Senate Standing Committee on Revenue and Taxation

Good morning, everyone. Welcome to the Senate Committee on Revenue and Taxation. We have 10 bills on our agenda today. File item eight. SB 1327 has been pulled by the author. We have two bills on consent. File item 10 and 11. I know we have authors here in the room. Thank you for being here on time. The custom of the Senate is to have at least one other Member present to begin as a Subcommitee.

So I would like to invite colleagues who are here in the building to come down to room 1200 so we can begin our business as we have two authors in the room ready to go. And there we have a. So we don't have a quorum here yet, but we We will begin as a Subcommitee. Now we have three authors in the room. I know we have a lot of committees meeting at the same time.

We could offer some bonus testimony here this morning on the A's coming to Sacramento. Anybody like to come up to the microphone? I guess that's not on the agenda. Not agenda. So we can't do that, huh? All right, so we'll pause as we wait for another Committee Member to join.

We are. Okay. Well, thank you, honorable chair. And I am here to present SB 964. And thank you, Senator Bradford, for getting to the meeting this morning so we can get started. First, I would like to thank the Chair and the Committee staff for all the work with my staff on this important measure, and I will be accepting the Committee amendments.

SB 964 is a very important bill in response to two recent Supreme Court rulings that have drawn our state's current guidelines for the sale of tax-defaulted properties into constitutional question. With me here today to best explain the important issue is Ensen Mason, who is a treasurer tax collector for San Bernardino, county, to explain the technical issues facing counties. And then I also have Jim Manley, who is the legal counsel from the Pacific Legal foundation to explain the legal implications of the Supreme Court rulings.

Thank you, sir. So our practice here in the Committee is two witnesses, two minutes each as primary witnesses. So you may begin when you're ready to touch that thing.

There we go. Thank you. My name is Ensen Mason. I am the auditor, comptroller, treasurer, tax collector for the County of San Bernardino. I want to start out by saying I represent myself, not my association, and I'm here to support SB 964. I am stuck between a rock and a hard place. On the one side, we have the Fifth Amendment of the Constitution that says you cannot take people's property without just compensation.

And that's backed by a recent Supreme Court ruling, Hennepin County, where the justices said 9-0 very strongly that, yes, this does apply to tax defaulted property. On the other hand, I have state law that says that we have an auction process. That's how we comply, that's how we're sure that we are paying fair value, and it works. People get their equity, and the process works.

But, however, we have this thing in state law that says that if a nonprofit or a government agency objects, we must, we shall pull that property for the purpose of selling it to them, usually at far below market value. Sometimes, oftentimes, the homeowner gets nothing. It is in violation of the Fifth Amendment and the SCOTUS ruling. So which law am I supposed to follow? I have two sides that say opposing things. I need some kind of legislation, legislative solution to this.

We also have something that concerns me. We have class action lawsuits popping up across the country. Recently, there was $108 million settlement in Minnesota. There's two more going on in Oregon and New Jersey. You know, California is much, much bigger than Minnesota, so this could be a much, much bigger deal. We need to fix this so that we at least are doing things correctly from here on out. I'm not sure if we can stop the lawsuit.

It's probably going to show up sooner or later, but we need to fix this so at least we have mitigated the damages going forward. Thank you.

Thank you, sir. Next witness.

Thank you, Mr. Chair, Members of the Committee, I'm Jim Manley. I'm the state legal policy deputy director for Pacific Legal Foundation. PLF was founded 50 years ago right here in Sacramento. We have 18 wins at the Supreme Court, including Tyler v. Hennepin County, 5he case that brings us here today. And the simple message from the court in that case was governments cannot take more than is owed when they're collecting a property tax debt. And so reforming California's Chapter Eight process is not optional.

It is required by the Constitution, required by the Supreme Court's ruling. As Ensen suggests, it is just good public policy because it is ultimately going to cost the state millions of dollars in claims if it's not reformed. While California law generally prevents the government from taking more than is owed, the Chapter Eight process creates this problem because the sale happens off-market. One county transferred four undeveloped commercial properties to another government for less than the assessed value of just one of those parcels.

There are millions of dollars in claims outstanding. Regardless of the reason, counties cannot transfer property under Chapter Eight for less than fair market value. If they do, they face claims under Tyler for taking property without compensation. This bill gives counties the information they need to set the price of a property in Chapter Eight sale at fair market value, at least.

If the property is worth more than the tax debt and the fees and penalties, then it should really go to a public auction and the government should get the most money for it. But if it does go to a Chapter Eight sale, it should at least be sold for the amount that the property is actually worth and not a severely discounted price that that deprives the property owner of their equity in their property.

Thank you, sir. Okay, we're going to now have those who would like to speak in support of the measure to do a me too, we call it here in Committee, where you come up to the microphone and give your name, affiliation, and your support for the bill. So those who would like to add on now, this is the moment to come to the microphone.

Hoffman Howard Jarvis Taxpayers Association, along with the Apartment Association, Greater Los Angeles AOA California, the California Taxpayer Protection Committee, Central Coast Taxpayers Association, Central Valley Biz Fed, Central Valley Taxpayers Association, Glendora Chamber of Commerce, the LA Taxpayers Association, Monterey County Farm Bureau, Nisei Farmers League, Orange County Taxpayer Association, Placer County Taxpayer Association, San Joaquin County Farm Bureau, Solana Solana County Taxpayer Association, and the Western Manufactured Housing Communities Association. Thank you.

Tobias Wolken with the California Taxpayers Association in support. Thank you.

Anybody else here in the hearing room want to indicate their support? Seeing none, we'll go to opposition. If there are opponents to the measure that would like to come forward, provide the same opportunity. Two minutes for two primary witnesses in opposition.

Good morning, Mr. Chair and Members. Karen Lange, on behalf of the California Association of County Treasurers, Tax collectors, the other 58. I want to thank you very much for the analysis that outlines the issue before the Committee this morning. It really helped lay out the issues very nicely. As noted, the tax collectors do rely on published guidance from the state comptroller's office when they execute tax sales.

And when Tyler v. Hennepin was decided last summer, I reached out to the comptroller's office to find out what, if anything, would need to change so that we could get ahead of it. We didn't want to be out of compliance with constitutional law, and we were advised at that time by the legal team at the comptroller's office that no changes needed to be made because the Chapter seven sale process provides for excess proceeds and a year to claim them.

And we were not advised of any changes. So when the author decided to introduce this bill again, I shared the letters we had produced for the previous two pieces of legislation on this issue and also encourage them to consult with the controller's office, since that's what we rely on, is the Chapter Seven and Chapter Eight tax sale procedures that are published by the controller's office. That's how my client executes the sales.

Unfortunately, the bill is premised on the fact that my client is stealing equity from homeowners. The reality is that even though the bill says it's the Home Equity Theft Prevention Act or a version of that, the actual reality of what Chapter Eight is used for is going to be very problematic. Properties, vacant properties, properties that are Brown Act or, excuse me, brownfields that need to be cleaned up.

I don't think that there's been an example yet that we've been provided where my client has taken an occupied residential home to a tax sale and sold it for less than it was worth. There just aren't examples of that here in California. This is the third time the bill has been attempted. We haven't. Again, like I said, we haven't found any examples. And if the committee passes the bill the way it is, it doesn't just affect residential properties, it affects undeveloped parcels, commercial property.

And they will have to go to the BOE for every parcel that they need to dispose of. And that could include thousands and thousands of parcels that are sometimes bunched together. For example, Imperial County has hundreds that they need to dispose of. They group them together in 15 and do a Chapter Eight sale. So we're very concerned about what this will do because it goes too far. And we would urge an aye vote or an, excuse me, a no vote or an abstention.

And I want to pass it off to Patrick Sullivan from Lake County, the treasurer, tax lecturer there, who is dealing with 12,000 parcels he's under court order to sell.

Patrick Sullivan, Treasury tax collector for Lake County. Thank you to the Committee for the opportunity to be here today. I just want to share some details about the situation in Lake County. The majority of our standard parcels sell in Chapter Seven auctions without any issue. But these are not the majority of our tax-defaulted parcels. The majority have an assessed value less than $10,000, most of them less than $5,000.

Our average tax bill is just $32 on a lot of these parcels. And we have 12,000 paper lots, lots that were created by land speculators over a century ago. 3500 of them are already auction-eligible. We have done auctions of 1000 parcels in the past for the more valuable parcels. This has nearly broken our office. We're a small office. The resources involved are enormous to go through these sales. Mostly they receive no bids, almost 80% of them.

Once we go to the paper parcels completely, we would expect no bids. It costs $500 to $700 in general fund per parcel. So in order to go through those 12,000 parcels, ultimately we are talking millions of dollars in additional staff, resources needed to go through Chapter Seven to then go to Chapter Eight. I guess the parcels are undevelopable. In most cases, they're geographically or geologically unstable. There's no roads every once in a while.

In the past, one would sell to an unsuspecting buyer who would then contact the county. We've had people wish to donate them. We've had people that have bought them. After a more predatory buyer bought one at auction and flipped them. So this is a major burden for our office, and that is the majority of what we have. We're not generally dealing with Chapter eight for occupied homes.

For instance, one of the concerns we have about the suggestion that the BOE can do this is timeline, 45 days. Whether that's really viable. It results in additional delays going through Chapter Seven. We have to duplicate the Chapter Seven and Chapter Eight process. Spend that money twice. and I'd just say Chapter Eight sales are erratic in time and frequency. The volume of properties could vary significantly. A thousand of these paper lots versus a mix of residential or commercial or vacant blighted lots.

That's often what we deal with. We did have four. I don't know if the reference earlier was to our county.

Can you sum up, please?

But, yeah. Often assessed values are lower. There are issues with these lots. These low value parcels are an issue for us, and there are other ways to address them.

Great. Thank you very much. We're going to now do me toos for those in opposition to come to the microphone.

Mark Stivers with the California Housing Partnership. Since the Chapter eight process has created a lot of lots for affordable housing. Thank you.

Thank you.

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

Mr. Chair and Members, Jean Hurst here today on behalf of the Urban Counties of California in opposition. Thank you.

Jeff Neal, representing the boards of supervisors of Contra Costa County and Lake County. Also in opposition.

Anybody else here in the hearing room, in opposition? Last chance to come to the microphone. Okay. Close the public portion of our hearing. Bring the matter back to the Committee. Questions or comments? Senator, do you want to speak to some of the concerns that the opponents have raised?

Sure, I can do that, and I'll do it more on kind of an overview method. I'm going to get into the weeds with each of the parcels that they're talking about. Many of the parcels that they're talking about are not affected by this at all. What we are talking about are parcels. And while the opponent stated that they had never seen one of these, I've seen two on my block. And these were people.

They lost their home and they lost the equity that they had in their home, and they got to be homeless. That's what brought it to me. I'm not brainwashed by the Howard Jarvis people or anybody else. These are things that I see in real life. My wife is a tax professional, and she deals with people that are affected like this.

