Senate Standing Committee on Revenue and Taxation

Well, good morning, everybody. Welcome to the Senate Committee on Revenue and Taxation. We'll call the meeting to order. It's an unusual day here at the Capitol to the extent that we do have multiple committees meeting. The Senate Budget Committee typically doesn't meet on this day, but they are meeting this morning, and we know that the Senate Education Committee is also meeting.

So I want to invite authors who are, and hear my voice, and staff to invite their Members, if they're not on those committees, and obligated to come on down to our Committee hearing room so we can have their bills presented. We have five bills on Consent today, so good news for those authors. Those are: Item 1, SB 974, by Senator Grove; Item 3, SB 1102, by Senator Nguyen; Item 5, SB 1172, also by Senator Grove; Item 12, SB 1499; and Item 13, SB 1501, by me, Senator Glazer. Those are, too, recommended on Consent, and we'll take up our Consent file when we have a quorum. So we're not going to have enough Members to establish a quorum here yet, but we will begin as a Committee of the whole. Our Minority Member staff has indicated that's okay to do that. I wanted to thank Senator Bradford for being here this morning, and I would like to offer you the opportunity to present your Bill first.

First, we'll meet as a Committee of the whole. Now, this is file item 10, SB 1059. Senator Bradford, thank you very much for your work in this area, and the floor is yours.

Thank you, Mister Chair. SB 1059 is a straightforward measure that will assist legal cannabis industry by alleviating some of the tremendous tax burdens placed on this industry. High taxes, excessive regulatory hurdles, and various challenges that cannabis businesses must face have done little to help the legal cannabis market concede the way voters had intended through Prop 64. This Bill does two things.

Specifically, it prohibits a local jurisdiction from including the state's excise tax and sales tax, from the definition of gross receipts for the purpose of local cannabis taxes. This would eliminate local government's collection of a tax on tax - no other industry has this. Taxing the taxes and ultimately increasing purchase prices pushes consumers away from the legal retailers and only worsens and continues the struggles for the cannabis retailers. Secondly, this Bill would eliminate the authority of the CDTFA to impose a 50% penalty on cannabis licensees.

Delinquent - for delinquent taxes. These licensees already face several existing penalties. One example is a 10% fee for failing to file a return or filing late, a 25% penalty for fraud or intent to evade regulations and a $500 penalty for failing to furnish a return or report. This 50% penalty is punitive, creates a significant hardship for licensees who are already struggling with the various changes to cannabis tax laws and has not been successful in increasing compliance. SB 1059 would provide much needed relief to this industry by ensuring that taxes are calculated on the actual goods being sold and eliminating excessive penalties. And I respectfully ask for aye vote. And today here as an expert witness is Amy Jenkins to testify.

Thank you, Senator Bradford. And before we go to Miss Jenkins, let me just mention for those who are new to our Committee, that we allow two witnesses in favor and two against, two minutes each to kind of get us going. And then for those who want to indicate support or opposition, we do a me too opportunity at the end of that so that we can hear from them before bringing the matter back to the Committee for discussion. So with that, Miss Jenkins, the floor is yours.

Thank you, Mister Chair. Pleasure to be here today. My name is Amy Jenkins and I am here on behalf of the California Cannabis Industry Association and the hundreds of cannabis operators we proudly represent in strong support of SB 1059. This is a crucial piece of legislation that addresses the state's tax framework for legal cannabis businesses. I will skip some of my remarks since the Senator covered it. I think what I'll say is, just bluntly, the industry is what we would consider in a state of crisis.

Recent data from the CDTFA paints a concerning picture, reflecting that cannabis excise tax collections has declined by over 300 million, or 20%, since 2021. Additionally, the overall debt carried by legal operators is estimated to be as high as 600 million, with the industry's tax balance nearly 287 million and growing. In fact, the cannabis industry quite frequently is showing up on the top 500 sales and use tax delinquencies, which is posted on the CDTFA website. Why do I say this?

The primary goal of Proposition 64, which is referenced in its intents and purposes section first, and no less than five times in total, is really charged with trying to get rid of the illicit market and more specifically, establish a taxation framework that undermines illicit sales, deters illegal production and distribution, prevents unlawful diversion, and also funds critical programs important to the state.

SB 1059 represents a proactive step towards addressing voter intent by promoting fair taxation, ensuring a competitive market, and aligning with the objectives outlined in Prop 64. For these reasons, CCIA proudly supports this Bill and encourages your aye vote today. Thank you.

Thank you, Miss Jenkins. Is there another primary witness in favor? I don't think so. So we're going to invite anyone here in the hearing room that would like to come to the microphone and do a me too in support of this legislation.

Hi, Mister Chair and Members, Talia D'Amato, on behalf of California Normal, we represent consumers and we are in support. Thank you.

Great, thank you. Anyone else here in the hearing room? Okay, we'll go to opposition. Anyone here in opposition that wants to come forward? Do not see anyone or that someone standing in the back? No. Okay, so we'll bring the matter back to the Committee for discussion and questions. Senator Bradford, first, let me just thank and applaud you for your leadership trying to make this legal market work. I know that's your commitment, and you've worked hard on it for a number of years.

And I also know that you've been. I don't know if shoehorned is the right word, but you're working under the limitation of a Proposition that's not so easy to change. And I know that you're proposing in your Bill a number of reforms that are good, that don't interfere with 64, and then there's one that does. And I wanted to give you a chance to address that, or your witness to address it.

Well, and I understand your concerns, Mister Chairman, and my response to that is that, yes, it was passed by the voters, but as we know by about many propositions, they're loaded with a lot of stuff that the voters are not aware of. And I assure you, if this had been highlighted, this tax on tax, I'm pretty sure the average voter in consumer would have said no to that. But it was baked into that, and many times that's what we get with propositions. You know, a lot of the unknowns, and this is one of the unknowns, because I think a rational mind would have said this, makes absolutely no sense. But Miss Jenkins, if you have anything else to add to that.

Sure. Just would echo my prior comments about intent and purpose.

Make sure your microphone is on.

Oh sorry.

Go ahead.

Yeah, just. Just would echo my prior comments about intent and purpose. We've unfortunately had to make a lot of modifications to Prop 64. So what I would maintain, Mister Chairman, is we're not fulfilling the intent and purpose. The illicit market is stronger than ever. Our revenues, our cannabis tax revenues are declining, our licensees are disappearing and going away. And so if we really want to achieve the objectives that the voters outline, very specifically, we need to reduce the burdens on the legal industry so that it can survive and thrive in California. Thank you.

Yeah, everything you say makes sense to me. And of course, the dilemma is the explicit words in the Proposition that this would reverse. For those out there listening that are thinking about doing a ballot measure. We don't want to interfere with the people's right to decide these issues. In some cases, they put provisions in there that says the Legislature can amend if it advances the purpose at a high threshold, sometimes three fifths of the Legislature, some real high vote threshold. And this is one of those opportunities where if they had done that, that we would be perfectly in line with the goals of the measure, but because we haven't, that creates the dilemma that's before us today. All right. With that, any closing comments you want to make.

As stated, I think if we want Proposition 64 to live out to its promise of having a thriving legal market, we have to reduce the taxes on consumers. As we've clearly seen, the retail market is growing in the last seven years, not the legal market, and it's absorbent in prices. You're paying almost 40% more at a legal dispensary than you do from the illegal ones. And that's what's popping up just down the street from here.

A legal dispensary has had its doors shuttered since the beginning of the year because they no longer can afford to operate. So if we want this market to succeed, I should say we need to help them, just as we've done with the cultivators, by eliminating act tax. We're just seeing, let's reduce this tax or eliminate it altogether. So thank you.

Thank you, Senator Bradford. Thank you again for your leadership in this area. When we have a quorum, we'll entertain a motion on your measure. Thank you for the presentation today. I see we have another author here. Senator Seyarto. Want to invite you up. This is item number two. This is SB 1086. Senator Seyarto, the floor is yours.

Thank you very much, Honorable chair. I'm here to present SB 1086. Currently, California consumers are being taxed on paying taxes when they buy gas. The sales tax is applied not only to the price of the gasoline itself, which it should be, that's how it's supposed to do, but also to the amount paid in excise tax under the motor fuel tax law. Motor vehicle fuel tax law, which means we're paying a tax, we create a tax, and then we tax that tax with our sales tax.

So, this actually amounts to double taxation. When consumers pay taxes on gasoline, they expect a clear and simple system based on the product's price. My bill, SB 1086, will rectify this issue by excluding the motor vehicle sale or motor vehicle fuel tax from the calculation of sales tax. This will not impact motor vehicle fuel account or projects dependent on those funds. According to the US Energy Information Agency, California leads the nation in gasoline tax rates at 68 cents a gallon.

California taxpayers deserve transparency and product pricing, not a confusing system that imposes double taxation. SB 1086 will continue upholding the principles of fairness and transparency by removing an unnecessary cost on consumers, especially California's families. With me today, I have Scott Kaufman from the Howard Jarvis Taxpayers Association.

Hello, Mister Kaufman. Welcome. Two minutes are yours.

Thank you, sir.

Current sales and use tax laws require retailers to pay taxes on various transactions. The amount of the tax is generally based on the price of goods. However, when it comes to gasoline, the sales tax is applied to the price of the product in addition to the amount paid and excise tax pursuant to the motor vehicle fuel tax law, which is administered by the California Department of Fee Tax and Fee Administration. This law imposes a tax on each gallon of motor vehicle fuel that is removed from a refinery or terminal rack, entered in the state, or sold in this state. The tax rate is specified per gallon. Taxing a tax is an action that raises ethical concerns and puts a burden on consumers, causing problems with fair taxation. Nowhere else in our society do we allow such a practice.

