Senate Standing Committee on Revenue and Taxation

Good morning, everyone. We have six bills on today's agenda. Item number three, SB575 by Laird, is proposed for consent. Let's establish a quorum. Secretary, please call the roll.

[Roll Call]

We have a quorum. We will now hear from the first author. That would be Senator Sierra. Welcome, and you may present your Bill.

Thank you very much. And we'll get the ball rolling appropriately and get you through your Committee. So thank you. I'm here to present SB 288. And first, I'd like to thank the Committee and the chair for working on the amendments for this. And I will be accepting the committee's amendments.

This measure contains provisions similar to those which passed the Committee last year, but were unfortunately held in the Assembly. Prop 19, which passed in 2021, included a restriction on the transfer of family homes between parents and their children, particularly regarding the retention of the property's Proposition 13 protected tax base.

Under Prop 19, a recipient must move into the home, claim it as their principal residence and file for their basic homeowner exemption within one year of receiving the property.

Under current law, individuals who inherit a property that is held in probate have found themselves unable to possess the property or get those other necessary items done under the one year timeline and have lost their Prop 13 protected tax valuation.

This measure will clarify that Prop 19 Calendar Year for individuals who are undergoing a probate process starts when the home is legally declared to be theirs. So I would respectfully ask for an aye vote. And as is my tradition, I try to limit the amount of witnesses to 0 unless we absolutely necessarily need them.

And with that, I ask for an aye vote.

Well, thank you for the presentation. Are there any witness or anyone care to stand up in favor of the Bill.

Apparently, nobody likes it..

Scott Kaufman, Howard Jarvis Taxpayer association in support. Thank you. Thank you.

Are there any other witnesses in favor of the Bill in support of the Bill? Any witnesses opposed to the Bill? With that, I'll ask Committee Members if anyone has comments or questions. Well, I have a comment, and then we will move the Bill.

Senator, this Bill grants basic fairness to California taxpayers who have lost a parent or grandparent who then have to endure the probate process to obtain ownership of their property. And you have accepted the Committee amendments? Yes, that's correct.

I'm happy to support the Bill. Thank you. Senator, would you like to close? No. As I stated, I just simply asked. For an aye Vote. Very good. Secretary, we call the roll.

Motion is do pass as amended to the Committee on appropriations. Senators McNerney, aye. McNerney, aye. Valladares, aye. Valladares, aye. Ashby. Grayson, aye. Grayson, aye. Umberg, aye. Umberg, aye. 4 to 0.

The vote is 4-0. And the Bill is on call. All right, thank you and may all the other bills go as quickly.

Next we have SB 347. Senator Choi. Mr. Senator Choi, would you present your bill?

Good morning Committee Members. Chairperson and I want to wish you a happy New Year. One of the first meetings. Thank you for giving me this opportunity to present to you Senate Bill 347 which is my state annual tax reduction bill. I want to start off by stating that I will be accepting the committee's amendment recommendations.

As amended, SB 2347 will reduce the state annual tax from $800 to $600 for every LLC, LLP, limited partnerships, S corporations or C Corporations. Currently under state law, California imposes an annual tax of $800 to all business partnerships regardless of gross profits even if they lose the money in operating. Still they have to pay minimum of $800.

Originally I wanted to reduce it from $800 to $80 to encourage many entrepreneurs could begin without such a burden and encourage them. But since we have a budget deficit problem in the state, I compromised to reduce a moderate level of $200 from $800 to $600.

Currently under State law, California imposes an annual tax of $800 to all of them regardless of their profit status. Paying such a high annual rate creates a financial burden for family owned and small businesses who can be. He already accepted it affected by this tax.

Although legislation in the past provided some relief with the first year exemption from this tax, that law no longer in effect. Small businesses with the slim profit margins are forced to pay the $800 with little to no exceptions. California's tax structure disproportionately affects smaller partnerships and harming our state's economy.

As we continue to compete with the other states to attract new businesses. This bill will help California businesses by reducing this tax to a more affordable amount of $600, making our state more competitive and business friendly. I would appreciate your support.

Well, I thank the author. Do you have any witnesses in support?

No, I don't.

Are there any witnesses in the audience that wish to come up in support of the bill? Seeing none. Are there any witnesses opposed to the bill? Seeing none. I'll ask the Committee Members if anyone has comments or questions.

Move the bill.

Motion has been made to move the bill. And I want to thank you, Senator, for your work on this. This measure does strive to strike a balance between reducing business costs and ensuring the burden of paying for public services is spread fairly. Finding that balance can be challenging.

So thank you for working with the Committee to achieve that goal. I'm pleased to support your bill. Senator, would you like to close?

Thank you so much, Chairperson. And your Support of West B347 will help so many startup companies and then also existing ones who are struggling to make it. I appreciate your support.

Thank you. The bill has been moved. Will Secretary Koller roll?

Excuse me. Motion is due pass, as amended, to the Committee on Appropriations. [Roll Call] 5, 0.