So this is not something that affects some of these larger parcels that have no value, that we're talking about being able to protect people, because a lot of times behind these properties are a family or people that would have equity otherwise, but they just don't have the. The wherewithal to continue to do what it takes to maintain and own their property. And so when it goes to foreclosure, whatever, we shouldn't be compounding their issues by taking what little equity they have and giving it away.

In other words, it is not their money to give away. It is the people who own the property. If there's equity in it, it should go back to those people and it shouldn't be that hard of a process. And with that, I would ask for your aye vote.

That wasnt' a close. It's just the first question.

Oh, okay. That could be a close.

So I appreciate your recognition of what you're, the heart of what you're trying to do, which is to focus on residential. I've heard the testimony that in the case of Lake County, many of these are not residential parcels. Right. And I think the other witness talked about problematic properties, which could be alleys and roadways and the rest. So are you open to trying to narrow your bill to just residential properties, then?

Well, it depends, because some commercial properties are also owned by a family or somebody else that may be in the same situation. And so some commercial properties, yes, but the properties they're talking about are blighted properties that have no value, pretty much. And they've been either devalued by the things that are going on around them.

But I will be more than happy to work with anybody to ensure that people are protected in this case and that the money that is rightfully theirs stays theirs. And allows them the time to be able to, after this catastrophic event in their lives, be able to take that money and at least try to rebuild their lives off of the money that their family or themselves have in equity instead of having it taken away from them.

As you know, I'm in agreement with the basic thrusts of the bill and the amendments you've taken to me satisfy an obligation to ensure that if there's value in the property, it goes back to the property owner. But I do think these issues that have been raised are different than the heart of what your bill is proposing to do. And I encourage you, if the bill moves forward today, to take seriously those. There are easy opportunities for you in this bill to carve out these examples that we heard this morning.

Yes, we'd be more than happy to continue to work on the bill if it goes forward. But like I said, the main thrust of this bill is to protect people from losing and compounding the issues that they've had and because they've lost enough, maybe due to their own inability to manage their lives. But if there's equity for them to be had, it belongs to them, not to everyone else who wants that piece of property.

I get it. But, you know, the challenge of making a law for the State of California is that you have a million parcels and there's all kinds of examples that, unique examples. And so it's a part of our challenge in the lawmaking side to make sure that the unintended consequences are what we watch for more than the heart of a number of the policy proposals, because it's easy to not understand all those complexities and those elements.

And I do think the witnesses in opposition have raised some good examples that seem, don't interfere with the heart, the thrust of what you're trying to do. And so while they're not part of the amendments today, I do think they should be taken seriously.

Oh, absolutely. We take everybody's concerns seriously and are willing to work with anybody who wants to work with us on making the bill better. But being in compliance with what the Supreme Court has already ruled is very important because at the end of the day, when those issues are challenged and we lose, it's not them losing, it's the taxpayers that are losing. So with that, if there are no other questions,

I don't know. I'm going to ask. Okay. Any other questions here from Members of the Committee? All right.

Well, I'm willing to support your bill today, appreciate the amendments that you've taken, and I do think that it's important, from my point of view that you work with some of the opponents in their unique situation, so that while we're trying to create a bill that affects everybody, we take into account some of these more unique circumstances that have nothing to do with a residential property owner who, unfortunately has not paid their taxes and is in default and you want to protect their value, which I agree with.

But there's so many other examples that I think you, you can work on. If the bill moves forward today that. Would you like to close?

No. What we talked about before could be my closing. I just appreciate an aye vote when you get to the measure.

When we do have a quorum, we'll entertain a motion on your measure. All right.

Thank you very much.

Thank you all for being here on this. All right. All right, next up is file item. Do we have an author here?

Senator Wiener. Where is he? There he is. Okay, we're going to move to file item number two. This is SB 1031 by Senator Wiener. Thank you for your patience this morning. Senator Wiener. Did you want to take that one first or you want to wait for your co?

I don't think she'll be here.

All right, so we will begin with file item two, SB 1031. Senator Wiener, the floor is yours.

Thank you very much, Mister Chair. I'm here to present Senate Bill 1031, the Connect Bay Area Act. My legislative partner in this Bill is Senator Wahab, who unfortunately has a conflict, and she very much wishes that she could be there. And I want to thank Senator Wahab for working very closely and collaboratively with us on this Bill. So, and Mister Chairman, I also want to thank you for your deep engagement along with Senator Cortese, the Chair of Transportation.

We've spent a lot of time together working amongst ourselves and with diverse stakeholders. And yesterday in Transportation Committee, we committed to a series of amendments that we'll be taking and presumably in the Appropriations Committee. I can read those now if the chair would like.

I think that'd set the stage right for those who are here potentially offering testimony.

Okay, I'll do that, perhaps at the end of my opening remarks. So, colleagues, public transportation is part of the lifeblood of the Bay Area. Even post pandemic, a huge number of Bay Area residents rely on transit to get around, whether it's every day or once a week. And these systems are critical to our economy, to our quality of life, to trying to control congestion on our freeways, which would spike without transit. And of course, helping us meet our climate goals.

We need more public transportation, not less. Even before the pandemic, our public transportation systems, we're struggling with structural operating problems. Frankly, we, unlike pretty much every other country that has robust public transportation, we provide remarkably little tax support for these systems, particularly the multi county systems that are not nested within one county that supports them. So BART, AC transit, Caltrans, etcetera. The pandemic made the problem much worse. Ridership is recovering, but it's not recovering quickly enough.

And so the goal of this measure is what it will do is authorize the Bay Area, either via the MTC or via a voter initiative, to place a regional ballot measure on the ballot to provide long term sustainable operating support for these systems, to stabilize the situation once and for all, and also to make capital investments both in public transportation and in roads.

It authorizes various options for the funding sources, and it also, this measure does not simply put more money in, but requires actual reform of how we do public transportation in the Bay Area. Most significantly, it will require a strong network manager. Network management is about integrating our systems. We have 27 transit operators in the Bay Area. They are too disjointed and there's been work over time to bring them into better integration, and we need to be much more aggressive about that.

So the Bill will require strong network management and strong and enforceable network management so that for the rider, the experience improves and it becomes more and more seamless to travel on various systems. The Bill also contains a provision which Senator Wahab has championed to require a study for the first time, around consolidation. We have 27 agencies.

While we don't want to presuppose what the result will be, there's been discussion of a long time in the Bay Area about whether we should consider some form of consolidation, and this will require a robust study to actually report back and so that we can have the actual facts.

The Bill I want to just note that I've learned over many years, and Senator Dodd and I learned this when we served on the MTC together, that there are few forms of politics quite like regional transportation funding politics. And it is always rough and always a back and forth. And I wanted to stress that I am keenly aware that this Bill is a work in progress. This is going to require to have any hope of passing something regionally.

It's going to have to have broad support among our colleagues in both houses in the Bay Area delegation, among the business community and labor and transit and environmental advocates and local government. We have to have as broad consensus as possible to have a real shot at passing this. We're going to continue to do that broad outreach, and as you'll hear today, there's a lot of opinions, opinions about where we should be going, and we're going to continue to do that work.

And then, of course, if we are successful in the Legislature, that'll happen at the regional level. In terms of what we committed to do yesterday, I will just note one of them. What we committed to is that the MTC's authority to put a measure to voters will expire in 2040. The tax measure may not have duration longer than 30 years. The goal will be to raise 1.5 billion annually. Any sales tax will be capped at one half cent.

We're keeping placeholder language for the new transit pass proposal in the Bill. The MTC can only bond against revenues raised by the taxes authorized by this Bill and that are retained by MTC. Bonds can only be used for capital investments. MTC, as network manager, will have authority to condition existing STA funds on network management policies subject to prescribed guardrails in the Bill. Other funding streams that exist today will not be changed in terms of being able to be conditioned.

The law will remain the same for those other funding streams. And then on the issue of return to source, we. I'm very committed to continuing that conversation regionally. And so that's what we agreed to yesterday. So with that.

And I believe that that term sheet's been shared with Members.

Thank you for.

Yeah.

And so with that, I respectfully ask for an aye vote and thank the Chair again with me today testify is Georgia Dorman, the Director of Legislation and Public Affairs at the MTC, and Danielle Schmitz, Director of Capital Planning and Development at the Napa Valley transportation.

Thank you, Senator Wiener. Before hearing from your witnesses, we have a quorum. We're going to establish the quorum secretary. Please call the.

[Roll Call]. You have a quorum.

Okay. A quorum is present. So we'll look to your two witnesses. We have two of them. Primary, two minutes each. Please begin when you're ready.

Good morning, or. Yeah, good morning. Chair Glazer, Vice Chair Dahle and Members, I'm Georgia Gann Dohrmann. I am the Assistant Director for Legislation and Research at the Metropolitan Transportation Commission. We are the transportation planning, financing and coordinating agency for the San Francisco Bay Area. I would first like to thank Senator Wiener, Senator Wahab, for their really bold leadership in leading this Bill.

I also wanted to thank the Chair and Senator, the Chair, Senator Cortese, and the pro tem for all their really close coordination and work on this as well. So SB 1031 is admittedly a very ambitious undertaking. It recognizes that in this post-COVID world, we cannot have the world class transportation system that Bay Area residents want and deserve without two new things.

So first, significantly more dedicated resources for transit and other transportation improvements, and then two, greater oversight and coordination of the region's 27 different transit operators. MTC is sponsoring at SB 1031 to deliver on these goals because we believe our region's future, as well as the state's climate, equity and economic goals, really depend on it. The Bay Area cannot thrive economically, socially or environmentally without a reliable, convenient and better coordinated public transit system. But this is not just a Bill about transit.

It is essential to ensure residents paying into the measure receive benefit regardless of how they choose to travel. It's also important for many of our business and labor partners that there are some significant funds to deliver on capital improvements. And so that is why one quarter of the SB 1031 funds are proposed to make local streets safer for all users.

And there's another 15% dedicated to a multimodal infrastructure program that would be aligned with county priorities and consistent with our long range plan and the state mandated climate goals. Both of these programs are formula based, with counties guaranteed to benefit in proportion to their contribution to the tax. I ask for your aye vote today so that Bay Area voters will have their own chance in 2026 to vote for a truly connected Bay Area. Thank you.

Thank you. Next witness.

Good morning. Is it working? Good morning. Chair Glazer and Members of the Committee. I'm Danielle Schmitz with the Napa Valley Transportation Authority and the Vine Transit System, and I'm here today to voice support for 1031. NVTA holds a unique position because we are not only a congestion management agency, but we're also the sole transit operator for Napa Valley. Like many transit agencies across the United States, the Vine Transit System is still recovering from the effects of the pandemic.

And while ridership is recovering slowly, additional revenues are needed to increase frequency and expand expand service hours and improve connections to the central Bay Area, which is critical for our labor market to provide a robust transit experience for the 4 million plus visitors Napa County hosts each year. 1031 is a balanced Bill that has taken into account feedback from transportation professionals as it works to modernize and improve connectivity to the Bay Area for residents and workers, regardless of how they travel.