When consumers pay taxes on gasoline, they expect clear and simple system based on the product's price price. However, adding an extra tax on top of an excise tax undermines trust and distorts the democratic process. Taxation should be clear and accountable. When voters or officials approve an excise tax, they expect a clear decision on the specific tax. Eliminating the taxation of a tax upholds fairness, transparency, and trust while removing an unnecessary burden and restoring the integrity of our tax system. I ask for your aye vote. Thank you.

Thank you, sir. Any other witnesses in favor want to come up to the mic and do a me too. Anyone here in the hearing room? All right, seeing none, we'll go to witnesses in opposition. Anyone here to testify in opposition to this measure? Anyone here to register their opposition, please come up to the microphone and so indicate. All right, we'll bring the matter back to the committee for discussion and questions. Discussion or questions?

Senator Seyarto, I know your intentions are good here to avoid what you would call double taxation, but there is a general fund cost to doing that that do affect a lot of state services, including road and highway maintenance. Do you have any thoughts about where the makeup will be if we do eliminate this, this added tax?

Yeah, having come out of Budget Committee right now, right now, we don't have any idea where the money for anything is going to be coming from right now. But what this measure is really aimed at is restoring some faith in our government and the way we do our business when we're double taxationing people. Is that a new word I just made up?

When we double tax people like that, they discover it eventually, and it adds to the distrust that people have in government and our transparency and what we're asking them to do, which is to pay some taxes so that we can provide services. But then, when they see wasteful, wasteful things being done with their taxes and then they see this; it creates less trust in the government or less trust from them, in us, in the government.

And then that, in turn, leads to them not wanting to pay more taxes, more bonds. And you're seeing that already. You're seeing that no matter how much we need to pass a bond for facilities that are desperately needed, people are very reluctant now, and part of that is the culture that we have created, and part of that culture is in things like this. And so that's part of my goal is to help make things more transparent for people.

So, and it also, if you're going to create a tax and then tax that tax, there's a perverse incentive to create a tax so that you can pile on more tax on top of it. So it's just, for me, it's something that we need to do to try to write the ship a little, little bit and how we do our business in the State of California.

It's this issue of a tax on a tax has been in effect for quite a while, hasn't it?

Oh, there - it does affect other parts of our structure. However, this goal because especially due to what we're seeing with gas prices and things like that, people will, you know, people are taking notice. And this is aimed specifically at the gas tax.

Got it. And this is a situation that's been in effect for decades, isn't that right?

It probably has been in effect for decades and it's time to fix it.

Yeah. And the dilemma for me, I'm just speaking frankly about it. The dilemma for me is that, theoretically, it makes sense. And for some of the reasons that you outline in terms of public confidence and trust, those are powerful words, and they mean something and their importance. On the other hand, when a voter says, "Well, why are you cutting this, and why are you cutting that?"

Whether it's our schools or if it's our roads or if it's our public safety, the answer is, well, we don't have the resources right now. We have this massive deficit. You mentioned coming from Budget Committee to be here today. We thank you for coming. That there's somebody has to, you have to pay the piper, right? Somehow. The budget has to be balanced, and so that's the dilemma for me and with your measures.

And for people that think we have a spending problem rather than a taxation problem, that would be the answer is, well, we probably should spend less money and be careful the way we do it.

Indeed, until it comes.

Anyway, I don't want to belabor that. I'll let that be my close if you want and simply ask for an aye vote.

Terrific. Well, we'll take that as your close, as you would suggest and we thank you for presenting the bill. When we have a quorum, we'll take up a motion.

Thank you very much.

Thank you for being here. All right, I see another author in the room, Senator Portantino, this is file item six SB 1192. Senator Portantino, welcome to the Committee. You can begin whenever you're ready.

Thank you, Mister Chair and Committee Members. We have Members. I'm here to present SB 1192, which extends the pass through entity tax provision of the Small Business Relief Act an additional two years. I note that some folks have maybe questioned why are we doing it now? And I say what a novel concept for the State of California to get ahead of the curve and start bringing a tax benefit to taxpayers before it's an issue.

And so I think it makes sense to move now and get this through the system. The expiration of the California SALT workaround creates uncertainty for eligible taxpayers and tax professionals who must make decisions in 2024 and 2025 about what the future will hold. And so passing an extension in 2024 will provide taxpayers with greater certainty and obviously help the industry provide good service to our taxpayers. So I would respectfully ask for an aye vote. I have with me Jason Fox from the CalCPA Society and John Ross on behalf of the National Accounting Firms.

Great. Thank you, Senator Portantino. Witnesses get two minutes each. Who wants to begin?

I'll start.

Okay.

Jason Fox of the California Society of Certified Public Accountants. The pass through entity tax, or PTET, has proven to be a win win tax policy by offering substantial relief for numerous small businesses without any discernible negative impact on state revenue. However, as the Senator mentioned, when originally established, the PTET provisions were set to expire at the same time as existing federal limits on individual, state and local tax deductions.

This approaching sunset date has created uncertainty for taxpayers and tax practitioners who need to make important tax and business decisions in 2024 and 2025 including whether to opt into the PTET election, how to plan for the use of their credits, and how these decisions may impact related tax or other business matters. Further, this creates uncertainty for tax agencies working to manage resources and effectively administer the PTET provisions.

While it's uncertain when or how Congress may address these federal limits, California can be proactive and take a step now to provide taxpayers, tax practitioners, and tax agencies with the clarity and guidance that they need to make informed decisions and plan for the future. Just as importantly, it ensures that the PTET will remain a beneficial option for countless taxpayers, should they need it. So with that, we'd urge support for SB 1192.

Thank you, sir. Mister Ross, the floor is yours.

Thank you, John Ross, on behalf of the National Accounting Firms. And I'll just, excuse me, speak for a second to the why now question and the analysis. Congress is likely to act on whether to extend various aspects of the Federal Tax Relief Act of 2017. In 2025, including whether to continue the cap on local taxes, the SALT cap. If they do that at the end of 25, the state really won't have certainty until then.

If you act in 2026, lots of taxpayers will have to make estimated payments in the first two quarters of the year, not knowing whether the SALT work around will be available, which then the taxing agencies will have to fill. Figure out a method of refund so that creates unnecessary complication for everybody that we hope this Bill addresses. Second, as Mister Fox noted, a lot of taxpayers are trying to figure out in 2025 whether they will elect into this system again, and whether the law will continue in 2026 will be very relevant to that. So we urge an aye vote on this important.

Thank you, Mister Ross. We're going to go to others here in the hearing room that want to do a me too. In favor of this measure. Come up to the microphone. Anyone here?

Jennifer Snyder with Capital Advocacy on behalf of the California Life Sciences in support.

Thank you. Anyone else here in the hearing room? All right, seeing no one, we'll go to opposition. Is there anyone here in the hearing room that wants to testify in opposition to this measure? Seeing none, we'll bring it back to the Committee for questions or comments. Senator Dahle.

Thank you for bringing this forward. Obviously, I think we do need to do it now, sooner than later, so that those who - actually California got penalized during the SALT. And so I'm glad the Senator brought this forward and I'll be supporting this Bill. I think it's really good policy and to give some certainty to the folks who are planning taxes I think it will benefit them greatly.

Thank you, Senator Dahle, any other comments or questions? Senator Portantino. Thank you. It makes a lot of sense to have a matter that deals with accountants, to have them be very organized, as we would expect, to make sure we're ahead of the game, more than ahead of the game, being in the right place to protect our taxpayers and to have certainty. So I certainly support your Bill. I want to give you an opportunity to close.

Just respectfully, ask for an aye vote when you have a quorum.

Great. So we'll put that Bill on hold as we wait to establish a quorum. Thank you all for being here and presenting your Bill. All right, we're looking for authors. We have a number of authors that may not be sitting in committees right now. So, staff, if you're hearing my voice, I won't mention names, but I hope that you'll invite your Member to come down to our hearing room, as well as Members on the Committee that will allow us to establish a quorum. So we're going to take a short recess while we wait for authors.

The Senate Committee on Rev and Tax will come back to order. We have an author present, which we appreciate. We're going to move next to file item nine. This is SB 1436 by Senator Allen. Senator Allen, welcome to the Committee.

Thank you so much, Mister Chair, and with your indulgence, I have with me here the member of the Board of Equalization, Tony Vasquez, who's one of the co-sponsors - the sponsor of our bill. So, as you know, California tax laws impact nearly every aspect of life. They influence the decisions that people make about how to save for retirement, where to live, how to organize their businesses, how much to borrow or invest, and the basic criteria needed for sound tax policy are fairness and transparency.

Obviously, there was a massive shift made a couple of years ago where we took a lot of the tax, a shift that I supported, where we took a lot of the tax governance role from the Board of Equalization and put it over into a set of administrative entities, CDTFA, and others. There's a lot of benefits that have come from that. One thing that has happened as a result, however, is that it's really taken away the sort of public oversight and responsiveness that the BOE provided.

So this bill seeks to remedy that imbalance while very much centering the key work of tax administration in these various entities that we sent that work to, while also providing for a public input process. We have a Franchise Tax Board already as you all know. It consists of three members. It's the controller, the Chair of the Board of Equalization, and the Director of Finance.

And the board is required to host public meetings every year where tax professionals and individual taxpayers are welcome to present proposed changes to California tax laws, and it's an important forum for debate and discussion about tax policy. And I think, I don't think it's a stretch at all to say that the FTB is viewed as a reliable entity. It's responsive to tax questions raised by taxpayers.

