I want to begin by accepting the Committee amendment to postpone the implementation of this Bill by one year, along with its reporting requirement. It's important to keep the legislative goal of AB 2128 on incentivizing future job creation for formerly incarcerated individuals. According to California Department of Correction and Rehabilitation.

Rehabilitation, over 60% of formerly incarcerated people are unemployed within a year of their release. These people who have paid their debt to society and many have families to provide for. They often struggle to readjust because it cannot fight work, which can cause many of these people turn back to crime. Consequently, over 60% of formerly incarcerated people in California will be offended within three years.

However, if a formerly incarcerated incarcerated person able to get a job and is employed after a year of release, their chance of refunding dropped from 60% to 16%. Helping formerly incarcerated people secure employment within a year of release is critical in helping these people get back on their feet and start new life. Helping them obtain employment also serve the interests of public safety as they are much less likely to re offend under Fair Chance act.

Employer with five or more employees cannot ask about a job applicant past condition history during the hiring process. Process mirror businesses with fewer than five employees who are exempt from their fair chance are struggling in California economy. These mirror businesses are the backbone of our economy, consisting of nearly 90% of our private businesses and approximately 40% of our workforce. Small business owner shelter the burden of potential risk of employment decision.

It is prudent, compassionate and in the best interest of public safety to encourage them to hire formerly guaranteed individuals. AB 2128 would provide 5000 tax credit for mirror businesses that hire formerly incarcerated person within a year of release. An AB 2128 a formerly customary person would be required to work for one of these business at least for at least six months before small business would be able to apply for this tax credit.

$5,000 is much less than 132,000 of the state pay to in Garcia someone to re offense this Bill mirror a similar federal tax credit, but it must narrow in scope. This Bill aims to not only help mirror businesses but also to promote public safety by reducing recidivism. Most importantly, AB 2128 aim to help formerly incarcerated people secure employment within a year of reintegration into society. I'm honored to present this Bill alongside with Katie Dixon and Bianca Blomquist.

As someone who was formerly incarcerated and was able to successfully start a new life, Katie understand how important it is for formerly incarcerated people to be able to secure employment after release. Bianca is with small business majority and she understands how these mirror businesses with fewer than five employees play a really important role in our economy and how this Bill could be a win win for formerly incarcerated people, small businesses and the safety of California.

Good afternoon, Committee Members, and thank you, Chairman Irwin. This is a new Committee for me. How y'all doing?

I'm used to the Public Safety Committee. You know, it's all tense and stuff in there and yeah, this is good, you know, to be in a different Committee. Well, my name is KD. I am a formerly incarcerated Californian. I've spent about 10 years of my life navigating California's carceral system from a juvenile up to an adult. I'm also a formerly homeless californian. I spent about three years navigating the homeless system here in California. Thank you, assemblymember Tri Ta. I just met this guy today.

It's really great to see that someone out here is paying attention to this overlooked area. I'm not here today representing no professional organization. I'm off today and it was very important for me to come up here and testify and support, because I do believe this Bill comes at a critical time. The assemblymember talked about how the state really as a whole is struggling to find quality workers, you know, at this time. And I do believe this tax incentive will help those small micro businesses navigate this.

A tax credit is a much needed benefit for these tiny businesses, you know, and they are often on the front lines of giving someone a chance when coming home. It's oftentimes you're referred through word of mouth or direct posting. You have more of an opportunity to meet a small business owner and really get a shot in the door. I believe that this tax credit will foster a more favorable decision for a formerly incarcerated person. So that's why it was personal to me.

And it's also political because this is at the same time protecting a small business owner in a way of offering a tax incentive. And I do believe that's a win win. We can tackle two wins at the same time. I'm really excited to see another tool in the pipeline for formerly incarcerated people. You know, we are a population that is increasingly having a little bit more attention paid to and we appreciate all the opportunities.

A lot of times formerly incarcerated people, we're grateful for employment opportunities and we're a lot of times the best workers that any employer can benefit from, especially a small employer who don't have the resources to be rehiring and retraining people. And lastly, I'll say this. There's about a million people, I looked it up last night, that's unemployed here in California and about 400 plus thousand drawing from unemployment benefits.