MTC and a wide range of Bay Area stakeholders, including NVTA and other transit operators, county transportation agencies, business and labor and advocacy organizations have been convening since 2022 to ensure 1031 addresses the Bay Area's top needs and priorities. SB 1031 complements the work being done by MTC. As Miss Gann has pointed out, MTC's regional network management and oversight establishes guardrails to ensure MTC's network actions are consistent with the legislators' intent to improve the transit riders experience and increase Bay Area transit ridership.

Therefore, I'm here to express NVTA's support of this Bill and urge the Committee Members to vote aye today. Thank you.

Great. Thank you very much to both of you. We're going to now open the microphone up for those who want to indicate support for the measure with just a me too. Your name, affiliation, if any, and support for the Bill, please come up to the microphone now.

Good morning. Sebastian Petty with SPUR, we support and seek amendments.

Thank you.

Jonathan Cole with Climate Action California. We support and seek amendments.

Thank you.

Jim Lites, on behalf of the San Francisco Bay Area Rapid Transit District, also support if amended, but we look forward to reviewing the amendments from last night and moving to full support very soon. Thank you.

Thank you.

Good morning. Francisco Morales here on behalf of the Housing Action Coalition, in support. Thank you.

Thank you.

Jeanie Ward-Waller, representing Transform, member of the Voices for Public Transportation Commission Coalition. Excuse me. We support if amended. We'd like to see additional progressive mechanisms included in the bill, such as the income tax.

This is an opportunity for me-too, but you're welcome to submit testimony and I know we've met.

Thank you.

Offline already and appreciate your input.

Good morning, Chair and Members. Andres Ramos with Public Advocates, also members of the Voices for Public Transport. Voices for Public Transportation Coalition in support if amended for the same reasons.

Terrific. Thank you. Anyone else here in the hearing room testify in support. Okay, we're going to move to opposition. Is there anyone in the hearing room in opposition to this measure? I see a hand. You're welcome to come up to the microphone, provide you with a couple minutes to express your opposition.

Thank you, Chair Glazer, Members of the Committee. First would like to express my appreciation to you and your colleagues, Senator Cortese, Senator Wahab, Senator Wiener, for their assistance in trying to put something together that works. As I mentioned to you, Senator, our objection. Our board has taken the position of to object unless amended.

We are appreciative of the current amendments, but our position, as you know, is that sales tax are the lifeblood of the Santa Clara Valley Transportation Authority's operational funding, and this bill, as currently written, would endanger that opportunity. Therefore, we continue to be in opposition. Agree wholeheartedly with Senator Wiener, admire his leadership in transit and transportation. We, like him, believe cooperation and coordination is imperative in order to be successful.

We also have concerns regarding the ability, the now adjusted ability of MTC to withhold funding associated with operations. We think that sets a bad precedent across the state. Thank you for the opportunity to express our board's position.

Thank you very much.

Mr. Chair and Members, Tobias Wolken of the California Taxpayers Association and respectful opposition. SB 1031 would provide the unelected members of the MTC with unprecedented taxing authority over the Bay Area's nearly 8 million residents across nine counties, increasing the cost of living and doing business in the area. The Bay Area has consistently been found to have some of the highest business operating costs in the nation, including the cost of labor, commercial leases and tax liability.

SB 1031 would exacerbate this problem by authorizing the MTC to impose sales taxes, parcel taxes, vehicle registration surcharges, and payroll taxes on businesses and residents in the Bay Area. It should not be understated that no other special district in California holds this broad and expansive taxing authority. These taxes would burden working families, penalize local businesses, and harm the economic prosperity of the region. Additionally, SB 1031 lacks the type of guardrails that are needed to protect residents from runaway taxes.

SB 1031 does not specify what elections these could be submitted to voters and does not require that these taxes be approved by the constitutionally required two thirds vote. Moreover, this bill would result in the unequal distribution of tax revenue between the region's nine counties. If residents choose to tax themselves, we believe that those tax revenues should be supporting the community. SB 1031 moves the Bay Area in the wrong direction.

This unprecedented new local taxing authority created by 1031 would result in fewer employment opportunities for Californians, depressed wages and higher housing costs, and would discourage companies from expanding their operations in the area. And for those reasons, we would encourage a no vote.

Thank you very much. Okay, we'll have me-too opportunities. Now come on forward and give us your name and affiliation.

Thank you, Mr. Chair. Matt Robinson on behalf of the San Mateo City County Association of Governments, we have an opposed unless amended position and a letter on the record laying out those concerns. We look forward to working with the author to resolve them. Thank you.

Thank you, sir.

Good morning. I'm Michaela Wright Petrik with SamTrans. We have an opposed unless amended position. Our letter is in the file. We look forward to working with the sponsors and with the author. Thanks.

Thank you.

Good morning. Jason Baker with CalTrain. We have an opposed unless amended position. We look forward to working with the author and the sponsors. Thank you.

Good morning. Grace Copeland, on behalf of the Bay Area Council. We also have an opposed unless amended position. Looking forward to working with the author. Thank you.

Thank you.

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

Good morning. Steve Wallauch, on behalf of the Alameda-Contra Costa Transit District. AC Transit has not taken a position yet. They have identified some areas concerned that they've informed the working group, and we look forward to working with Senator Wiener and Senator Wahab on resolving things.

Thank you, sir.

Thank you. Good morning. Preston Young from the California Chamber of Commerce here today in opposition.

Thank you.

Manny Lee on California Alliance for Jobs. Opposed unless amended.

Thank you.

Chris Lief, on behalf of the Sonoma County Transportation Authority, Regional Climate Protection Authority. Had an opposed unless amended position on the prior version of the bill. Reviewing the amendments in the term sheet. Thank you.

Thank you very much. Anyone else here in the hearing room want to indicate their opposition? All right, seeing none, we'll bring the matter back to the Committee. Well, let me begin by thanking Senator Wiener. Thank you for your leadership in this area, and, of course, Senator Wahab as well.

I've enjoyed the opportunity to get to know your world over the last three weeks, which has meant meeting with many of these stakeholders that have come up here in support with some suggestions, and opposition with some suggestions. And I know from our conversation that this is a work in progress as you try to find that consensus which is so difficult in this space, as you and Senator Dodd and others know.

I appreciate the term sheet, which is some matters in which you've found some agreement with Senator Cortese when it went through Transportation. You have heard from me directly, and I'll repeat it on the record, that while this bill has many fine components of it in its current form, I know that you've committed to continuing to work with me, with Senator Cortese, with our colleagues here in the Senate, and, of course, future work with the Members of the Assembly in trying to craft that final package, which I know you hope to accomplish this year. And I know that you've committed to.

If there are issues that I see as the bill moves forward, that you would welcome that matter coming back to this Committee for that review at any appropriate time in the process. And so with that, I'm really very pleased to support your bill today. I want to invite any colleagues, if there's any further questions or comments. Okay. Looking for a motion on this measure. Senator Dodd has moved the measure. This is do pass to Appropriations. Secretary, please call the roll. Hold on 1 second. Senator Wiener, would you like to close?

Respectfully ask for an aye vote.

All right, very good. Secretary, please call the roll.

[Roll Call]

All right, we'll put that Bill on call for absent members. And Senator Wiener, we wish you well on your work ahead on this with wonderful partners here in the Senate. All right, we're going to move next to file item number three. This is SB 1227. Senator Wiener, the floor is yours.

Let's wait for them to clear out. Okay. Thank you very much, Mister Chair. I want to thank the Chair and committee staff for working with us on this Bill, on the welfare tax exemption portion of the Bill. We've agreed on some amendments. I think due to timing, my understanding is it won't be amended coming out of the Committee, but there will be some further discussions with local government. And then we would put the amendment in, presumably, in Appropriations. But I want to make sure I'm not misstating that.

No, I think that's correct. As long as the Local Government Committee blesses those. And it'd be good if you put on the record the issues at hand.

Okay, so is that sufficient, Mister Chair, or do you want me to state more?

I think that explaining what those amendments intend to do would be appropriate at this time.

Yeah. So, right now, the welfare tax exemption for moderate-income housing is simply applying the same welfare tax exemption that other subsidized below-market rate homes receive. So, the amendment is twofold. First, it acknowledges that there are aspects of property tax that get remitted to entities other than the city and County of San Francisco, school district, BART, et cetera. And so those that will continue, we're not going to impact the Non-City of San Francisco recipients of the property tax.

In addition, this will be moved from the Revenue and Taxation Code to the Government Code, and then the city will have the ability then to use that portion of that property tax to incentivize the construction of this moderate-income housing. Have I accurately stated that?

Yes, you have.

Okay, thank you. I do my best. Okay. With that said, Mister Chair, again, thank you for working with us. This Bill focuses on the downtown areas of San Francisco, which are frankly struggling right now. And the analysis does, I think, a good job of laying out the details of those struggles. San Francisco's downtown is one of the slowest recovering downtowns in the country due to return to work or remote work. And we have very high office vacancy rate downtown.

It's in the mid-thirties and it's probably going to continue to go up as more leases expire in the coming years. Tax revenue downtown is way, way down, and there are some real challenges. And while many other parts of San Francisco are doing really, really well and are very, very vibrant, we just have a big problem downtown, Union Square, parts of South of Market, and so forth.

And so, this Bill does two things to try to help San Francisco as it reimagines what downtown is in terms of the possibility of not having the financial district be purely office, which is what it has been in the past, and having more of a mixed-use future of entertainment and housing, educational facilities and so forth, helping Union Square recover.

It creates a CEQA exemption, which we worked out amendments with the Environmental Quality Committee on, because physical changes are likely going to be necessary, and we want to facilitate those. And that CEQA exemption has strong anti-displacement protections in it, strong environmental protections in it. It's a very focused, narrow approach to facilitate the process. The piece that is before this Committee is creating what we created as a welfare tax exemption expansion. Obviously, as indicated, we're changing it to be a different structure.

But in the downtown revitalization area, to incentivize the creation of moderate-income housing, we know that we want the future of downtown to be very, very robust. We want people of all income levels to be able to live there. We want workers to be able to live near where they work or if there's educational facilities. We want that workforce to be able to live there. We want student housing to be there.

And this expansion of the exemption and the property tax relief will help create an incentive. I do just want to note that there are precedents for this. New York City has a fairly robust stock of workforce housing. It's actually huge. And when we ask, how did that happen, it's because after World War II, New York made the decision, because they had a housing crisis then, too, to provide tax abatements for building that workforce housing.

And as a result, a massive amount of workforce housing was built in New York City. And we should be looking to models like that. I am a huge supporter of investment in subsidized affordable housing for low-income people. In the last five years, in partnership with the Governor, this Legislature has put billions and billions of dollars into helping cities fund that housing. We have passed legislation to incentivize and to streamline low-income and very low-income, and extremely low-income housing in California.

We should also find ways to build for this missing middle-income level. I respectfully ask for an aye vote. And with me here today to testify is Jacob Bintliff, Manager of Economic Recovery Initiatives for the San Francisco Office of Economic and Workforce Development, and Carolyn McCormick, the Vice President of Lending and Policy at the San Francisco Housing Accelerator Fund.

Thank you, Senator Wiener. We invite your witnesses to give testimony. Two minutes each. Please begin.