It's a place for discussion because a big part of that is that it's made up of some elected officials who are responsive to real people. Now, on the other side, because of their more bureaucratic structure, other tax agencies, such as CDTFA, the Office of Tax Appeals, they don't always have that same level of transparency and accountability. They're less responsive to inquiries from taxpayers and including tax professionals.

I mean, I've spoken to county assessors who say that they can't get a call back from the CDTFA, which is really extraordinary, given how important a role they have in the system. So this bill establishes the California Tax Policy Oversight Board. It's modeled on the FTB. It would just like the FTB; it's the controller, Director of Finance, Chairperson of the BOE, the way we have it structured.

It is also because of all the debates happening on other bills; as you know, we include the state treasurer and the secretary of government operations agency. So the administration still has a very significant role in all of this, and we're open to discussion as to how this would be structured.

But this is the vision here is that this new board would have the responsibility to hold public meetings to promote consistency in tax policy, provide forums for tax agencies to work collaboratively on issues brought by taxpayers, and provide recommendations to improve tax administration's policies and procedures. So it's all about, it's a very gentle corrective, I suppose, to some of the rather, because as we've discussed, Mister Chair, there's not a lot of teeth by the board here.

It's just that it would provide a forum for discussion of tax policy so as to encourage more responsiveness and engagement and more coherence to the system. That's the vision. We're very open to different ways of achieving that vision. I'm also happy to talk about some of, with more detail some of the reasons as to why this is being brought forward in the first place from a responsiveness perspective. But that's what we're trying to do here with this bill.

And testifying in support this morning is our Third District Board of Equalization Member, Tony Vasquez.

Mister Vasquez, welcome.

Thank you. Thank you, Chair. And just for the record, my name is Antonio Vasquez and I serve as a member of the State Board of Equalization and previous chair of the board. But I'm here today representing just myself as a district member because the board as a whole hasn't taken it up. It's on the agenda for our next meeting, which is next week, our board meeting. But let me just say that I'm in total support of this.

And what I want to emphasize is that this bill, I think, would serve three key issues. And let me just run through them. First, there is currently no central official entity that facilitates communication among the various tax agencies, which include the BOE, EDD, FTB, OTA, and CDTFA. This bill would provide an official public forum for discussing and reporting on high level tax policy issues among the tax agencies under a board of primarily elected officials knowledgeable in tax policy.

Second, existing taxpayer resources tend to be limited to the agency charged with administering the specific tax program in question. For example, taxpayer rights advocates appointed by the tax agencies will conduct intake on and address taxpayer grievances and issues, including operational questions. The Tax Policy Oversight Board can provide an additional resource to taxpayers in the following ways: when taxpayers are not able to get their issue resolved with the appropriate agency due to solutions beyond the agency's purview, that is, when legislation may be needed to address issues or when the taxpayers have an interdisciplinary tax issue that may require more than one taxation to resolve it. Third, the Tax Policy Oversight Board would have the ability to receive input from the tax agencies and taxpayers regarding cross-agency problem areas. All businesses in California engage and or file with the FTB, CDTFA, and the BOE at least annually.

The Tax Policy Oversight Board would have the authority to receive input and make recommendations concerning interagency tax policies that are or may be negatively impacting businesses, such as policies regarding recordkeeping and acceptable standard of reasonable approximations. And yet another example, affordable housing is an interagency topic that requires the engagement of nonprofit organizations with FTB, BOE, including county assessors and CDTFA, to obtain welfare, property tax exemption, and other exemptions or tax credits.

These are just a few examples of interdisciplinary tax policies, areas that single California tax agencies are currently unable to address comprehensively on its own. With approximately 20 million income taxpayers, 14 million property taxpayers, and a million sales taxpayers, there is a need for a statewide elected official to focus at least twice a year on current issues that may impact the tax agencies, and I thank you for this opportunity.

Thank you. Thank you for your testimony. All right, we're going to go for others here in the hearing room that want to indicate their support for the measure before we hear from the other side. Anyone here in the hearing room want to come to the microphone, indicate support? All right, we're going to move to opposition. Is there anyone here in the hearing room that wants to speak in opposition? Okay, not seeing anyone. We'll bring the matter back to the Committee. Senator Dahle.

Thank you, Mister Chair. So, I'm trying not to lose my mind right now, and I'll share why. I'm in business. One of the few members of this legislature that actually runs a business and who has watched what we've done with the Board of Equalization over the years that I've been here. So we had some members, I'm just going to call a spade a spade today, we had some members of the Board of Equalization who were doing things that, in my mind, weren't their scope running, coming to the legislature and the legislature saw that, and we acted on it. We basically neutered or gutted the Board of Equalization. They don't really have. With all due respect to the elected member, my member called me today and wants me to support your bill.

And so, with that being said, as a business owner in California, if I have a problem with the Franchise Tax Board or I have - I mean, one time we got billed, we got taxed for fuel. I'm just gonna - it was highway fuel versus farm fuel, and we got a tax on it. And it took me two and a half years, my wife and I, to get that back from the state because I was forced to pay it upfront.

If it wasn't then for the Board of Equalization, I had no place to go as a business owner. And now I'm right there again. The Board of Equalization has been neutered. I don't have. So where do the business owner and the people go to actually get some reprieve when there's no justice in the tax system and there's nobody to advocate for you?

Now I'm going to just say a couple more things, and I want your response, because I don't see any teeth in this, of any ability to get done. I just came from the budget hearing, which is the same thing that happens here. Even a Republican who is a legislator can't get engaged in the process. I'm an elected person. What about the person that's the business owner, the regular constituent that we represent? How do they get any access to anything? That's the problem here.

I mean, at the end of the day, everything's done in the dark. And as somebody who's trying to abide by the law and actually get somewhere, there's no place for a taxpayer has nobody to represent him her. That's why you're doing this. And where are the teeth in this bill that say, "Hey, Brian Dahle, that owns Big Valley seed company, can come to someplace and say, 'I have a discrepancy with the law, and I need help.'"

I mean, yeah, they call our offices. I'm sure you've had them, and you go do what you can to get it done. That's, I mean, I understand where you're trying to go here, but there has to be a hammer at some point that somebody has to be accountable. Who is it?

Yeah, I appreciate -

Senator Allen.

I appreciate the line of questioning a great deal. It's part of what we're trying to address here. I absolutely agree that it doesn't go far enough. We're barely hanging on a string here with the committee, with this proposal.

I know there are some folks who really still believe in everything that was in AB 102, but I feel as though AB 102, which is a bill I supported for better for worse, I've been regretting some aspects of that support, quite frankly because I think that it did swing the pendulum too far in the other direction.

There were some things that needed to be fixed up at the BOE, but there's a responsiveness issue that you are hammering at right now that has been lost as a result of AB 102. And this was our modest attempt to try to create more of a mechanism for - to give taxpayers the opportunity to weigh in and be heard. Because right now, when these questions go to the faceless bureaucracy, it's a black box, and there's no responsiveness. So, should this go further? Yes, it should.

Is this gonna be hard enough to get through the legislature and sign? Yes, but it's absolutely a step to try to address the lack of responsiveness that you're correctly raising, and it's our hope that having a board made up of high-level elected officials will provide a forum for taxpayers to get heard and to have their grievances addressed in a way that is just not available right now under the current system set up by AB 102. So it is a step in.

It's going to provide some, certainly, significantly more opportunity to be heard than what is currently allowed under AB 102. That's the idea here.

Senator Dahle, I don't know if you have a follow-up, but we're going to take a brief pause and establish a quorum. The secretary, please call the roll.

[Roll Call]. You have a quorum.

Okay, we have a quorum in place. Senator Dahle, anything?

Thank you, Mister Chair. I think this is really important for the business owners and the people that pay taxes in California that have. They have no place to go. And I think you bring up, but I think we should maybe go back and look at AB 102 and fix that and give back the Board of Equalization some power to actually act because they're elected body and they have to be held accountable to the voter.

And look, it would have been really hard at the time when we did AB 102 to stand up and vote against it because there was so much misuse of their power and you couldn't with a straight face defend them. But here we are now, a couple years later, how long it's been. And there is no place. Again, I'm going to support your bill, but I'm, well, I should say I'm in a quandary.

If I support your bill, then, and if it does get passed and signed in law, it really doesn't fix the problem. We still don't - it's an attempt to get there. It's at least having the discussion. But if I support it and it gets signed in law, then we go, okay, we did that. And then we're back here again, still not with an opportunity to give the power back, some power back to the Board of Equalization, so I have some representation of an elected person.

Yeah.

Other than calling my Senator or my, when I'm not here anymore, calling somebody and trying to rattle the cage to get something done. I mean, it's hard enough to, as a legislator, to figure your way out to get some answers. Imagine what the local small business owner is doing. They're calling; they're frustrated.

So as to put it on the record, I think, let me say right here in public, that I agree with what you're saying, and this is not fixing the problem of AB 102. It makes things a little bit better. And I appreciate you seeing the fact that it's going to help. But by no means is this offered as a wholesale corrective for the challenges raised by the implementation of AB 102.

We're going to see if we have any more questions or comments from colleagues on the panel. Not seeing any, Senator Allen, do you want to close?

Really appreciate the discussion. You know, this is, I think, I think you've heard my perspective, and we're just trying to ask for some, a little greater responsiveness out of the system. That's what we're seeking to do here. And with that, in that spirit, I welcome future discussion from the members and from the committee, and I respectully ask for aye vote.

Thank you, Senator Allen. I appreciate the conversations that we have had with your witness. I think that what you're asking for is reasonable to me. I wish some of these tax agencies were here to testify either in support or opposition or defend the concerns that you have legitimately raised about the lack of responsiveness from these tax agencies.