Thank you very much. bill was out. Thank you, Senator. Thank you, Joy. Okay, next we have bill SB623. Senator Archuleta, would you like to support Present your bill? Okay. I guess you're going to do SCA4 first.

That is correct.

Okay, Very good. Proceed.

Well, good morning, Mr. Chair and Members. Good morning. And I'd like to thank you all for giving me the time to present SCA 4. Here to present Senate Constitutional Amendment 4, which seeks to provide property tax relief for veterans and their families.

SCA4 removes a provision in the California Constitution that prevents veterans claiming the homeowner's exemption from also claiming the disabled veterans or veterans exemption, thereby allowing eligible veterans to stack the exemptions.

If approved by the voters, this measure would allow a veteran who qualifies for the veterans homeowner's exemption or the disabled veterans exemption to also receive the homeowner's exemption.

Under current law, in order to qualify for the veterans exemption, the veteran may not own property, real or personal, worth more than an average of 5,000 if the claimant is single, or 10,000. Wow. We got to bring this up to date, don't we?

SCA4 modernizes the veterans exemption by removing those arbitrary limitations a veteran must meet in order to qualify for the exemption in California. We're all proud of our veterans. We support them. No doubt. We have always recognized the sacrifices that they make in our country.

And bills like SCA 4 and Senate Bill 623 show we are committed to providing them with the support they need to succeed in California. With me today to testify in support of the Bill is Seb Reeb, a veteran who is also here today representing veterans and organizations across California. For these reasons, I respectfully ask for your aye vote.

Thank you, please begin. I'll give you three minutes.

Good afternoon or good morning. Chair and Members, my name is Seth Reeb with Reeb Government Relations representing American Legion Department of California, Amvets Department of California, the California State Commander's Veterans Council, Military Officers association of America California Council of Chapters, and the Vietnam Veterans of America California State Council. It has been over 50 years since.

Since this statute was updated, and it's time to correct an unfair discrepancy. Right now, veterans are forced to choose the homeowner's exemption to get a higher benefit. This means they effectively lose the recognition of their veteran exemption. By combining these exemptions, we restore fairness. But this is about more than just a tax break.

It's about stopping an exodus. In 2017, we had nearly 2 million veterans. Today, that number is closer to 1.5 million veterans. We're losing the very people who bring stability, federal dollars and leadership to our communities. We urge you to stop the bleeding. Help us retain these vital Members of our community. And we respectfully request an aye vote. Thank you.

Thank you. Any other witnesses in the audience wish to stand up in support?

Scott Kaufman, Howard Jarvis Taxpayers Association in support.

Thank you. Any other witnesses in support? Seeing none. Are there any witnesses that wish to speak in opposition? Seeing none. I'm going to ask Members of the Committee if anyone has comments or questions. Senator, you're recognized.

Thank you, Mr. Chair. I just want to thank the author for bringing this forward again. You know, we recently worked on another Bill that would exempt 100% disabled veterans from property taxes as well. And this just goes to show how committed you are to our veteran community. And having served as well, we thank you for that service.

And again, this is yet another simple thing that we can do for veterans. But I also think that the people of California are going to agree that we should do for veterans. I want to thank you for that. Happy to support this Bill and ask the motion to move it when appropriate.

Thank you. Any other Members of the Committee? Seeing none. Senator, you have been a tremendous advocate in California for our veterans. To hear that veterans are leaving the state is not acceptable. And anything we can do to stop that and to give veterans the support they deserve.

A lot of veterans have needs that the state should be providing, and so I'm willing to support this Bill, and I offer my support. And with that, the Bill. Do I hear a motion? The bill's moved. Senator, I almost forgot to ask you if you wanted to close. Thank you, Mr. Chair, but that was reminded.

Well, I'm honored to present this in front of such a distinguished Committee which includes our veterans, Tom Umberg and yourself, Mr. Chair, that serves on our Military and Veterans Committee. So all of you know and of course, Senator, your support well received, believe me. And I know all the veterans that are listening and watching also agree.

And this is a first step. You're absolutely right. And I think by keeping the veterans in California giving that time that they need to readjust, come back in and stay and be part of our California way of life. I think this is the first step and I appreciate what you've done and said today. So with that, I ask for an Aye vote.

The author is closed and the Bill is moved. Secretary call the roll.

[Roll Call]

Unanimous. The Bill is out. Thank you, Senator.

Well, thank you.

And now you have another bill to.

Yes. And thank you, Mr. Chair. And again, Members, Senate Bill 623 is a companion Bill, the SCA 4, which was just presented, and thank you for approving the Bill.

Senate Bill 623 makes conforming statutory changes to implement Senate Constitutional Amendment 4 to allow a veteran who qualifies for the veteran's exemption or disabled veterans' exemption to also receive the homeowner's exemption. I respectfully ask your aye vote.

Thank you for the presentation. Do you have any witnesses in support?