Good morning, Chair Glazer and Senators. I'm Jacob Bintliff with the San Francisco Office of Economic and Workforce Development. Here speaking on behalf of Mayor Breed, who's the sponsor of the Bill. As the Senator mentioned, downtown San Francisco has been greatly impacted by the pandemic and remote work. We have a historic office vacancy of 36%. Retail vacancy is going from 25% to 40%, depending on where you are downtown.

In response to those challenges, Mayor Breed has laid out her roadmap to San Francisco's future, which is a series of more than 50 initiatives to make downtown thrive into its next chapter. Over the past year and a half, we've made a lot of progress on that.

We've had zoning reforms and local tax incentives to support office-to-housing conversions, local tax relief for small businesses and a tax credit for new office tenants downtown, significant investments in public safety and cleaning downtown, investments in our downtown parks and plazas, funding for outdoor events, and robust streamlining legislation for both small businesses and housing development. So, we've been hard at work at the local level.

The intent of this Bill is to bring additional tools to bear that only the state can provide, namely an expanded welfare tax exemption to support the development of new rental workforce housing to moderate-income residents in the downtown revitalization zone for a period of 10 years.

This advances multiple policy objectives, adding housing to our dense, transit-rich downtown, repurposing vacant office space, providing housing for workers close to downtown jobs, and increasing foot traffic to our streets and our small businesses that will support our overall downtown economic recovery. While we recognize that increasing the income level here is a significant change to current state policy, we believe it is warranted in this time and place. San Francisco remains the most expensive rental market in the State of California.

In San Francisco, new rental units remain far out of reach for moderate-income households of up to 120% AMI. New rental units routinely go for $5,000 per month for a one-bedroom unit, an amount that require a household income of around 200% of AMI to be affordable to that household. Moderate-income housing is also the most challenging income level of housing for San Francisco to produce without any existing programs to finance this income level.

This Bill would add a valuable new tool in stimulating long-term affordable housing for those households for a limited period of time in a targeted geographic area where the need is most acute. Yes, we thank you very much for your attention today and ask for your support in helping us revive downtown San Francisco. Thank you.

Next witness.

Good morning. Thank you, Mister Chair and Committee Members, for the opportunity to speak today. My name is Caroline McCormack and I'm the Vice President of Lending and Policy at the San Francisco Housing Accelerator Fund. The HAF is a community development financial institution that delivers capital to create and preserve affordable housing for low- and moderate-income communities in San Francisco. Since we've launched in 2017, we've invested $450 million in over 2,500 affordable homes in San Francisco.

And among that portfolio, approximately 40% of our projects have involved the acquisition of mixed-income buildings serving households from 30% area median income up to 120% area median income. And in our experience, households at that upper end of that range, what we call our middle-income or workforce housing, also struggle to secure and maintain affordable homes in our city. We're talking about the marine biologists living in one of our buildings or the freelance photographer with two children who finally landed a family-sized apartment.

They contribute to our city's economy and vibrancy, and yet face ongoing housing insecurity. And as Jacob noted, the reality is that few financing tools exist at the local or state level to reach middle-income households. And that's why the HAF is excited about the welfare tax exemption component of SB 1227. It provides a benefit without the creation of a direct subsidy program in a job and transit-rich city like San Francisco.

We think that extending the charitable purpose of the welfare tax exemption for middle-income workers makes sense in this moment in this geography and represents an important affordable housing strategy for the city for an underserved segment of the market where there is currently limited government intervention. And we don't think that this comes at the expense of creating the deeply affordable housing that our city also needs.

The Low-Income Housing Tax Credit Program is the primary source of financing affordable housing, but this program is limited to buildings restricted, usually up to 100, up to 60% area media income.

If you could sum up, please.

And so, we need more tools for middle-income housing. And so, this Bill represents a unique opportunity. And the HAF respectfully urges you to vote aye to support moving it forward.

Thank you very much.

Thank you.

We're going to now turn to those here in the hearing room who would like to come up and give a me too in support. Just name and affiliation and position, please.

Good morning, Chair and Members. Martin Radosevich on behalf of SPUR in support.

Thank you.

Ryan Elaine on behalf of the California Retailers Association, in support.

Thank you.

Francisco Morales here on behalf of the Housing Action Coalition, also in support.

Thank you. Anyone else in the hearing room want to indicate their position in support? Seeing none. We're going to go to opposition. Is there anyone here who is in opposition to this Bill? To invite you to the microphone, and you're welcome to have a few minutes to express your opposition.

Good morning. Angelica Cabande, Director of SOMCAN. We are one of the many organization that is opposing SB 1227 unless amended. Since 2000, SOMCAN has participated and worked closely with city departments like MOHCD to address affordable housing, tenant protection and preservation issues, the housing element, and many more. We are pro-development as long as it centers around people and equity. There are two components to SB 1227.

First, it proposes to remove all CEQA protection from downtown San Francisco where thousands of people live and work, including families, youth and seniors. This will create an inequitable San Francisco where CEQA's protection would remain in affluent areas, leaving low-income downtown neighborhoods vulnerable to public health and environmental impact. CEQA does not stop projects. Over 58,000 housing units have cleared the EIR process in San Francisco but remain unbuilt. The numbers suggest the pandemic and other factors are the cause of our downtown problems, not CEQA.

Second, the Bill also would give tax break to private interests, but does not attempt to encourage affordable housing, ignoring the needs of vulnerable communities. In the consultant report, the state wants to approve tax exemption in San Francisco, but wants to disclaim the state's responsibility. How is this equitable and fair? Where will the City of San Francisco get the funds to subsidize building these housing when the city is currently in a budget deficit?

How is the author and San Francisco mayor seeking to address San Francisco's economic challenges with this Bill when they are not only providing tax exemption to a large geographic area, but also commencing the tax exemption on January 1st, 2025, next year? How does this make sense in a time of budget cuts? At this very moment, our community of San Francisco at city hall fighting cuts to essential programs.

At the time when we need more public funds, why are we increasing the deficit in the form of tax breaks?

Could you sum up please?

The proposed legislation also includes the Filipino Cultural Heritage District, which is one of the 14 state-designated cultural districts. This is.

If you could sum up, please.

Thank you. This district advanced socioeconomic and ethnic diversity. The state should be working with the cultural district, not rescinding their CEQA protection and giving tax exemption.

Thank you very much.

Hello, my name is Theresa Dulalas and I live in the heart of South of Market and I strongly oppose unless amended. You know, giving incentives to developers is not a new concept to try to revitalize downtown. In 2011, the Central Market/Tenderloin Payroll Tax Exclusion, also known as the Twitter Tax Break, was passed, which was championed by city leaders, including the then Mayor Ed Lee, as a way to both revitalize the Mid-Market and Tenderloin areas and simultaneously keep and attract corporate tenants.

If taxes on new development projects are reduced, how can we guarantee that the impacts of SB 1227 will not have the same negative impacts on our communities as the Twitter Tax Break? Senators, I live in the South of Market Filipino Cultural Heritage District for almost 50 years. I've seen firsthand, you know, firsthand what these impacts were. My neighbors and I went through four eviction cases, and along with hundreds of other attendants, they faced all these evictions.

How can you have this SB 1227 be on this right now when we are facing a lot of budget deficits right now in the city? I'm supposed to be over at city hall fighting against the budget cuts. You know, our school districts have budget deficits. Our children's education, you know, all the different projects and programs which are under the care of the different departments of the city are all impacted. So how do you want.

Do you want us to build, or do you want us to not? I'm not against, you know, all these all these housing development. As long as there's sincerity in there and making sure, you know, that this Bill is actually, you know, for the community. And this, I just also want to also share with you about CEQA.

Your time is exhausted. So if you want to sum up, I'll give you another 10 seconds.

Thank you, sir. I really, really appreciate. This Bill Tampers, the fundamental foundation and purpose of CEQA.

CEQA is there for a purpose.

Great. Thank you.

Okay. Thank you for being here and for sharing your testimony. And we welcome additional testimony which you can provide to the Committee if you didn't have enough time here today. Yes, you're next up.

Thank you, Chair. Alison Ramey here today on behalf of the California State Pipe Trades Council, State Association of Electrical Workers, and State Council for Sheet Metal Workers, in opposition.

Okay, thank you.

Mister Chair and Members, Mike West, on behalf of the State Building and Construction Trades Council, also in opposition. Thank you.

Thank you.

Good morning. Reina Tello, community organizer with People Organizing to Demand Environmental and Economic Rights, in opposition, unless amended. Also was asked by Communities for a Better Environment to give a me too. Thank you.

Thank you. Thank you for being here.

Hello. My name is Zachary Friel, resident of San Francisco. Also work in the South of Market, in the affected area. I'm here to represent Race and Equity in All Planning, a coalition of over 40 organizations. And we would like to express opposed unless amended. Thank you.

Thank you.

Hi there. My name is Marti Buckley Dulalas and I'm with SOMCAN as well as representing Communities United for Health and Justice. And strongly opposed unless amended.

Thank you.

Raymond Castillo. I'm also with SOMCAN as well as San Francisco Anti-Displacement Coalition. We're built up of over 40 organization in opposed to this Bill. Thank you.

Great. All right, anyone else here in the hearing room in opposition? Seeing none. We'll close our public portion of the discussion and bring the matter back to the Committee. Any questions or comments from colleagues? Senator Weiner.

I just want to say I saw this Bill in EQ, made my comments there. I will continue to be opposing the Bill.

Okay, thank you, Senator Dahle. Senator Wiener, thank you for your work in this area. I know you and Mayor Breed are certainly committed and passionate about trying to help the San Francisco circumstances in which you find yourself, and that certainly is to be applauded. You know, when I was looking at this Bill, the question that went through my head is, on the environmental side, we had a committee to do that work. So that's. That's their work.

But in the tax space, what I was trying to wrestle with is the precedent that this sets. Number one, while it's just a San Francisco-centered Bill, and I believe, as you know, in local control and the ability to kind of handle your affairs, I was trying to understand if someone else came from another community and wanted the same, how would I feel about it?

And the second issue that went through my head was that while in the unique case of San Francisco, that 80% of the money that would be deferred would be money that would be going to the city and County of San Francisco and in some other jurisdictions, it's a different formula. But what's the matter for state policy review? And I thought that the matter for us was, who doesn't get the money when these exemptions are put into place?

That there are special districts, there's school districts, there's transportation districts, that under the Bill as originally presented, while they wouldn't have a say in providing that exemption, that they would have the consequences of it. And how should we, as a committee, ensure that their interests are protected? The amendments that you have accepted in the Committee today really go to the heart of those concerns. They would allow the city and County of San Francisco to take the benefit that they would be giving up.

It would marry it with the choice that they would make about whether these subsidies should be or these assistance that should happen for this type of housing that you feel and the city feels is important.

And that, for me, if another jurisdiction comes in and says, we want the same exception that San Francisco got, that as long as they were covering the consequences for those that weren't a part of that decision, that I feel like that would be a precedent that I would feel comfortable with under the Bill as you are proposing to amend it would be for me, we've set the right practice if it was to go further than this pilot program in San Francisco. And so there.