I would encourage you and the board to - we do have hearings on their administration of their, you know, their work, budget hearings to decide whether they should get any more resources from the state for the work that they do. And those do provide opportunities to challenge them on their lack of responsiveness because I think it's something that, I'm sure, there's unanimity around the panel of concern. I'm happy to support your bill today. I'm worried that not the issue so much the issue of teeth.

But, you know, this is going to go to the Governor, who's going to defend an administration, and you're really raising concerns now about the Administration that he leads. And so its prospects are somewhat dim because of that, because of the criticism that you legitimately are raising. And we'll see. But I think you have the right to advance the bill and see if you can force them to address the concerns that you're, you're raising. So, with that, I want to entertain a motion on the bill.

Okay, so this is a do-pass to Governmental Organization. All right, would that, secretary please call the roll.

[Roll Call] 4-0

Thank you, members. Thank you.

Votes to get out. We'll hold the roll open for absent Members. Okay, thank you. Okay, we have another author here present, Senator Alvarado-Gil. Welcome to the Committee. Want to invite you to come up with your witnesses so we can hear your Bill. This is file item eight, SB 1261. SB 1261. You may begin whenever you're ready. Is your microphone on? Try that again.

All right, there we go. Thank you so much, Mister Chair. Chair Glazer. I am here to present Senate Bill 1261 that would adjust the percentage of the Department of Food and Agriculture's budget dedicated to Fairs and Exposition Fund from three fourths of 1% to 5%. For more than 70 years, the source of state funding for California fares was dependent on horse racing license fees.

In 2009, the Legislature recognized the need for a new source of funding for the continuation of fairs and thus continuously appropriating $32 million from the state's General Fund to be paid into the Fairs and Exposition Fund. However, in the 2011 to 2012 Budget Act, this eliminated those General Fund contributions requiring fairs to be self sufficient.

To address the problem, the Legislature enacted AB 1499 in 2017, which directed the Governor's Budget proposal to include three fourths of 1% of the amount of revenue from sales and use taxes generated on fairgrounds to be allocated back to the fairs. The Fairs and Exposition Fund supports projects at fairs that address deferred maintenance, emergency services, protection of fair, property, and the health and safety of visitors.

Without an adjusted percentage dedicated to the Fairs and Exposition Fund, our California fairs run the risk of not receiving the necessary funding they need. Although we have some of California fairs that are self sufficient and that run quite, quite well, these are in particularly urban areas of California. The inequities throughout the rural communities that really depend on the fairs for emergency services, for the center of community are not seeing the same lucrative response from self sufficiency enterprises. Here to testify in support is Sarah Cummings, President and CEO of the Western Fairs Association.

Thank you. Welcome to the Committee.

Good morning, Chair and Committee. Thank you for having me. Sarah Cummings, Western Affairs Association. And thank you, Senator, for all of those wonderful comments. We're in full support and certainly appreciate your understanding of the need to improve our fairgrounds. These state assets serve their communities in so many different ways, and the increasing of the metrics of this - increasing the percentage in this metric would certainly support the ongoing improvements to these local community centers.

Great. Thank you for your testimony. Anyone else here in the hearing room would like to testify in favor of this measure, please come up to the microphone. All right, seeing none. Anyone here in opposition? Seeing no one in opposition, we'll bring the matter back to the Committee for questions or comments. Senator, thank you for your continued work in this area. I have a fair in Pleasanton, in Alameda County I know would appreciate the measure that's before us today. I'm happy to support it. Any closing comments you want to make.

I would just like to invite all of you to partake in this year's fairs in your district. If you don't have a fair in your district, I welcome you to visit one of the 10 fairs in my district.

10, is that right?

That's right.

That may be the record in fairs. That's a very busy schedule for you.

It is. We kick off fair season next month.

A fun one. Nevertheless, All right. Is there a motion from the Committee? Senator Bradford moves. This is a do pass to Appropriations. Secretary please call the roll.

[Roll Call].

All right, that Bill will be put on call for absent Members. Thank you very much.

My first presentation to this Committee. And thank you very much for the warm invitation.

Until you get our evaluations. But I thought you did very well.

I will do your Yelp review outside.

All right. We're looking for authors here in the Senate Committee on Rev. And tax. We have a number of authors that. Senator Becker, Senator Padilla, Senator Rubio, Senator Newman, Senator Nguyen. Want to invite you to the Committee room. I think the Budget Committee is just finishing up. Just finishing up. Yes. Senator Bradford is offered, and I accept that motion on consent. We have five bills on consent items. One, 3512, and 13. The secretary, please call the roll on the consent calendar.

[Roll call].

We'll put that on call for absent Members. We'll go through the list of bills that we have heard. If the Members want to make a motion, it would be in order. First we had Searto. Item two. Any motion to be made on that? At the moment hearing, none. We'll move on to item six. Senator Portantino 1192. Any motion to be made on that? All right, that's a do pass to appropriations. This is Senate Bill 1192. Secretary, please call the roll.

[Roll call].

That's three to zero. Be put on call for absent Members. Let's move next to file item 10. This is SB 1059 by Senator Bradford.

Come back to that in just a second.

Sure, we'll pause on that one. Okay. All right, we're looking for authors, authors please come forward. We could adjourn the Committee. That wouldn't be good. Ah, there's an author. No, there's a Member. Not an author. Well, since we have Senator Dodd here, we can. While we're waiting for authors, why don't we go through the roll one more time and allow Senator Dodd to add on when he gets ready? We'll begin with a consent calendar. That's an easy one. So the secretary could open the roll on the consent calendar.

Motion is to adopt a consent calendar. [Roll call].

Back on call Senator Dodd. We're next. Going to move to file item six by Senator Portantino. 1192. If you're ready.

I'm ready.

Okay. Secretary, please open the roll.

Motion is do pass to appropriations with the chair voting aye. Vice Chair currently no vote recorded. [Roll call].

That is enough votes to get out. We'll put the matter on call for absent Members. Moving next to file item eight. This is SB 1261 by Senator Alvarado-Gil. Secretary, open the roll.

Motion is do pass to appropriations with the chair voting aye and no vote recorded for the Vice Chair. [Roll call].

Put that on call for absent Members. Move next to file item nine. This is Senator Allen's. 1436. Secretary, please open the roll.

Motion is due pass to the governmental organizations Committee with the chair voting aye. And Vice Chair voting aye. [Roll call].

Put that matter on call for absent Members. All right, so that's a pause. Still looking for authors. Looking for authors. We're going to take a short recess while we wait for authors.

Good morning, everyone. Thank you so much, Mr. Chair and members of this Committee. Today I'm proud to present SB 1230, the stop and seize Illegal Tobacco Products act. We all know that public health effects of smoking cigarettes and vaping flavored tobacco products. California has made great progress on reducing the use of tobacco products, including adopting a recent ban on selling flavor tobacco products that I know the chair knows very, very well, since he was also a co author to that bill.

But more work needs to be done in that respect, because we need to make sure that our laws are being enforced. As a school teacher, I know all too well that California students continue to have easy access to addictive vapes with flavor design to appeal to students.

I passed a lot of bills, and I've tried to pass a lot of bills on this, on this issue, because we know that our students are still going into the restroom and vaping and doing all these inappropriate things, and tobacco continues to be one of those issues that we need to tackle. I believe sometimes these bad actors are specifically flavoring tobacco and trying to market to our kids.

And so what this bill does is SB 1230 will strengthen the enforcement of California's anti tobacco laws and ensure that flavored tobacco products are kept off the store shelves and out of the hands of students, which is critically important, not to me, but to all of the members I'm sure of. The Committee. SB 1230 will authorize employees of the California Department of Tax and Fee Administration to cease and destroy flavored tobacco products discovered during their regular inspections of tobacco retailers and warehouses.

The department already has the authority to do this. They already have the authority to seize and destroy tobacco products that fail to include the proper state tax stamp. So this bill is just simple. It's a cost effective way of the department to remove labor tobacco products from the market. SB 1230 also includes a reasonable increase of the existing civil penalties imposed on retailers who break the law by continuing to sell these products or by selling tobacco products to people under 21 years old, which happens often.

The fine amount hasn't changed in 20 years, so there is a modest change, but it goes a long way in trying to deter the use of tobacco products. So, once again, the stop the season Illegal Tobacco Products act is sponsored by a coalition of public health advocates, the American Lung Association, and the Campaign for Tobacco Free Kids. And the Bill has no opposition today. Joining me is two individuals.

I'm going to start with Ananya, who's here to testify, and Mr. Gibbs, who will be answering any technical questions you may have.

Thank you. Senator Rubio. Welcome.

Hi, my name is Ananya Pinnamaneni. I'm a senior in high school in California. And I'm speaking on behalf of the American Cancer Society Cancer Action Network. So, as a high school student myself, I've seen that tobacco usage is a growing issue among my peers. And for example, in my school, there's one bathroom that's actively avoided by the student body. It's known as the vape bathroom because there's always a group of students vaping in there. And a survey was conducted by my school newspaper where.

Where we asked the students and faculty, what percentage of students do you think have used e-cigarette or tobacco product at least once? And the responses range from 31 to a shocking 70% of the student body. And problematically, flavors are the reason that so many of these youth are getting hooked onto these tobacco products. Some of my close friends have started using e cigarettes. And they started with just one flavor that maybe someone offered them at a party, like blue raspberry.

But then now they have to try all of the flavors. Pink lemonade, bubble gum, iced mango. The list goes on. It's become like trying ice cream flavors for them. And they know that tobacco is bad for their health. They know it's killing their lungs. They've been taught this for years. Yet these flavors are masking the harshness of the tobacco products and making the kids feel like it's just a harmless treat that they can take.