And I bring that up because I know we are in a deficit and I feel like we're in this deficit together. You know, it's me, as a citizen, you all, as legislators and small businesses, we're in this together. And we do need to triage our priorities. And right now, a tax credit to a small business, I think it's always a great gamble, you know, to help see us through economic downturns and. Yeah, thank you so much and I will leave it right there. Appreciate it.

Thanks, Katie. Not sure if I'm going to say anything more than what you just said so wonderfully. Thank you for sharing your perspective. Thanks, Chairwoman Irwin. Vice Chair Ta. Members of the Committee, small business majority is a nonprofit organization. We advocate for small business owners, particularly micro business owners, to participate fully in the economy and to provide quality jobs for both themselves and their employees. We support AB 2128 because it's providing a competitive advantage to small business owners.

It's a meaningful legislative change that will address ongoing workforce shortages, and our research shows it's supported by small business owners. We represent over 85,000 small business owners working to build thriving and equitable economies, and the Fair Chance act, just briefly from 2018, generally allows employers with five or more employees to ask a job candidate about conviction history only after making a job offer.

But AB 2128 the Second Chance act, applies to employers with less than five employees, also called micro businesses, and would grant a tax credit of up to $5,000 to those micro businesses who fire a formerly incarcerated person. Small businesses employ nearly half of the private sector workforce and employ approximately one in three California workers, many of whom being women and people of color.

Opening up a very powerful role for small employers to play went in addressing the labor shortage and reducing the harms of mass incarceration. Employers who hire justice impacted workers have reported that their quality of work and contributions are on par with or better than other employees, and their turnover rates are notably lower. This is why a robust 84% of our respondents agree that policies like 2128 will open up a pool of job applicants that deserve a second chance.

Notably, only 16% of small business owners polled disagree with this. Compared to medium and large sized businesses, small business owners often struggle to find dedicated staff while providing a competitive wage. One measure to give small businesses an edge is this tax credit.

Therefore, fiscal incentives like AB 2128 will provide this competitive advantage to small business owners, create wealth in communities, combat job scarcity in their communities, and the second Chance act is a common sense approach to assist small business owners and the employees who work for them. Thank you.

All right. Thank you very much. Do we have any other witnesses in support? Witnesses in opposition.

Hi, Katie Hardeman with the California Teachers Association. Unfortunately, in opposition.

Brandon App. Representing California Tax Reform Association in opposition.

Thank you. Do we have any questions or comments from the Committee? Mr. Gipson.

Thank you very much. I would ask the author if he could please consider me as being a co author of the Bill. I think this goes in the right direction and would love to be added as a co author.

Really appreciate that. Thank you.

All right. Mister Patterson.

I'd like to ask the same thing, to be co author on this and hopefully it can come off suspense. I think this is very, very worthwhile for all the reasons mentioned. Thank you.

Thank you so much for that. Assembly Member Patterson, thank you.

With all three of you, I really appreciate the work you are doing to increase employment for the formerly incarcerated. We know that that is the best way to reduce recidivism. So I had one question. I'm not sure which one of the three of you might be able to answer it. We have the new employment tax credit. Has that been worthwhile for small businesses? Has it been fully utilized? Is that something that's...should it be expanded to include this or why do a brand new tax credit for this?

I believe that my AB 2128 will provide easy access for micro businesses and small businesses. I understand that out there we have like the current law, but it's not easy to access for the micro businesses and the small businesses. That's the reason why that I introduced this standalone credit.

Do you have any other...

Yeah, I'll just add that the targeted approach by AB 2128 towards very small businesses is of particular note here. Most small businesses are actually these very small businesses. So coupled with the streamlined application process, working of course with your wonderful district offices to raise awareness about this program, we think AB 2128 is the best approach.

All right. Well, thank you very much, and without objection, that bill will be referred to--oh, Mr. Ta, would you like to close?

Oh, I really thank you for your dedication to helping formally incarcerated people to start a new life and provide for their family in the fiscally responsible way. So I respectfully ask for your aye vote when it is appropriate time.

All right, thank you very much, and without objection, that will be moving to our suspense file. All right. Okay. We are going to move back to Item Number Five: AB 2238, and we will entertain any vote changes.

[Roll Call]. That bill is out four to zero. Four to two.

And that bill is out four to two. Okay. Well, thank you everybody for another riveting meeting of the Rev and Tax Committee, and with that, our meeting is adjourned.