For people who are following this, they can understand at least the thinking that went behind my examination of your proposal. That's why I'm happy to support it today. There is an element of this that requires the input from our Local Government Committee. They're not here in the room, and I want to show a proper deference to that Committee in how this would be restructured so San Francisco could have all those choices that you would desire before them.

And so, with that, I'm happy to support your Bill today.

Thank you.

Any other questions or comments from Committee Members? Senator, you can respond, or you can put it in your close.

Thank you very much. And I do appreciate the Committee creatively working with us on this issue. As you and I discussed, the city can't do these things on its own, requires state authorization because of Prop 13. And I also just want to note, you know, my former colleague, our former colleague David Chu, repeatedly tried to enact this policy at the state level, never made it over here, but did not advance. And I think that is a conversation that should continue.

But for now, we have a crisis in downtown San Francisco, and this will help. And I respectfully ask for an aye vote.

Terrific. The author having closed, looking for a motion here in the Committee. Senator Bradford moves the Bill. This would be do pass, as amended to Appropriations. Do pass. Secretary, please call the roll.

[Roll call] Two to one.

All right. That Bill will be put on call for absent members.

Thank you, Mister Chair.

Thank you, Senator Wiener. Right. Are there other authors here besides I know we're going to. Well, but we have Senator Bradford. If you're ready, we can go, or you can defer and wait for an author to arrive.

Terrific. Senator Bradford's up next. This is file item number six, SB 1013. Senator Bradford, thank you for your work on this Bill, and the floor is yours.

Thank you, Mister Chair. And I'm here to present SB 1013, which would create a property tax assistance program for descendants of enslaved People persons program. The program would provide financial assistance in the form of a rebate on property tax paid, helping descendants maintain home ownership and keep a roof over their heads. Many of us know after the Civil War, federal, state and local government officials working with private individuals actively segregated African Americans, well, Americans and land, into African American and white neighborhoods.

This housing segregation occurred for over 200 years and through a variety of different government strategies and policies. As certain segregation methods were declared unconstitutional, local governments ignored them or thought of new ways to reach the same goals. Although the decisions of millions of private homeowners, real estate agents and landlords settled Americans into segregated residential patterns, it was actions by all levels of government which expanded and solidified these settlements into segregated neighborhoods that we know today.

This Bill is the recommendation of the California Reparations Task Force, which I spent two years part of, and it was, will counteract the property taxpayers that have been reinforced the existing patterns of housing segregation in California and across the nation. I respectfully asked for your aye vote.

Thank you, Senator Bradford. Do you have any primary witnesses in support?

Not that I'm aware of.

No?

Not here.

Okay. We would invite anyone who'd like to come up and speak in favor of the Bill to come join us here at the front microphone. Welcome. Welcome to the Committee.

Good morning, Committee Members. My name is Kim Mims. I'm here with a Coalition for Just and Equitable California, CJEC, Arc Sacramento and Amend the Mass Media Group. And I am in strong support of 1013. Thank you.

Thank you very much.

Morning, Chair and Members, Senator Bradford. Chris Lawson, Coalition for a Just and Equitable California, on behalf of the coalition in strong support. Also on behalf of the Lineage Equity and Advancement Project out of LA, California Black Lineage Society of the Inland Empire and the American Redress Coalition of California out of the Bay Area. All in strong support. Thank you.

Thank you, sir.

Good morning again. Karen Lange, on behalf of the California Association of County Treasurers and Tax Collectors in support. And they want to be helpful in developing the program when it comes to life. Thank you.

Thank you.

Thank you.

Michelle Rubalcava, on behalf of Contra Costa County, also in support.

Thank you.

Morning. Henry Ortiz with Legal Services for Prisoners with Children and All of Us or None in strong support of this great Bill. Mister Bradford, hopefully we could get one for the Uto Azteca, descendants of our native people here. Thank you.

Thank you.

Good morning. Sydney Fong with Asian Americans and Pacific Islanders for Civic Empowerment, AAPI Force and Alliance for Reparations, Reconciliation, and Truth in support of this Bill. Thank you.

Thank you very much. Anyone else here in the hearing room want to indicate their position of supports? All right, seeing that we'll move to those in opposition. Is there anyone here in the hearing room that wants to speak in opposition? All right, we'll bring the matter back to the Committee for comments or questions. Senator Dahle.

So, Senator, we've worked together on my office.

Actually, if you recall, when I was in the Assembly, we did the freedmen's bureaucracy and actually had the Mormon church, which did a lot of work in trying to trace back lineage to slavery, and actually went through the whole freedmen's data. And I know Assembly Member Jones-Sawyer and many others came and tried to trace back. So I want to ask a question on that, trying to get a gist of how this was going to. How you. How it's going to work. Because one of the.

One of the. My concerns is that we've had a lot of immigration come to America prior to slavery, and how. How do we determine who's actually a descendant of.

And that's why we have SB 1403, which will establish the Freedmen's Bureau. That's another Bill that I'm working on that will have genealogists that will help determine those individuals eligible, again, those who are direct descendants of chattel slavery, which we know it's going to be a challenge in tracing that or anyone who arrived to the United States prior to the 1900s.

Okay, that's. That Bill is separate of this.

Yes, but it's. It's going to help determine.

So you can trace back to actually. So the system can't be gamed from somebody that wasn't actually. Or family wasn't impacted by.

That's why we were very specific. The language of the reparations task force that our former colleagues, Doctor Shirley Weber, authored AB 3121, clearly stated, descendants of chattel slavery. Not. It's not going to, you know, capture everyone who says, hey, I'm here. It's those who can trace their lineage to chattel slavery of those who arrived in the United States prior to the 1900s.

Thank you.

Very good. Senator Bradford, thank you for your continuous work in this area. I know it's not been easy. It's been a lot of time. You spent a lot of time with the task force and their thoughtful recommendations, which we're considering today.

I appreciated the conversation that we had yesterday in regard to the Bill before us in ensuring that we could provide the benefit to all those who meet the test, not just those who are property owners, that if you're a renter and you're a descendant, the concern that I expressed was that we should be treating them the same. And I think you have indicated that that is your intention.

I accepted your amendment. I failed to state that in my opening statement.

Right. So I just wanted to have on the record, then would you like me to describe it, or do you want to describe the.

You can describe it.

Okay. So in regard to ensuring that we would treat everyone fairly under the Bill, that it would allow renters who meet the definition of a claimant in the Bill to also receive assistance based on the amount of property taxes paid by the property owner, where they're renting, the amount of time they've rented in a calendar year, number of people paying rent in a given address. So these are elements that will be put in the Bill, as I understand you're accepting.

I'm accepting your amendments.

To ensure that the benefits of this. To account for that trail of discrimination, which is so unfortunate but true, that they get the benefits of what you're proposing to do.

Exactly.

Okay, terrific. And I think that, for me, sums up why I think this is a Bill that's worthy of support today, and I'm happy to support it if we have a motion now or as we continue this discussion today. Is there anything else you want to add in closing, Senator?

No. I appreciate the support, not only from this Committee, but the witness who came to testify. This is not easy issue, but it's one that needs to be addressed. And again, it's a lot of folks who are still in denial of California's role and slavery and the impacts that it still has in this state, in this country today. And the reparations task force, which I challenge every Member of this legislative body in both houses to read.

Those 1100 pages, clearly spells out all what we have discovered, all that needs to be known and why this is so important. So I respectfully ask for aye vote.

Thank you, Senator Bradford. I'm going to pass the gavel over to Senator, or Vice Chair Dahle. I'd be happy to. I'd be happy to move the Bill as amended.

Motion is due pass as amended to the Appropriations Committee. [Roll Call]. Two to zero.

Will the Clerk please call the roll?

Leave it open for absent numbers. I'll leave it open. Congrats. Are you going to present your bill now? No, we have an author in the room. Thank you, Senator Dahle, for your work as leading the Committee. We're going to now go to the next author who is patiently waiting in the room.

This is file item number five, SB 1362 by Senator Newman doing double duty today over at education. So thank you, sir.

It's a busy day.

It is.

Appreciate that, Mr. Chair and Members, I'd like to swap this bill out for a bill I have a bill on clear I'd like to bring to this Committee.

I hear that's a popular one.

Very popular. SB 1362 Madam Chair Members, thank you for the opportunity to present SB 1362, which would make a change to the existing CalABLE act by providing seed funding of at least $250, subject to an appropriation by the Legislature in order to encourage eligible Californians to participate in this innovative savings and investment program, which helps foster financial security via a 529 investment account.

CalABLE is the California version of achieving a Better Life Experience Act, a federal program enacted by Congress in 2014 to allow individuals with disabilities to establish tax advantage savings accounts without adversely affecting their eligibility for other important public benefits.

Certain disabilities, which manifest during childhood and early adulthood, often prevent individuals from generating sufficient income to support their medical care and basic necessities, and many individuals living with disabilities receive means tested public benefits like Medicaid and SSI in order to maintain basic necessities.

Prior to the able program, individuals receiving such benefits could not save more than $2,000 without fear of a possible loss of eligibility. California's implementation of the federal act allows individuals and families to build financial security without impeding their access to needed public benefits.

Unlike so many other programs that are either oversubscribed or strapped for funds, the CalABLE program is currently underutilized, and without legislative action, millions of eligible Californians will miss out on the opportunity to save and invest in their financial future.

California is one of 47 states that has an ABLE program, but less than 1% of the state's eligible disabled population is currently utilizing the program to save and invest for their future. SB 1362 will encourage eligible Californians with qualifying disabilities to set up the savings accounts to which they're entitled, by requiring a CalABLE program to make a one time deposit of at least $250, either through a future appropriation or via fundraising from private donors or other entities.

By ensuring the financial well being of individuals with disabilities, we can create a more inclusive and prosperous California. In light of the current fiscal challenges faced by California, it's important to note that this bill does not include or assume an appropriation in this legislative cycle.

Here to testify in support of SB 1362 is Mr. Thomas Martin, Executive Director of the CalABLE program, and Ms. Anne Osborne, the program manager for CalABLE, who is here to answer any technical questions. I respectfully ask for your aye vote.

Thank you, Senator Newman. We'll go to your witness. Two minutes, sir.

Thank you. Good morning. So again, my name is Thomas Martin. I am the newly appointed executive director for CalABLE, with me is Ann Osborne, the deputy executive director.

So, as a disabled Californian myself, I'm very proud to represent this program it represents a major, a life changing and a game changing opportunity for Californians with disabilities. More than half of account holders have a household income of $25,000 or less a year, year.

Many of them are, they're saving money for the first time, many of them. This is their very first bank account. This program is critical, as the Senator stated, it's critical for helping, for helping Californians with disabilities not be subject to means testing.

For decades, they've been told, don't save money. Don't put name in your account. You'll run into issues. You'll lose your state and federal benefits. And so this program is critical to make sure that's not the case.

Right now, California CalABLE is helping parents with children with disabilities save when historically they were told they shouldn't. It's helping them save for future lifelong costs those children might have. It's also helping Californians with disabilities who are working be able to save and grow their money.