Although California voters overwhelmingly voted to pass the law and end the sale of flavored tobacco products with Proposition 31, there are still gaps in the enforcement of this law, as can be seen in schools just like mine. Instead of kids consuming less tobacco, they're consuming even more. Clearly, more work is needed to end the availability of flavored tobacco products in California. That's why I'm here today to urge you all to pass Senate Bill 1230.

Because students need to be focusing on developing life skills, spending time with our family and friends, studying for our classes, and preparing for our future careers, where we will be the ones taking charge of our societies in the future. We can't be caught up in defending ourselves from those who are trying to exploit us by selling illegal tobacco products. Which is why it is so important for the California Department of Tax and fee Administration to have the authority to protect us.

It is vital that action is taken on this matter right now to prevent even more future generations from falling victim to these cycles of addiction. Thank you.

Thank you so much. Yes, sir. Mr. Gibbs.

Yes, thank you. Tim Gibbs with Campaign for Tobacco-Free Kids. Proud co sponsor of this bill, here to answer any technical questions. But I did just want to say that this bill is genius for its simplicity. I mean, CDTFA personnel are already inspecting retailers to ensure that they have a tax stamp. This would be an efficient and cost effective way to ensure that tobacco retailers are obeying the new law. You know, we've heard stories of CDTFA compliance staff who have gone into stores.

They see boxes of menthol cigarettes in the back storeroom. They see obviously illegal kid friendly flavored e-cigarettes. And they recognize the illegality of these products, yet they're hamstrung in the ability to do anything about it. So if this bill were to become law, those CDTFA staff would be able to seize these illegal products they come across doing their normal duties. So this is a simple yet effective way to ensure that the promise of SB 793 is upheld.

Great. Thank you, Mr. Gibbs. Anybody else here in the hearing room that wants to do a me, too in favor, please come to the microphone.

Nora Lynn with Children Now, in support.

Thank you.

[Unintelligible], American Lung Association, in support.

Jamie Morgan on behalf of the American Heart Association, a proud co sponsor.

Thank you. All right, anybody else here in the hearing room? All right, we're going to move to opposition now. Anyone here in opposition to the measure, please come forward. Seeing none, we'll bring the matter back to the committee for comments or questions. Members, comments or questions. Senator Ashby.

Thank you very much. What's your witness's name? Senator Rubio.

Ananya.

Nice to meet you. And where do you live? Do you live here in Sacramento?

I live in San Ramon.

In San Ramon. Okay. And you did a really good job with your testimony. That was great work. Very brave of you. So smart. And to come and talk to the Committee on Revenue and Taxation. That's impressive. Congratulations to you on your hard work and advocacy for young people today. Senator Rubio, as you know, when I was at the local level here, I championed this exact bill in the City of Sacramento.

So we no longer sell flavored vape and tobacco products in Sacramento, and particularly cannot target kids. This is a passion of mine as well. I share this with you and your sister and many other members of the women's caucus that we all believe so strongly that we need to do what we can to protect young people. I appreciate your creative approach here. This is very intellectual and smart, and I'm proud to support it, saying, we'll move the item at the appropriate time.

Any other comments or questions for members? Senator Dodd.

It may have been said but they cannot destroy tobacco products. Now, if they find that these, you know, they're violating the law.

Yeah, but what this does is this is already law. Target the ones that are, they continue to do it. And so there's a penalty attached to now, catching them, still doing it, increasing the penalty. Do you want to address some of that?

Sure, if I could. This bill, would CDTFA agents go into tobacco retailers to check for Tax Stamps when they see an illegal flavored product? They don't have the authority to see those products. This bill would change that and give them that authority.

All right. But the issue is whether they can destroy them. And they need this legislation to destroy them when they find them, right? That's the question.

And sees them in the first place. Yeah.

Okay. Both things seem to apply to the bill. Okay, thanks, Senator Dodd. Anything else? Senator Rubio, thanks for your leadership in this space. As you know, as a joint author with Senator Hill of the original bill to ban flavored tobacco, this is something close to my heart, and I think it's an exceptional bill. The student from San Ramon. Thanks for representing San Ramon, my district. Really good job with that. Senator Rubio, do you want to close?

Yeah. Thank you. And, you know, I was also a co author to your bill, so I know that we've all been trying really hard to address this issue, and it just continues to persist as our students shared. I mean, they're still going into the restrooms, and clearly they're always being targeted. Our youth continues to be targeted. So we need to make sure we send a message that we will not tolerate it. And with that, I ask for an aye vote.

Thank you, Senator Rubio. I'm going to recognize the motion from Senator Ashby. This is a do pass to health with that secretary. Please call the roll.

[Roll Call] Five to one.

All right, that bill has enough votes. Five to one. We'll put it on call for absent embers. Thank you. All right, I see Senator Newman, who I know is double booked this morning, because I am as well. Senator Newman is bringing to us item four. This is SB 1164. We invite him to come on up with his witnesses, and we'll hear the bill. Thank you, Senator Newman.

Morning, members. Morning, Mr. Chair. I am chairing Senate Education right now. There's a guy on my committee who looks just like you, and he hasn't been there. Thank you for the opportunity to present SB 1164, which will defer the property tax assessment on a newly constructed ADU for a period of 15 years or until the property is sold.

Before I begin, I'd like to make clear that I am accepting the committee amendments and thank the committee's consultant, Colin Grinnell, for his customary good work on this bill. The amendments clarify a number of technical details while adding a sunset of five years. As you're all well aware, California, especially working-class Californians, continue to grapple with a daunting shortage of affordable housing.

It's an offsite fact that the Department of Housing Community Development estimates that over the last decade, housing production fell on average 100,000 units short of estimated need annually. Among the various policy remedies adopted in recent years, one approach toward increasing California's supply of housing stock, which has received particular attention from this Legislature, especially with respect to neighborhoods where other forms of development may be either unprofitable or unpopular, is the construction of accessory dwelling units, also referred to as ADUs, also known as second units, in-law apartments, or the ever popular granny flats.

Over the past decade, the Legislature has adopted a series of measures related to ADUs intended to reduce barriers that were identified as hindering the pace of ADU creation across the state. Those barriers, which included administrative, zoning, and other issues, were for the most part, on the municipal or supply side. Where much less has been done and where this Bill is focused is in relation to the demand side of the equation.

Homeowners for whom an ADU may be a good investment, but to whom the finances seem daunting. As the analysis notes, disparities in homeownership in California carry through to disparities in homeowners who can construct ADUs. According to housing experts, homeowners who construct ADUs tend to be much more affluent and less likely to identify as people of color than the typical California homeowner.

These households are also likely to have substantially less by way of savings or access to credit, making the prospect of building an ADU more than a little daunting. Add to that the fact that when a new addition to a home or ADU is built, the newly constructed portion of the property is immediately assessed at 1% of the value of the square footage just added, an amount that is then appended to the property owners next yearly property tax bill.

As an example, an ADU assessed at a value of $200,000 would incur an immediate property tax increase to that homeowner of $2,000 a year. The prospect of such an increase in owner's property tax burden, especially on top of the expense and complexity associated with the construction of an ADU, appears to serve as a substantial disincentive for working-class homeowners to build ADUs, even if they might otherwise reap the benefits over the long term.

By pausing the property tax increase associated with the construction of a new ADU, property owners will be further incentivized to increase the overall production of ADUs across the state. Such an allowance will better align market forces with the state's broader housing goals by enhancing an individual homeowner's cost-benefit perspective as it relates to considering the construction of an accessory dwelling unit.

Your analysis further notes that, based on current levels of ADU production, the Board of Equalization estimates that SB 1164 would result in a total of $19 million in property tax revenue loss statewide. While I'm generally sympathetic to the opposition's concerns about property tax revenue loss, the Legislature should balance this prospective cost with the equity benefits of encouraging ADU construction in neighborhoods most in need by homeowners who might otherwise not be so inclined.

I would also point out that cities are not currently substantially relying on the revenue generated from ADUs, and cities would still receive the permitting and impact fees associated with ADU construction as allowed for under existing law. Moreover, this impact would obviously vary across cities and in cities such as Anaheim and Santa Ana, and Orange County, and other low-income communities in your own districts where the property tax exemption may Jumpstart ADU construction and benefit working-class homeowners who may not otherwise build ADUs.

This can be expected to be more than offset over time. Further, the anticipated increase in ADU production will also help many cities achieve compliance with their RHNA targets, something which many cities are currently struggling to achieve. I'm fully committed to working with stakeholders to mitigate any possible unintended negative impacts of this bill and to ensure that implementation and administration for local assessors is as simple as possible.

If we're serious about our commitment to increasing affordable housing across the state and believe that ADUs are a critical piece of this, in addition to the work we've done removing administrative hurdles, we should also lower real and perceived cost barriers to make ADUs a more appealing and feasible option for working-class homeowners. With me to testify is Debra Carlton of the California Apartment Association. I am respectfully asking for your aye vote.

Thank you, Senator Newman. To your witness.

Good morning, Mr Chairman, members. Debra Carlton with the California Apartment Association. Now, I know apartment is in our name, but our largest member are single-family homeowners, many of those who have rental single-family rentals, and many of them have ADUs. The California Apartment Association was one of the first sponsors back in the early 2000s with Assemblymember Bloom in which we encouraged ADU construction. We think it's an easy way to build housing, less hurdles.