Seth Reeb with Reeb Government Relations, representing American Legion Department of California, AMVETS, California State Commander Veteran Council, Military Officers of America, and Vietnam Veterans, all in support. Thank you.

Thank you.

Mr. Chair, Jeff Neal, representing the County of San Diego, also in support.

Thank you.

Scott Kaufman, Howard Jarvis Taxpayers Association, in support.

Thank you. Any other witnesses in support?

Seeing none. Are there any witnesses in opposition? Seeing none. I will ask Members of the Committee if anyone has questions or comments. Seeing none. My comments will be very brief. This is the second presentation of yours in a dedicated career of serving veterans, and that's much appreciated by the Committee and by the state of California.

Thank you for that presentation. I'm happy to support the Bill. Senator, would you like to close?

So moved.

Good.

And with that, Mr. Chair, I will close if you permit.

Yes.

And I, again, would like to thank the Committee, each and every one of you, said, look you in the eye, I know you love our veterans, and I know you'll stand up for them, and I really, really appreciate it. And what more can I say but thank you?

The gratitude is there among the veterans in the state of California, and I respectfully ask for your aye vote.

Thank you, and the Bill is moved. Will the Secretary call the roll?

[Roll Call]

Again, good showing. Unanimous vote. The Bill is out.

Very Good. Thank you, Mr. Chair. Thank you.

Next, we have SB 762, Arreguin. Senator, please present your bill.

Well, good morning, Mr. Chair. Members of the Committee on Revenue and Taxation, it's my pleasure to present Senate Bill 762, which is a district specific bill addressing the unique revenue needs of the City of Hercules, which is in my Senate district. Hercules was founded in 1900 as a company town, later evolving into a residential suburb.

Over the years, the city has struggled to generate sufficient revenue to meet the needs of its community due to its status as a low to no property tax jurisdiction. Unlike many other jurisdictions in my district, this lack of funding jeopardizes continuing services such as policing services, youth and elderly support services, and park and infrastructure improvements.

Under SB762, the City of Hercules will be authorized to place on the ballot a sales tax increase of up to 1% that intends to ensure services and infrastructure maintenance continue and want to emphasize once again this is increasing the cap to give the voters the choice to consider a sales tax increase. It's not imposing that increase.

It's giving the voters the opportunity. Here to testify in support of the bill on behalf of the City of Hercules is Carby Shelby with Townsend Public Affairs.

Thank you, witness. You may proceed when ready. I'll give you three minutes.

All right. Good morning, Chair McNerney, Members of the the Committee. My name is Carlin Shelby. I'm here on behalf of the City of Hercules in strong support of Senate Bill 762. Senate Bill 762 provides a narrowly tailored and constitutionally sound solution to a challenge facing cities across California.

The growing gap between the cost of delivering essential public services and the limited revenue tools available to local governments. While cities are responsible for public safety, emergency response infrastructure, parks and community services, we operate within one of the most constrained local revenue systems in the nation.

As the Senator noted, Senate Bill 762 does not impose a tax increase. It simply allows the City of Hercules to ask their voters for approval of a local transactions and use tax that may exceed the current statutory rate cap. Any measure would still be subject to full constitutional voter approval requirements.

The authority granted under this bill preserves transparency, accountability and local control. The decision remains entirely in the hands of the city's residents. State imposed rate caps, while appropriate as a General policy, can function as a binding constraint that prevents communities like Hercules from even placing a locally supported self help measure on the ballot.

If approved by voters, revenue generated under this authority would be used to protect and maintain essential city services, including public safety, emergency response, parks, facilities, economic development and youth and senior programs that directly support the community's quality of life. On behalf of the city of Circules City of Hercules, we respectfully urge your support for this measure.

Thank you. I thank the witness for your brief presentation. Any of the witnesses in support? Seeing none. Are there any witnesses in opposition? Seeing none. I will ask the Members of the Committee for comments or questions. Seeing none. I want to thank you, Senator, for your testimony.

This measure allows the voters of the city of Hercules to decide whether they want to attack themselves to sustain city services. The Legislature has granted other jurisdictions this sort of authority many times. I'm pleased to support your bill. Senator, would you like to close?

Respectfully ask for your Aye vote.

Very good. The bill has been moved. No, it hasn't. The bill now has been moved. Secretary, would you call the roll?

Motion is due passed to the Committee on Local Government. [Roll Call] 4,1.

4-1 the Bill is out. We will now take up the consent calendar which is item number three. SB575 by Senator Laird. The author has accepted technical amendments from the Committee. Would anyone like to remove this item from the consent calendar? Seeing no objection, we do have a motion.

Do we have a motion on the consent calendar? All right. Senator Grayson has moved bills. Will the secretary call the roll?

[Roll Call]

Consent calendar is adopted. Lift the call on item number one. We will now lift the call on item number one. Will the Secretary please call the roll.

Thank you. It's been a pleasure.

[Roll Call]

The vote is 5-0. The Bill is out. And this concludes the business of the Committee, which is now closed.