It's helping Californians get wheelchair accessible vehicles. It's helping them live independently for the first time. These are all things that happen because CalABLE exists.

So today, why we're here today is talk about how we can keep the program growing to make CalABLE more equitable, to make it reach even more Californians, especially those who might, might be a little more difficult for them to start saving money.

This bill would give us an extra tool. It'll help them be more independent. It'll help them be able to self advocate.

Sum up.

Okay. Yes. So to be clear, the funding is not locked in. It could be set in future appropriations, but there's no requirement. But importantly, it would give us a tool to be able to fundraise and be able to provide the money separately as well. With that, I appreciate your aye vote and be happy to answer any questions.

Thank you very much. And I understand you're here just for technical questions. Is that right? Okay, we'll go to those in the audience who'd like to express their support for the bill to come up to the microphone.

Thank you, Mr. Chair Members. Jean Hurst here today on behalf of the California Community Living Network in support.

Thank you for being here. Anyone else here in the hearing room? Seeing none, will go to opposition. Is there anyone here in opposition to the bill? Seeing none, we'll bring the matter back to the Committee for questions or comments. Members, any questions or comments?

Senator Newman, thank you for your good work in this area, and I'm happy to support your bill today. Appreciate all that you're doing. Appreciate it that our budget picture improves going forward. Is there a motion for the Members? Senator Bradford moves the bill. This is do pass to appropriations secretary. Please call the roll.

[Roll Call] Three to zero.

Senator Newman, I didn't give you a chance to close. I don't know if you could change the vote count.

I think three ayes were my close. Thank you very much.

See you later. All right, we're gonna put that vote on call for absent Members. Thank you, sir. All right. Thank you. Thank you all for being here. All right. I don't see an author in the room. I do have a bill that I can present. I'll pass the gavel over to Vice Chair Dahle.

We will see SB 1494. Senator Glazer.

Any time you're ready.

Great. Thank you, Vice Chair and Members, thank you for allowing me to present this bill. The current system for distributing online sales tax is broken. Currently, revenue sharing agreements allow retailers to allocate sales tax to specific distribution centers and warehouses, regardless of where the sale occurred.

This creates a perverse economic incentive when companies bait cities into giving away millions of dollars in sales tax revenue through rebates in exchange for marginally higher tax revenue and a promise of, quote unquote, good jobs.

While these agreements allow some cities to profit at the expense of their neighbors, the majority of our cities, about 93%, are experiencing substantial losses in tax revenue due to this manipulation of tax allocations.

This loss directly affects our ability to fund essential public services, maintain infrastructure, and support our communities. To address this problem, SB 1494 would do two things that, collectively, I think, would resolve the concerns that I have expressed.

First, it would retroactively prohibit a local agency from entering into renewing or extending a tax rebate agreement. And second, it voids all existing agreements starting January 1, 2030. So it gives them six years to unwind these agreements.

The current agreements, for obvious reasons, are a problem. Both the State Auditor and our legislative analysts have issued reports showing that the consequence of the current approach on the Bradley Burns sales tax revenue is disproportionately concentrated in districts with surplus industrial space, where these distribution centers often locate.

It's unacceptable to provide corporate welfare through these tax sharing agreements, especially when public resources are already scarce. We must create a tax structure that fosters economic growth and benefits all communities, from local business to workers to taxpayers. And with that, respectfully ask for your aye vote here today.

Do you have any witnesses?

I do not.

Okay. Is there anyone here wishing to speak in support of SB 1494? Seeing none. Is there anyone here wishing to speak in opposition? Two minutes each.

Good afternoon, Mr. Chair and Members Angie Minetti, here representing the mayor of Fresno Jerry Dyer. In opposition to 1494, this bill strikes a heavy blow to local governments by removing our ability to attract and retain businesses in an already unlevel playing field.

These tools help disadvantaged communities, promote economic vitality, development and jobs. Eliminating leaves these communities with the status quo and helps and stops future investment. These agreements are not corporate tax giveaways. They are job creation based. If jobs are not created, the incentives are not provided.

We attracted the gap from Phoenix and that means we took jobs from Arizona and brought them to California. In total, our agreements have equated to around 3000 or 3500 direct jobs and about 4000 plus indirect jobs.

Banning these agreements will do nothing to address the Senators main concerns over the way sales taxes online sales tax is allocated. Rather, it will devastate rural and disadvantaged communities and it perpetuates wealth inequality.

The Governor vetoed a similar bill that had prohibitions on these agreements, and I'll quote him in his veto message. He said current use of these tax agreements are limited, but also an important local tool that captures additional economic activity, particularly in rural and inland California cities that continue to face significant economic challenges like high unemployment rates.

Therefore, completely removing these tax options from local decision makers is the wrong approach.

Before we approve a policy that will do such harm, I encourage to explore alternative policies that provide similar economic development tools prior to removing our ability to help elevate Fresno residents out of poverty. Thank you for your consideration of our position.

Thank you. Michelle Rubalcava on behalf of the City of Paris here today. The City of Paris is located within Riverside County. Our population is predominantly Latino, and prior to the city entering into some of these E-commerce agreements, the city struggled with about an 18% unemployment rate. Currently, their unemployment rate sits at 6%.

Now, some of you may think that a warehouse job is not a suitable job, but I can tell you that the men and women of Paris who work in these warehouses are grateful for the job that pays for the rent, puts money on the food and gas in their cars.

The other thing that they're really grateful for is that they get to spend more time at home and with their families and not on the road going to jobs in LA or in San Diego.

Before online shopping was a normal practice of everyday life, Paris struggled with generational poverty. However, with the opportunities that come with the E-commerce agreements, the City of Paris has been slowly able to grow and prosper.

As a result of these agreements, the City of Paris has been able to support and maintain 25 parks and the 274 acres of parkland within the city and paid off $14.3 million of unfunded pension liability. SB 1494 is an aggressive attack on the City of Paris in similarly situated cities.

The City of Paris is not a coastal city. They are not a tourist destination unless you want to go skydiving. We do not have other valuable and prosperous economic tools that other cities have. We have land, and that land is conveniently located near major transportation corridors.

SB 1494 unabashedly seeks to take away the singular economic tool available to cities like Paris without the courtesy of suggesting an alternative.

The last point I'd like to SB 1494 focused solely on E-commerce agreements, which are typically found in mostly underserved lower socioeconomic cities with high population of people of color.

There are other types of rebate agreements that happen with cities, such as rebates on transient occupancy tax back to hotels. Cities will also rebate sales tax to big box stores that choose to set up in their suburban communities. Auto dealerships will also enter into these agreements with cities.

Yet these types of agreements are not covered under the spell. And what's notable is those type of agreements are usually found in your more affluent communities. So that's what we'd like to see. We'd ask for a no vote on SB 1494. Thank you.

Thank you. Anyone else here in 1200 wishing to Me Too on opposition.

Peter Blocker of the California Taxpayer Association, in opposition.

Good morning. Chair Members Carlin Shelby, on behalf of the cities of Tracy, Dinuba and La Palma, and respectful opposition. Thank you.

Preston Young from the California Chamber of Commerce here today in opposition.

Mary Creasy, on behalf of the City of Ontario, in opposition.

Sharon Gonzalez, on behalf of the cities of Rancho Cucamonga, Beaumont, Eastvale and Merced, in opposition.

Ryan Elaine, on behalf of the California Retailers Association, in opposition.

Good morning. Ben Triffo at the League of California Cities, in opposition.

Lawrence Gaydon on behalf of the California Manufacturers and Technology Association, in opposition.

Seeing no one else in the room that wishes to speak, in opposition, we will bring it back to Committee. And since I'm the only one here at the Committee, I would like to make some comments. Actually, I'm a co-author to this bill and I wanted to, and I'm getting a lot of heat from the business community. But I want to state some facts.

I represent a very rural, high unemployment, poor people district in California and a lot of very small communities that rely on a tax base that is eroded. And that attack space has actually been transferred to online sales.

So if you're in the community I live in, Bieber, we have one market, and most of my constituents are ordering online from Costco, from Amazon, you name it. And they're paying a tax when they buy those goods that they need.

And that tax is going to, let's say, Tracy, where there's an Amazon distribution center, and then the City of Tracy is actually taking a portion of that tax that's being paid and giving it to the company.

So my tax base that I pay is going to, not my local community, where it went before when I had a retailer there. It's going to an actual profit center in Tracy. And I think that that's wrong.

I still have deputy sheriffs I need to find, I still have things that that tax base was originally set up for to fund those services at those levels. Now our economies have changed and we're diverting those taxes.

And some areas where there are obviously I5 or a hub or distances between communities, they profit from that. And that's typically the people that you're representing here have been profiting. But all of California, those little communities out there are not getting their tax base.

So that's the reason that I support the Senator's bill, because I want fairness in where my tax base goes. And there's reasons that we allow sales taxes for those services that those communities need. And to talk about vehicles right here in Sacramento was the reason we don't allow vehicles.

We had Cal Worthington, I don't guys remember he rode a cow right outside. He went to Roseville and he basically took the tax base from Sacramento County to Roseville or from the City of Sacramento.

And there was a big war over and he got a better deal out there and he was able to dual cart. Well, it started happening all over California. And what did we do? We changed the law. The law now says wherever you register that vehicle is where the tax base goes.

So when I buy a $50,000 pickup in my district, the money goes to my county because that's where the service ends. That's exactly what the Senator here is trying to do.

So for all of you people who are tax people, I'm surprised at the opposition to this bill. You know, taxpayers associations. I don't know why, I don't understand why this bill is basically saying, let's put this, let's let this tax where it's consumed go.

And then we did it with, we did it with vehicles because it's righteous. It's the right thing to do. And then you don't have communities giving our tax base back to corporations.

So what happens is the ones that are good at lobbying get more money, and the ones that aren't, which are my communities, don't get it. So for those reasons, Senator, I will continue to support this bill.

I think it's righteous in the face of all the special interests that's out there that is trying to manipulate the system for their community. And quite frankly, it's not fair to all the other communities who still have to provide those services with no resources. So there's my comments on your bill.

Thank you, Vice Chair Dahle, for your thoughtful remarks. One of the impacts you didn't speak to, but certainly when that delivery truck comes down into your part of the world and impacts your roads, potholes and the rest where that money is supposed to mitigate.

You don't get that for those impacts as well. A witness in opposition mentioned the governor's veto a few years back. And one of the measures that he vetoed was to try to ascertain who were the winners and losers under this tax scheme that's going on. And he vetoed that bill, but the tax agency did the work anyway.

And they determined who wins and who loses under this current tax structure. And they found out that 7% of the cities gain and 93% of the cities are losers. 93% are losers. And you want to know where the 7% are? They're right here in the hearing room.

And they get a lot of money from this deal and they hire lobbyists and they're present. And it's why this is the third time around for me on this bill. It's always been contentious because the opposition knows they have a lot to lose and they show up. But the fact is that 93% of the cities are losers.

And when you talk about the Central Valley and impoverished cities, you can put forward some that have that definition, but there are so many neighbors right around you that are in that exact same position, and you're stealing their money.