As you know, multifamily can take up to 10 years to permit, and ADUs have been something of value in our local communities. We think that SB 1164 is an incredibly helpful bill to encourage more ADUs. And even if the tax benefits are not realized immediately, they will realize it over time, because, of course, if we don't build ADUs, they don't get the money anyway. ADUs are very valuable for our young teachers, our young individuals who are entering the market, working market, and we think that this is incredibly valuable bill. And we ask for your aye vote today. Thank you.

Thank you, Miss Carlton. Anyone else here in the hearing who want to testify in favor, please come to the microphone.

Good morning, Mr. Chair and senators. Rosanna Carvacho Elliott here on behalf of the City of Alameda, an island city in the San Francisco Bay Area, in support of SB 1164, acknowledging what the senator said in terms of the importance of ADUs and getting these built to help with the housing crisis. Thank you very much.

Thank you very much. Anyone else here in the hearing room in favor? All right, we'll move to opposition. Anyone here in opposition to the measure want to come forward? You have the opportunity to testify if you want to come to the front tables, or you can do a me-too at the microphone.

Good morning, Mr. Chair and Members. Marcus Detwiler with the California Special Districts Association. Along with the California State Association of Counties and the League of California Cities, we are respectfully opposed to SB 1164. SB 1164 proposes, in our view, a solution in search of a problem.

The contention belied by SB 1164 is that the fair and proper assessment of property taxes is serving as a substantial deterrent to the construction of ADUs and is somehow existing as a substantial barrier to the deployment, their deployment in the State of California. We find that the data do not bear this out. According to the letter that we submitted to the Committee, since 2018, there have been year over year increases in the number of ADUs being permitted and constructed in the State of California.

According to data published by the UC Berkeley Center for Community Innovation, from the period of time from 2018 to 2022, ADUs constructed in the state totaled over 10,000, with over 28,000 permits also being applied for during that time. According to recent reporting by the Sacramento Bee, a CEO of an ADU design and manufacturing firm reports that, since 2016, demand for ADUs has increased twentyfold, and using a data point from that same article, ADU applications as a percentage share of housing permits issued overall in Sacramento jumped from 2.5% to nearly 10% in the period of time running from 2020 to 2023.

Additional data points in the same nature are contained in the thoughtful analysis prepared by the Committee staff, and, as we've seen, the residents are waiting in line in order to get ADU firms to manufacture the ADUs for them. In short, demand for ADUs is robust in California. SB 1164 would instead have us ignore all of this data and instead decide to commit to slashing property tax receipts that are vital for local agencies to provide services to their communities.

The property tax cuts that are being proposed by this bill would result in the diminishment of millions of dollars annually to the operational budgets of local agencies, and it will be disproportionately felt by those local agencies that heavily or almost entirely rely on property tax receipts like fire protection districts, mosquito and vector districts, and parks. Also, this bill in print contains implementation concerns, although we did hear that the author has committed to accepting the Committee amendments.

However, the bill in print does propose concerns as it relates to the good faith effort related to maintaining the ADU for residential housing. As a result of the lack of specificity in the bill in print, we view this as potentially ripe for abuse. In short, while we are sensitive to the fact that there is a housing affordability crisis in California, we do believe that is not solved by cutting the revenues that are relied on local services providers in order to provide California communities with the vital, essential local services that they rely on. For these reasons, we are respectfully opposed to 1164.

Thank you, Mr. Detwiler. The other witness, please. Two minutes.

Hi, good morning. Still Katie Hardeman with the California Teachers Association. Not used to being up here so close, but unfortunately...

Not scary. We're really not scary.

CTA is unfortunately opposed to this bill. We appreciate the goal and intent. The shortage of affordable housing affects all of the members, the students, and families that we serve. However, we cannot support a solution that reduces property tax revenue.

I won't get into all the details on school finance and Proposition 98 in this Committee. But I will, in short, say that when the state is in what's called Test 1, within Prop 98, education receives a minimum percentage of General Fund revenues plus its share of local property tax revenue. Therefore, any reduction in property taxes reduce the overall Proposition 98 level for our schools and community colleges.

While we want to incentivize additional housing, we also have concerns that the existing, that this exclusion would provide a windfall for those homeowners who would have already built an ADU regardless of this bill. So for these reasons, CTA is opposed.

Thank you very much. Anyone else here in the Committee room want to come up to the microphone and do a me too in opposition?

Good morning, I'm Eric Lawyer, speaking on behalf of the California State Association of Counties, the Urban Counties of California and the Rural County Representatives of California, in respectful opposition. Thank you.

Thank you, sir. Next up.

Good morning. Ben Triffo with the League of California Cities in respectful opposition.

Thank you.

Good morning, Honorable Chair and Members. Rob Grossglauser with the California Assessors Association. Appreciate the author working with us and the Committee amendments, but we still have some concerns, regrettably are opposed. Thank you.

Great. Thank you. Anyone else here in the hearing room in opposition? All right, seeing none, we'll bring the matter back to the Committee for questions and comments. Senator Dahle.

Thank you, Mr. Chair. So, gosh, we all want housing, but at the expense of... So as somebody who represents 15 counties and a lot of very rural in nature counties that maybe have very few cities in their counties, and so the property tax that is available to them to do... So I want to just maybe talk to you a little bit about, or ask the question about how are these special districts...

I have several special districts, so water, sewer, that are having to do many upgrades due to regulation for clean water and all these other things. But if you have no revenue coming in, and you can't do those upgrades. I mean, this is the tax that actually goes to those special districts. Fire, sewer, water. And I know that you're saying that, yeah, over time when it sells. But if it doesn't sell, it's, and a lot of people don't move. They're getting the profit of having an ADU, but they're not paying their fair share, and everybody else that doesn't have an ADU is on the hook to pay for those services that they need.

Is that a question for Senator?

All right, Senator Newman.

Yeah. So how...

How are they going to pay the bill, I guess?

So, as my testimony noted, you know, this doesn't waive the other fees or permitting or other fees associated with the construction. But if you do the math... So $19 million estimated by the Board of Equalization, let's say out of the 482 cities in California, 200 are mid-sized cities that really would benefit from additional housing caused by ADU. That's a net of $95,000 per city. So not a ton of money, right? Money is real to everybody.

But, you know, the argument here is that over time there's a net benefit to that. I'd argue that in your district there would be very, you know, there's not a huge need for ADUs. This is mostly for other cities that have other parameters. And so I'm open to an amendment that would take care of those cases, and we're happy to continue discussing that.

So if you have a non-incorporated city and you, so I'll just take, for example, the town where I get my mail, which is Beaver, is not incorporated. It's an unincorporated town, but it has a water system, a sewer system. All that, which is derived from property tax. They get a percentage of the property tax, comes back to that special district. They're not able to raise their rates because of Prop 218. They can't get the tax passed, and they're stuck. And they have all these regulations.

If we do get some building, that's the one place that we get a bump in our revenue, and it actually helps provide the services that are mandated by the state. And so I'm concerned for those reasons that this bill, and we see, we don't, so we get it. We have a solar exemption. So solar doesn't pay. And so pretty soon the locals don't get anything. And at the end of the day, they have a service they have to provide with no money.

All right, so, you know, this bill is actually intended to encourage ADU construction in cities that would benefit from it. And, typically, they're lower income, higher density. Your cities probably don't fit that description. Again, I'm happy to include language moving forward that would cover that case because it won't affect the goals of the bill, and it might address your concerns.

All right. Any further discussion or comments? Senator Dodd.

Through the Chair, has there been... The analysis seems to me that number seems to be very low. I mean, given the, you know, the incentive, 15 years of property property tax relief on that specific item. And so I'm just wondering if there's any further analysis in terms of an average value, or maybe I should ask a different way. You came up with $19 million. So how much per dwelling was that?

I think 19 million is the total revenues per year generated by ADU construction, right? So it's, you know, against... That's across the whole state, right? That's a pretty small share.

No, but I'm trying to get to what the number was in terms of evaluation of an ADU on the tax to derive a $19 million tax. Because I just know in the areas that in the area I represent, for example, Napa, you know, it would probably have a pretty decent assessment. Maybe in other areas it does.

You know, the math is simply 1% of the assessed value that the newly constructed square footage. You know, across the state, it's calculated by the BOE. I don't know. You could probably do it.

Yeah. So, I guess. Look, look. I want...

It varies a great deal by county.

It does.

It varies a great deal. It seems like it should be straightforward, but in fact, it varies a great deal, and it is up to the assessor. There are the broad rules of what any new construction like this should be assessed. However, there are some assessors who are, if they are calculating on the basis of what their rental value will be or the resale value versus the construction costs, so then that can vary hugely by county.

Okay, so there's...

Just a moment, please. So that was Senator Skinner, prior to that, with Senator Dahle, with her observations on the accounting practices of counties. I'm going to, before I go to Senator Newman, I want to give Senator Dodd an opportunity to clarify any further.

So, to finish. And it may, we're certainly not going to negotiate anything here. I'd like to support the bill today, if I can. But...

You definitely can. That is fully possible today.

To me, the benefit... To me, the benefit of 15 years of property tax avoidance exceeds... That is an excessive incentive in my mind, particularly in my county.

I probably should not say this. We put in 15 years as kind of a starting point. Again, open to the conversation. That was the starting point. The Committee did add a sunset of five years, and so we should have some data within five years as to whether or not this has made a meaningful difference in increasing the number of ADUs that, again, the theory is that otherwise wouldn't be built, otherwise would not have been built.

And not to be argumentative, but the testimony that we heard today suggested there's a robust market already for ADUs. And so perhaps this incentive... And so what I'm looking for is a narrow, if we're going to do this, we have to narrow it down because I think 15 years is excessive.

I mean, I'll commit to narrowing it down.

Any other comments or questions from Committee Members? I'm going to give you an opportunity to close, Senator Newman. Senator Padilla.

Thank you very much, Mr. Chairman. I appreciate where the author is trying to go, and I'm, along with Senator Dodd, inclined to give you every opportunity to refine sort of the framework. I have grave concerns about any net reduction in property tax receipts in this context.

I have grave concerns also about not necessarily the best clarity around the formula or standard that's been applied in the analysis either about how we quantify what the actual real impact here is. And those are both greatly concerning to me. But I want to give the author every chance to try to continue to have dialogue and get clarity around it. But I want to put on the record, Mr. Chairman, that there's some grave concerns.

Thank you. I want to close this unless there's something else that's important. Let me just say, Senator Newman, I appreciate your focus in this area. I think it's an important place for really making a difference in the housing affordability space. And so I think your leadership in that is very worthy and important. I, too, share the concerns about the impacts that this would have and whether or not it creates the right incentive or disincentives or people might take advantage of it when they were building anyway.

But all that being said, I want to give you the opportunity to refine the bill and improve it if it moves forward out of this Committee. With that, I'll support it today. All right. Anything further? Senator Newman, you want to close?

And thank you. I appreciate it, Mr. Chair. Actually, the genesis of this bill, it came from a city planner in the City of Anaheim. The City of Anaheim has done a lot of good work in streamlining their ADU process. In fact, they have a set of pre-approved plans, and they will guide people to resource, including construction loan resources, to do this. And the observation conforms with some of the Committee's analysis.

Wealthy people who are well situated are building ADUs where lower income people who could really benefit from them, whose neighborhoods really desperately need them, are really daunted by the prospect.

So when we look at the data, it is true we've had year over year growth, but there is probably a large delta between what we're seeing, and in fact, that is growing, versus what we would be seeing and what we in fact need if we're going to make a big difference, especially relates to RHNA numbers in the cities that would benefit from increased ADU construction. I am... This is a concept.

And the idea here is that, you know, over time this will prove out, you'll get a net benefit by way of new construction that over time will increase the tax base. And we're going to try to find the right balance, both in duration and kind of the other offsets to make this work. And so I am more than willing to continue this conversation.

I look forward to discussing this with the opposition, and hopefully we can get to a bill that will let us test this thesis that there is sufficient demand, in fact, additional demand that can be spurred by new incentives on the demand side, and that's not the supply side. And I look forward to working with you. With that, I ask respectfully for your aye vote.

Senator Newman's closed. He's accepted the technical amendments. Is there a motion on this measure? Senator Bradford moves. This is a do pass as amended to Appropriations. Secretary, please call the roll.

[Roll Call] 6-0.

Thank you, Members.

Just a moment. Ready to close the roll on that? You laid off. Yeah. All right. That bill is out, six to zero. That bill's out. Thank you, Senator Newman. I see another author presence, Senator Becker. Excuse me. Oh, that's different. Senator Becker, come on up. This is file item number 14, SJR 14. Same file item as the as the number on the bill, on the resolution. Senator Becker, the floor is yours.

Thank you. Oh, great. We'd witness it in a House Committee, but we've thought just in time. Thank you. Good afternoon, Chair Members. First, I want to thank the committee for its analysis, which was a fastball straight down the middle, I can say, and I hope this bill will be a home run for California and our many programs here. I also especially appreciate the reference to Bobby Bonilla since I grew up rooting against the Mets.

So I especially appreciated that. In December, the Los Angeles Dodgers baseball team signed a 10-year, $700 million contract with pitcher and hitter the outstanding Shohei Otani. That current contract is structured so that Otani will defer $68 million annually, thus only receiving 2 million per year for ten years and allowing Otani to potentially avoid over $90 million in state taxes if he resides outside of California when the deferred compensation is paid. I would venture, friends, that this is quite the hit-and-ball trick.

The process of deferred compensation is allowed under current federal law and conforming state law that allows high earners unlimited deferrals of compensation. This creates an unbalanced tax structure and perpetuates income inequality. The absence of a cap deferring compensation for high-income earners has created further repercussions for the fair distribution of taxes, and potential limits on deferred compensation can establish an equitable tax system for all and maintain potential state revenue.

I've introduced this bill to urge Congress to establish a reasonable cap on deferred compensation to rectify this imbalance. While Congress has put us in a hole that will affect many of our public programs, they can rectify the situation and allow us to come back for the win and hope this resolution will help us do that. And with me, I have two witnesses today from the Controller's Office. I want to thank the controller for sponsoring this bill and Dennis Ventry from the UC Davis School of Law.

Okay. Do they have to put their major league baseball affiliation on the record or no? Just their -

They're not required.

Are you a Giants fan? Okay, your witnesses, please. Go ahead. Two minutes each.

I'm from Philadelphia, so I'm a Phillies fan, so I apologize for everyone here. And I'm Evan Johnson, Deputy Controller for Legislative at the Controller's Office, representing Comptroller Cohen. I am not a tax expert, and we have several tax experts here with us, so I'm going to keep it short. And I simply want to thank.

I wanted to be here today on behalf of the controller to thank the Senator for his work on this and for his support on this issue in ensuring that there's a fair and equitable tax implementation of the tax code for all. And just wanted to appreciate the opportunity to both support and sponsor this resolution.

Great. Thank you, sir. Next witness.

For the record, my family is an Oakland A's Family, you know, hurt me once, blame me, hurt me twice. So, I also want to put on the record that we bought my son, our ten-year-old son, a Shohei Ohtani Los Angeles Dodgers Jersey for Christmas. And so we are in no way biased for or against this bill. My name is Dennis Ventry. I'm a Professor of law at UC Davis, where I specialize in tax policy, tax Administration, tax practice, and legal ethics.

I am also a former chair of the IR's advisory council. SJR 14 relates to a federal law that was enacted in 1998 that purports to preempt states from taxing income of a taxpayer that is earned in a state but defer receipts until a later date. The law effectively turns the federal deferral into a state exemption. It costs Congress nothing, but it costs states unknown amounts of revenue. Furthermore, the legislative history reveals pretty clearly that the law was designed to protect income from tax, I'm sorry, to protect from tax income in retirement plans of modest-income workers. It was not designed to protect from tax income on millionaires and billionaires who didn't need a 0% tax rate on the retirement savings to survive. Now, it's fair to say that we wouldn't be here today but for Mister Otani and the contract that he signed with Los Angeles Dodgers. But I'm here to tell you that this practice has been going on for a long time.

Perhaps not with professional athletes yet, but the compensation packages of executives up and down the state have long exploited this loophole. And there are a lot more c C-suite executives in California than there are professional athletes. Finally, I should say that if the - yeah, sorry - finally, I should say that if the National Congress fails to respond to our state resolution urging it to raise the 0% tax rate on deferred income of high-income earners, California has at least two other forms of recourse. One, it can leverage the judicial presumption against preemption. This is a classic case where a preemption should be read narrowly.

That is where, in this case, Congress, one, ignored state sovereign police powers to tax income earned within their borders, two blew a hole in state budgets, and three, facilitated heightened net worth individuals migration to other states and countries. And then also another form of recourse would be to use the substance over form arguments to convince courts that Congress never intended to create this 0% tax rate on deferred comp to high net worth individuals. I urge your vote yes on the resolution.

Thank you. Thank you. Anyone else here in the hearing room want to speak in support of the resolution? Please come forward. See none. Anyone here in the hearing room want to speak in opposition to this measure? Okay, so we're not going to discriminate against Dodger fans. Just for the record, if they were here, they could testify. Senator Dodd.

So it's clear in the law, in the federal law, that deferred compensation, even when the deferred compensation comes due. The fact that it was earned in a specific state means nothing. Do you follow the question?

Do you mean in terms of -

Because obviously all the income in the 10 years was earned in the State of California.

Correct.

It was deferred till after ten years so he can go, presumably he in this case, or many other executives can go somewhere else besides California. But clearly the income was earned in the State of California; the federal exemption gets down to that level?

Yes. I mean, there's no denying that there's a possibility that the executive or whomever the employee is moves to another state and during the period of earning the income and before retirement, such that the deferred comp then gets paid out, in which case, then you kind of have to split which state which jurisdiction actually is getting, is getting the tax revenue.

Right. And just to follow up on Senator Dodd's question, that means that in the case of a baseball player, you just said if an executive moved to another state and earned some income while they were living there, there would be some obligation. For a professional athlete that travels to Arizona and Texas and New York, et cetera, on the baseball circuit: those obligations are, they have a tax obligation in those jurisdictions, right?

Yes, precisely right.

So, in fact, other states are going to have the same anxiety that Senator Becker has expressed in his bill to this deferral issue. Isn't that correct? Yes. So maybe that helps the case with our good United States Congress. Wthout any other comments or questions to - yes, Senator Dalhe.

I just want to make a comment. You know, we are driving out, our biggest tax base is wealthy people. 40% of our tax general fund comes from people a million or making $1.0 million or more, and some of those are billionaires, and we have seen them migrate out of California, the law that you're talking about. So most of our state employees work here and then retire in Nevada because there's zero, at least close to my home, most of them move to Nevada because there's zero state income tax. And so in their pension, they're gaining $600 to $1,000 a month more in their pension that they receive from California. So, how would this affect those folks if they change the law? Somebody who is a state employee, who worked here for years, moves to Nevada, who gets a benefit because of tax law, they would be penalized as well if Congress changed that.

Right. So it would depend on how Congress reacted to the extent that they reacted to this resolution; this particular form of compensation is nonqualified compensation. And for as this particular bill that was enacted in, I mean, law that was enacted in 1995, the bill started in 1991. It only applied to pensions and qualified plans, and only at the last second did the nonqualified plans get thrown in.