You're stealing their money that they need for their community and their services and serving their, and the community and the citizens that are there that are not wealthy citizens on some coastal elite. But you know who is not here in the hearing room today?

You're not having people come front and center who are the biggest gainers of this whole deal. Over $1.0 billion going to the biggest companies in the world because you're giving it away because it's free money for you. You're giving it away to Apple computer.

You're giving it away to Target, to Walmart, to Best Buy. They're not here in the hearing room because they don't want to be here in the hearing room. They want to be in the shadows. You are protecting them. These cities that have made these deals are protecting the wealthiest companies in the world. In the world, because you get, you get some pay in your pocket.

And I say to my friends, because I know they're well intentioned, come up with some alternatives, come up with some amendments. There's been nothing put forward to me that says, hey, we'll take a phase out over 15 years. Six years is too soon, or we'll do this or that.

There's no proposals to do any of that over the many years that I've authored this bill, because you want to keep that money, that ill-gotten gain. You want to keep it in your pocket, and you're hurting 93% of the other cities in California, and that's not right.

And when we talk about taxes and Senator Dahle, you raised this. I mean, no one likes to pay taxes, but they want the system to be fair. They want it to be fair that you can't game the system.

And we spend a lot of time in this Committee and in this Legislature trying to deal with the gaming of the system because no one wants to pay it. But let me at least know that it's being done fairly. And with the Internet.

The rise of the Internet is not being done fairly. As I've testified to when Senator Dahle articulated, we have to have a system that's fair. And so I know I've gone on too long, but this bill inspires me, and that's what happens. So with that, I respectfully ask your aye vote today.

Thank you. As soon as we get another Member here, I'll be happy to make a motion for your bill.

All right, we welcome to the podium our next author. This is file item number four, SB 1135. Senator Limon, thank you for your patience here today and for having to listen to some of this earlier testimony. And the floor is yours.

Wow. Chair and Vice Chair, what strong and powerful comments. Good morning. First, I'd like to thank the Committee staff for their work on this Bill, and I would like to accept the suggested amendments. Compost application on agriculture and rangelands is beneficial practice as it repairs soil health, conserves water, increases carbon sequestration in soil, and reduces overall carbon in the atmosphere. The 2022 CARB AB 32 scoping plan further identifies compost as a strategy to reduce greenhouse gas emissions, aiding in the fight against climate change.

The challenge is that compost is expensive to produce, transport and apply to land. SB 1135 establishes a tax credit for California farmers, ranchers and landowners who to employ farming and ranching practices that maximize carbon sequestration through the utilization of compost on natural and working lands. The Bill continuously appropriates 1% of the Greenhouse Gas Reduction Fund to a new Fund, the California Compost Tax Credit Fund, not to exceed 120 million annually for 10 years to fully pay for the tax credit.

I have with me today Jennifer Gailhouse, on behalf of the People, Food and Land Foundation, and Michael Miller from the California Association of Wine Grape to speak in support of the Bill.

Thank you, Senator Limon. We have two witnesses. We welcome you. We have two minutes each, and you can begin. Why don't you check your microphone volume there? Try it one more time.

Thank you, Mister chair and members.

Nope. There we go.

Okay thank you Senator Dahle. My name is Jennifer Galehouse, and I'm here with the People, Food and Land Foundation, who is an organization that promotes environmental and social justice in rural communities, economic development, and also the development of family and community farms. I'd like to thank the author for introducing this important measure that will not only help improve the soil for ranchers and farmers, but also impact the health of food and reduce greenhouse gas emissions.

As the Senator mentioned, composting is a way to repurpose organic materials, and the major environmental benefits are carbon sequestration, soil health improvement, and soil water retention, which will actually reduce the need for irrigation and the associated energy use with irrigation. Compost is interesting because just one application can continue to to sequest carbon and reduce greenhouse gas emissions for up to between its estimated 30 to 70 years. That's just one application, and it's also cost effective.

The actual cost is still being studied, but it's estimated that for between $50 to $110, you can reduce one ton, one metric ton of CO2 equivalent. So with that, I'd like to close by saying SB 1135 has the accountability of a grant program, but the availability of a tax credit. So I respectfully ask for your I vote, and then I'm available to answer any questions at the appropriate time.

Thank you so much. Next witness.

Good morning, chair Members. My name is Michael Miller with the California Association of Wine Grape Growers. I want to thank the author for her leadership on this Bill. I want to thank the Committee for its thorough analysis and for consideration of the Bill. And I also want to acknowledge our co sponsorship here with the environmental industry where you have ag and environmental coming together working on this important issue should speak to the importance of this issue and how we can come together and work together.

The Association, California Association of Wine group growers. We represent basically the vineyard end of the wine industry. We grow the grapes that make the wine. For us, sustainability is a big issue. We've partnered with the White Institute to create the California sustainable wine growing alliance, and in that effort, we certify growers to sustainability. Environmental is a big part of that conversation. Water conservation, soil health, all of that is very important in that program.

One of the challenges we have today, while we have a huge interest from our growers in moving that direction and getting that done, there are environmental concerns that get in the way. Our industry is facing some significant economic challenges, environmental, economic challenges, and the fact that globally, the wine industry is taking a pretty big hit right now. In France, they spent roughly $250 million to subsidize the French wineries, to not sell wine anymore, to try to stabilize that market.

In Canada, Oregon, they've also put money into the wine industry to help stabilize things. The reality in California is that we've got to take out between 30,050 thousand acres of grapes just to get back to equilibrium in the market supply, demand. So when we're looking at growers who are trying to, on a day to day basis, pay the bills and get things done, it's hard to go to them with a straight face, say, hey, invest in things like composting. Yes, it's good. It helps them.

It helps the environment of fighting climate change, the whole thing. But when they can't afford it in the short term, it's a real challenge for them. And that is where this Bill will step in. It will help them out. It will help them engage in these practices in the short term, which have long term benefits. And that is why we're in support of this Bill.

Thank you. Thank you very much. Okay, we're going to turn to others in the audience here would like to come up and do a me too in favor.

Thank you, Mister chair Members Jean Hurst here today on behalf of the Santa Barbara County Board of Supervisors and support.

Thank you.

Good morning, Mister chair and Members Erin Norwood, representing the Almond Alliance in support. Thank you.

Thank you.

Good morning. Noelle Cremers with Wine Institute in support.

Mister chair and Members Madison Dwelley with political solutions on behalf of the Family Winemakers of California in support.

Preston Young from the California Chamber of Commerce here today in support.

Good morning, Chairman. Members Nicholas Mazzotti, on behalf of Californians Against Waste and Compost Coalition, in support of the Bill. Thank you.

Terrific. Thank you all. Okay, we're going to move to opposition. Is there anyone here in the hearing room in opposition? Seeing none, we'll bring the matter back to the Committee for questions or comments. Yes, Senator Dahle.

I just want to say I love this Bill. I'm an organic farmer, and we've been doing composting for a long time, and we actually have really great data on water retention, carbon sequestration. We do. We use biochar as our main amendment to our soil, along with composting back in our residue. We don't, we're not. We do annual crops, though, not.

Like. An orchard or something that is, you know, many years removed. So I do have a question, though. So is this available to all types of, and what's the criteria to get in the program, I guess, and receive the benefits?

We've deferred the criteria to the regulatory process at the Department of Food and Ag to develop that criteria. So that's not actually in the Bill. They'll be developing the regulations for the program.

So one of the things I just want to mention, as a family farmer and somebody who. It's a small business, right. So we have, obviously, we have some mega farms that are going to be able to get through the process. But for those small family farms, the process usually defeats the ability to be able to take advantage of the program.

So I would encourage them to make it so that people who are certified organic or doing those things or applying these composting and stuff to their lands, that they are able to get through the process and actually get advantage. Because we are all ag in California over the last three or four years, we've seen, you know, competition and, you know, regulation. It's being very difficult to, you know, it's a worldwide market, and so we're not competitive, and so we need to be able to stay competitive.

And that that would be something I would just hopefully comes out right. So that those of us who don't have an HR Department and somebody writing a grant for us can get through the process to actually take advantage of doing good things for the environment and doing good things for the food chain.

We do anticipate, as the Bill continues to move through the process, working with the policy committees, the two here in the Senate as well as those in the Assembly, on giving more direction towards the Department on what the regulations should include. The organization I'm here on behalf of also is interested in the same things you are.

Thank you.

Thank you. Senator Dodd.

Yes. Just really short. I appreciate the author bringing this Bill forward. Our agricultural communities have had really a disproportionate share of burden on all the wide variety of policies that we've had throughout the State of California. It's high time that we do something like this. So I appreciate this and I'll be voting aye on this today.

Thank you. Great. And I join in my colleagues praise for the Bill. Thank you for your leadership in this area. I think the challenge will be less policy and more budget, but I wish you well with that. Would you like to close?

Thank you. And I will just say Members, you know, I know this is Senator Dawley's last year in the Legislature, but, you know, there's been an evolution in terms of. There's a couple bohe likes of mine. But I have to just recognize that, you know, it does take the Legislature a little time to figure out how to work on mutual things that are of mutual interest.

And so this is, you know, one example of really looking at the agricultural community, but also what was coming from the environmental community to say, how do we bridge that? And it has taken time, but, you know, I'm very respectful of that and also just want to acknowledge that it's not time alone.

It's also the previous work, including the work that he and others have done in the Legislature, to kind of get us here and say we found something, something that works for mutual, you know, groups that and stakeholders on something like this. So with that, I respectfully ask for an aye vote.

All right. Looking for a motion. All right. Senator Dahle the lame duck. No ... Just look, because we may not be here the next time you mess up. All right, we have a motion. Is do pass. Is there an amendment to that?

Yes, yes, and I accept it.

Do pass as amended to appropriations. Secretary, please call the roll.

[Roll call].

I will put that on call for absent Members. Colleagues. Thank you, Senator Lemone. Yeah, we will, sir. While we're waiting for our final author, Senator Ashby, if her office is paying attention, we'd love you to come down to the Committee. You're the. Between us and lunch is your Bill. But we have three measures that did not get motions earlier today. We have the consent calendar. First up, is there a motion on the consent calendar? So moved by Senator Bradford. Secretary, please call the roll.

This is file item 10 and 11, SB 1527 and 1528. [Roll Call]. Four to zero.

That's on call for absent Members. We needed a motion on file item one, SB 964, moved by Senator Dahle. This is a do pass as amended to appropriations. Secretary, please call the roll.

[Roll Call] Four to zero.

All right, we'll put that on call for absent Members. We have one more measure without a motion. This is file item nine, SB 1494. Is there a motion moved by Senator Dahle. This is a do pass to the Senate Floor. Secretary, please call the roll.

[Roll Call]

All right, let's go through the other items to catch everyone up who was absent earlier today. We'll go next to file item number two. This is Senator Weiner's 1031. Secretary, please open the roll.

Motion is to pass to appropriations, with the chair voting aye. Vice Chair voting no. Current vote is three to one. [Second Roll] Three to one.

All right, we're going to move to file item three, SB 1227 by Senator Wiener. Please open the roll.