So, to the extent that we were talking about high-income individuals, folks like Shoehei Hautani, professional athletes, those are nonqualified plans. Those are not pensions and annuities, defined benefit plans, defined contributions plans.

Well, I think that we should maybe try to figure out how to keep all these people in California because the biggest loser is California. And we're seeing that now. I brought this up in budget where when the stock market's doing well, which it's not today, it's down 500 points today, but it was up over almost 39,000. That's the highest it's ever been. And we're still seeing a revenue drop in California. It's because our tax base is leaving, and we're not doing anything to keep them.

We need to focus on that like, just like we did in the last bill with ADUs. We're trying to keep people here, but not when it comes to taxes. We're pushing them out or keep hammering on them and they're leaving. At some point, we got to fix that problem. And until we do, we're going to see people leave California and we have to have a tax base before we can have a private side. I'm not going to be supporting this bill today.

We need to reform our tax system in California so that we can actually keep business people here and keep our state employees that leave and keep that tax base in California, and the laws that we have, as far as taxing goes, don't benefit those people at all.

Thank you, Senator Dahle. Senator Ashby.

Thank you. As the Member for Sacramento, I want to tread very lightly on any MLB reference this week. Sorry, Senator Skinner, but I do want to take the moment to say to you, Senator Becker, that I think this is a brave bill. Baseball aside, you represent a part of the state, and I think you will have members who are impacted by this decision. And I think it's, you are truly putting forward a conscience for the rest of the state.

So I wanted to take the moment to thank you for doing that.

Thank you.

Very nice. I have another bill to share with you, another hearing on that general point. All right. Any other comments or questions? Senator Becker would like to close.

Thank you. Yeah, I appreciate the discussion. And yeah, I think this is, number one, about doing the right thing. I appreciate the comments of the committee. I think number one, this is about doing the right thing. We're earning, this is income that is earned here. It should be taxed here. In response, Senator Dahle, I actually agree with you again. I do represent a lot of those high owners and I have seen a lot of people, people leave.

And I think we do have to look at our tax system. But this is, this kind of policy actually, in good, encourages someone to leave as opposed to encouraging someone to stay. And we want to do all we can to encourage people to stay and continue to earn income and then paying their fair share here. So with that, respectfully ask for that vote.

Okay, Senator Becker. And the resolution itself says that it asks congress to establish a reasonable cap on defense for compensation. Doesn't mean it's necessarily going to capture retirees.

Right. As the analysis. Right. As the analysis mentions, that was sort of the witness, I think, alluded to. It was originally contemplated for people making, say, $30,000. Right.

And even the Senate Judiciary Committee analysis from Congress that kind of points out the problem that were, you know, that they were actually creating this unlimited liability, which is what we're now dealing with here.

Trying to cap. Okay. Yeah. Senator Dodd has moved the bill. This would be a do pass. No, I guess to simply be adopted. Okay. It's simply that it be adopted. Secretary, call the roll.

[Roll Call]

Six to one. Congratulations on that. Senator Padilla, I think you're.

May I make one note about the analysis, the committee analysis on the last of the bill we just voted on? It was very good, but I just want to make the note that Mr. Otani should be very happy that the Dodgers did not make his contractual arrangement was such that they put in the money as what happened to Billy. I forget Billy's last name, Bonilla, where the Mets put it into Madoff's fund. And I guessing that Billy Bonilla has never seen a dime of that.

Okay, well, that was a point of personal privilege by Senator Skinner and we appreciate that. Okay. All right, we're going to go to our last bill of our session. Senator Padilla, this is file item number 11, Senate Bill 1191. Senator Padilla, thanks for your patience today and participation, and you can begin as soon as you're ready. And members, for the other members here, then we'll take up all the bills that remain.

Senator Padilla.

Thank you very much, Mister Chairman and colleagues. SB 1191 is a specific conformity provision. I want to begin by accepting the Committee's amendments and thank you and your staff for working with us on this Bill. I think we're well aware that we continue to feel increasing impacts of climate change and that every mechanism or tool at our disposal should be employed within reason.

Also, the 2022 Federal Inflation Reduction Act, or IRA, contains several clean energy investment incentives, and two of those provisions provide additional mechanisms for eligible taxpayers and entities to monetize certain clean energy tax credits. California does not automatically adopt these, which has created a disconnection between the federal and state treatment of clean energy tax credits in California. Taxpayers who sell these credits may be required to include the sale of the credits gross income for franchise tax purposes.

Without alignment, projects in California will not be able to access federal tax incentives, making these projects more expensive, and those costs will ultimately be passed on to ratepayers. By enabling California businesses to utilize the incentives laid out in the IRA, SB 1191 will accelerate clean energy developments in California and make this energy more affordable for our constituents. And with me today is Stephanie Doyle with the Solar Energy Industries Association.

Miss Doyle, the floor is yours.

Thank you. Good morning, Chairs and Members, my name is Stephanie Doyle, and I'm the California State Affairs Director for the Solar Energy Industries Association. We're the national trade group for the solar industry, representing over 1000 companies all across the solar market segments. SEIA strongly supports SB 1191. The Bill simply conforms California tax law with federal tax law regarding the treatment of the investment tax credit, or the ITC, by investors in clean energy technologies.

Current state law does not subject investment tax credits to income tax in California, and SB 1191 would continue this practice to ensure continued and increased investment in clean energy technologies in the state. The Inflation Reduction act made a handful of changes to the investment tax credit, including extending the sunset and allowing for new means of using the investment tax credit, hence necessitating conforming our state tax law.

Use of investment tax credits ensure greater affordability for California energy consumers by taking full advantage of those federal incentives that can reduce project costs. Lastly, I want to thank Senator Padilla, his team, and Committee staff for their hard work on this Bill. And if there are additional technical questions, SEIA Member Jacques Abadi of US Bank is here to help me answer those.

Thank you, Miss Doyle. Anybody else here wishing to testify in favor, please come to the microphone. Do a me too.

Leah Barros, on behalf of Independent Energy Producers in support.

Thank you, Miss Barrows.

Thank you. Melissa Cortez, on behalf of the California Wind Energy Association, in support.

Thank you.

Cara Martinson on behalf of the Large Scale Solar Association, in support.

Thank you.

Good morning, Mister Chair and Members. Meegen Murray with the Weideman Group. On behalf of AES Renewable Clean Energy, RWE Renewables, and SB Energy, all in strong support. Thanks for your time.

Good morning, Mister Chair and Members. Graciela Castillo-Krings, on behalf of the California Storage Alliance. Thank you.

Good morning. Tiffany Phan, on behalf of the California Efficiency and Demand Management Council, in support. Thank you.

Mister Chairman, Members. John White with the Clean Power Campaign. We're a coalition of environmental NGOs and clean energy companies, in support.

Good afternoon, Mister Chair and Members. Jason Bryant, on behalf of Wellhead Electric, we're in support. Thank you.

Anybody else here in the hearing room in support? We'll go to opposition. Anyone in the hearing room here in opposition want to come forward? All right. Seeing none, we'll bring the matter back to the Committee for comments or questions. Comments or questions. Okay. Senator Padilla, would you like to close?

Thank you. Mister Chairman, respectfully ask for an aye vote.

All right. Senator Skinner has moved the Bill. This is a do pass as amended. You took the amendments, is that correct, Mister Padilla? Do pass as amended to appropriation. Secretary, please call the roll.

[Roll call] 7 to 0.

All right. That Bill is out 70 Members. We're going to go through the agenda now for Members who want to add on. Just wait 1 second. I'm going to start with the consent calendar. Consent calendar has been moved. Secretary, please open the roll.

[Roll Call]

The consent calendar is approved. Six to zero. We're going to move next to file item number two. There is no motion on this. All right. Senator Dahle has moved. File item two. That's 1086. This is a do pass to appropriations. Secretary. Please call the roll.

[Roll Call]

All right. That Bill is defeated. Two to four. And reconsideration is requested without objection. It's been granted. We're going to move next to file item four is done, correct? Yeah, that's done. We're going to move next to file item number six. This is 1192 by Portantino. Secretary, please open the roll.

[Roll Call]

That bills out seven to zero. Move next to file item seven. SB 1230 by Senator Rubio. Secretary, please open the roll.

[Roll Call]

That bills out six to one. Moving next to file item eight. SB 1261 by Senator Alvarado-Gil. Secretary, please open the roll.

[Roll Call]

Moving next to file item nine. This is SB 1436 by Senator Allen. Secretary, please open the roll.

[Roll Call]

All right, that Bill is out six to zero. Okay, file item 10. We're going to. We're going to need a motion on it, but I'm going to first go to Senator Ashby for a comment before I entertain a motion.

Thank you. I just wanted to say that this item I have some concerns with. But because if it makes it out of this Committee, it comes next to a Committee that I chair, I will have plenty of opportunity to work with the author there. And in deference to him, he is a very good author who works hard on his bills. I am willing to vote for it today. However, making the motion was a bridge farther than I was willing to go. And I wanted to make that statement on the record so that he knows we have an opportunity to talk about it further when it moves to its next Committee.

Great. And I will, as the chair, concur with Senator Ashby's remarks. I know the author wants to continue to work on this, and his intentions are good. I'll support the Bill today, knowing that he's going to continue to work on it. Yes. Yeah, it does need a motion. And I see Senator Dali's hand up. I see it across the room. So Senator Dahle has moved. This is a do pass to business, professions, and economic development. Secretary, please open the roll.

[Roll Call]

That Bill is out. Seven to zero. And we did 14. All right. That seems to complete all of our business here today, ladies and gentlemen. With that, thank you for your participation, and this session's adjourned. It.