Motion is do pass to appropriations, with the chair voting aye, Vice Chair voting no. Current vote is two to one. [Second Roll], three to one.

I'll put that on call for apps and Members. We'll move next to file item number five. This is SB 1362 by Senator Newman.

Motion is to pass to appropriations chair. Voting aye. Vice Chair voting aye. Current vote is three to zero. [Roll Call], four to zero.

We put that on call for absent Members. We'll move next to file item six. This is SB 1013 by Senator Bradford. Please open the roll.

Motion is to pass this amendment to Appropriations Committee, with the Vice Chair voting. I. No current vote for the Vice Chair. Current vote is two to zero. [Roll Call] three to zero.

All right, ladies and gentlemen, that catches us up. I believe we'll wait for our final author to come forward. And. Yes.

So we'll be in short recess as we wait for our final author.

All right, we're going to come back. Senate revenue tax is back to order. We're going to go through the role for a returning Member. We'll start with file item number one. This is SB 964. Secretary, open the roll.

Motion is do pass this amendment to the Appropriations Committee. [Roll call].

All right, we'll move next to file item number.

[Roll call].

Okay, well, let's pause that now. We have an author here, so we'll go back through the roll in just a moment, but let's move now to file item number seven. This is SB 1035 by Senator Ashby. I know it's been double and triple book today. Thank you for being here.

Apologize. Blame Senator Newman. Okay, thank you so much, Chairman Glazer. I'm here today to present SB 1035, which seeks to better reform the structure of restitution payments. I will be accepting the Committee amendments. I'd like to thank the Committee staff and the Chairman himself for their input and help. Restitution fines are paid to the victims compensation board by individuals convicted of crimes in an attempt to hold them accountable for the financial losses that they've caused to their victims and victims families.

Restitution, in theory, aims to serve as a form of restorative justice by promoting forgiveness, resolution of damages, and, of course, accountability. However, restitution fines in actual practice have oftentimes failed to make any or all parties whole. Victim restitution can easily exceed amounts in the tens of thousands of dollars, on top of which there's accruing interest by the Franchise Tax Board up to 10%. Currently, 80% of people who owe restitution live in poverty, and an uncertain interest rate further exasperates an already dire situation.

SB 1035 seeks to reform the restitution process to ensure victims are properly compensated, including today's amend tying the interest rates on restitution payments to inflation not exceeding 10%, allowing increased flexibility by requiring restitution payments be paid before administrative costs that should keep victims whole sooner, and implementing a sliding scale model for the Franchise Tax Board. Garnishments that consider income and ability to pay as determining factors.

SB 1035 seeks to reform the structure of restitution payments by better ensuring victims are compensated first and in a timely manner, while also easing the burden for people trying to reintegrate back into their communities, pay off their debt, and move forward with productive lives. I do have a couple of support witnesses here with me today. Mister chair, Michael Mendoza from the anti Residivism Coalition and somebody from the California State Treasurer's office on behalf of Fiona Ma.

Terrific. Thank you, Senator. We welcome your witnesses. Two minutes each, and you can begin when you're ready.

Good afternoon, Mister chair and Members of the Committee. I am Connie Chan, legislative manager for the California State Treasurer Fiona Ma, a proud co sponsor of SB 1035. This measure seeks to directly get more restitution monies back to victims families while simultaneously helping to lower the rates of recidivism in our state.

SB 1035 proposes reforms to address these issues by reducing interest rates on restitution payments, prioritizing restitution payments over administrative costs, and implementing a sliding scale model for garnishments that considers individuals income and ability to pay restitution fines. Attempt to hold those ordered with restitution accountable for the financial losses they have caused to the victims of their offenses. This is not meant to serve as a punishment, but rather a form of restorative justice. However, restitution fines often fall short of partially or fully compensating all parties involved.

Less than 1% of survivors receive restitution as ordered, and 67% of survivors receive no restitution or victim compensation at all. This is not at the fault of those paying restitution. Most of them are living in poverty and are unable to pay. This inability to pay off restitution debt leads to higher cases of recidivism. The problem is exacerbated by high interest rates and wage garnishments imposed by restitution fines.

Consequently, the current restitution system disproportionately impacts individuals from Low income communities and backgrounds, perpetrating the racial wealth gap and systemic inequities. By reducing barriers to make these payments on time, we are ensuring that more money goes directly to victims and their families instead of in interest charges made to the state. Unlike other debt, restitution has no statute or limitations and is not dischargeable in bankruptcy. Consequently, this debt can follow formerly incarcerated people for their entire lives.

For individuals reintegrating into their communities after serving their sentences, paying off restitution fines can be a significant barrier to moving forward with their lives. SB 1035 allows formerly incarcerated people not only the ability to assimilate, but also give back their restitution.

Thank you so much for your testimony. Next witness.

Thank you, chair and Members of the Committee, my name is Michael Mendoza and I'm a consultant on juvenile and criminal justice, as well as a Member of the anti recidivism coalition.

I'm here to speak in support of SB 1053, which is critically important to people like myself who are previously incarcerated, but also to many Americans who are tax paying citizens of this state and this Bill to lower the interest rates and apply an ability to pay a style of garnishment would be incredibly useful to so many people to be able to pay their restitution.

Current garnishments don't really take into consideration a lot of factors that go into making it harder for debtors to pay their garnishment, their restitution. For example, I myself, unfortunately, served close to 18 years, from the age of 15 to 32 in adult state prisons. Throughout that time, there were no resources or anything available to me to be able to earn a livable wage and be able to pay my financial restitution.

Once I was able to finally earn my way home in 2014, there were still a lot of things that weren't taken into consideration that inability to pay would be able to do. Upon release. I got a full time job, minimum wage. I was going to school at SS State University to earn my BA degree.

But when the Franchise Tax Board sent me a letter saying that they're going to garnish my wages, that was a threat to my basic living needs, one that I didn't know how I was going to financially give while I was out here trying to make a living, not having anything at all to my name, to be able to do that.

And so for this Bill to make those simple changes would go a long way for taxpaying Americans like myself to be able to give back and make the amends and give the important dollars to our victims that are deserved. This is a simple Bill that just helps people, helps debtors be able to pay back society what it's owed. To be able to lower that interest rate and apply an ability to pay style of garnishments. And for that, we strongly support this Bill. Thank you.

Thank you, sir. We're gonna now open up the microphone to those in the hearing room that would like to indicate their position and support. This is a me too opportunity. So just name and affiliation.

Thank you Mister chair Members Dan Seaman, on behalf of the Reentry Providers Association, Californians for Safety and justice and Crime Survivors for Safety and Justice in strong support.

Good morning chair and Members Espan Nunez, on behalf of Sister warriors in strong support.

Thank you, sir. Good morning. Henry Ortiz with legal services for prisoners with children and all of us in Sacramento and on behalf of community healers as well, in strong support.

Thank you. All right, seeing no further witnesses and support, we'll go to witnesses in opposition. Anyone here in opposition would like to come forward.

Thank you, honorable chair and Committee Members. I'm Gretchen Litchenberger. I'm here on behalf of the California Association of Judgment Professionals, and I appear before you on behalf of all victims of crime. We respectfully and adamantly oppose SB 1035. This measure actually incentivizes crime. Why not steal money, invest it at a higher rate? And if you get caught, you only have to pay less than 1% interest on that money. That's a terrific idea for perpetrators, but a terrible idea for the victims.

I would love someone to loan me 1% money at 1%. So please understand that restitution has two separate and distinct components. Fines are the statutory penalty that criminals are ordered to pay to the State of the County, whereas the restitution order is the money that goes to the victims. If the state or county doesn't need interest on their money, that's fine. So be it. However, please don't take the interest money from the victims.

They're the ones that have lost out and had their money or property taken. Every judgment creditor, be it criminal restitution or otherwise, has the ability to settle the judgment for less money. The judgment debtor who owes that money. All they have to do is pick up the phone and call the victim and make arrangements. Don't choose how much interest should be should be given to the victims. They're the ones that lost the use of their money.

The author failed to provide statistics on the percentage of restitution orders that are voluntarily paid. I've been working a long time in victim restitution orders, and I can tell you that very few people voluntarily pay. It's not the interest rate that they choose not to pay.

You can sum up. Please.

Please vote no on SB 1035 to prevent further victimization of these poor victims of senseless crimes. Let them choose the interest rate. Leave it at 10%, please. For the victims, the fines can be lowered if necessary, and I'm available if anybody has any questions.

Thank you very much for coming here today. Anybody else in opposition want to come to the microphone? All right, seeing none, we'll bring it back to the Committee for comments or questions. Members, comments or questions on the measurements.

I will move the Bill. And I appreciate your witnesses. I appreciate especially hearing firsthand from someone who faced the restitution fee and who has clearly been conveyed, wanted, and was committed to making that restitution and yet still surviving. And we know that persons with a record who have served time and those are mostly the people that get the restitution judgments have difficulty getting employment. And very often the employment they do get is at Low wages, and so it is difficult to pay.

But we want them to make good on those commitments. But we also don't want to incentivize recidivism. So I think what we've been trying to do, within a lot of our adjustments to current laws in the books, is to support those who have returned to our communities, support them so they can thrive and actually function well and make their restitution and not recidivate. And I think this Bill is in that spirit. So I think the author, and I'm happy to move it.

Any other further comments or questions? Senator Ashby, thank you for your work in this area. I think I, as you know, agree with you that a 10% is not a reasonable interest rate. Surprise t's lasted this long before someone like you has come forward to properly correct it. I appreciate you taking the suggested amendments to have the rate more closely approximate the rate of inflation, which is probably in the three to 4% range. And with that, I'll allow you to close.

Thank you very much. Also, just thank you to the Committee for your patience and waiting for me. I'm very sorry about that. But, you know, Senator Skinner says this all the time. There's no one Bill that's going to fix any of these issues. And recidivism is one of the toughest issues that we face in this state. If it was easy, some Senator smarter than me, long before me would have already run that Bill.

But the thing is, we can take incremental steps to help people be successful in their endeavors when they are released. This is one of those incremental steps. And I appreciate your attention to this item and urgent, I vote.

Thank you, Senator Ashby. She's closed. I'll recognize the motion from Senator Skinner. This is a do pass as amended to appropriations secretary. Please call the roll.

[Roll call].

We'll put that on call for absent Members. Thank you, Senator. I'd like to note that we're now finished our agenda for the day, that we do have some Members who are not present. We're going to go through the role, and I want to make sure everyone has an opportunity to be recorded on these bills. We heard today we have any update on the status of a couple Members who are not here.

[Roll Call]

All right, we'll leave that on call for absent Members. Okay. For those who have participated in all the votes today. Thank you. Appreciate it. And we'll wait here for our one remaining absent Member so we can conclude our business today. So we'll be in recess for the moment. Okay, we're going to call the Committee to Rev. And Tax back to order. Opportunity to close the roll on bills that are outstanding. If everyone in the panel is ready, we'll begin with file item number one.

[Roll Call]

All right, that bills out seven to zero. Thank you to all who participated, certainly the staff and all the witnesses who came here today. We appreciate your input, and we look forward to our next hearing. Thank you all and have a good day.