Assembly Standing Committee on Revenue and Taxation

Wanna say good after-- is this on? Yeah. Wanna say good afternoon and welcome to this hearing of the Assembly Committee on Revenue and Taxation. As the chair, I want to start by welcoming our new members to this committee, Vice Chair Sanchez and also Member Rodriguez. I look forward to working with you all to consider bills under our jurisdiction. Before we take up this-- before we take up bills on the agenda today, want to address a few housekeeping items.

First, we'd like to remind advocates that the deadline for position letters is one week prior to the hearing. Please submit support/opposition letters through the Legislative Position Letter Portal. I want to make sure everyone understands that the Assembly has rules to ensure we maintain order, and run efficiently, and fit in a fair hearing. Both support and opposition will be allowed two primary witness on each bill. Each primary witness will be allowed two minutes to provide testimony.

All subsequent witnesses should state their name, their organization, and their position on the bills only. That's all we will have time for. We will apply these rules consistently to all people who participate in these proceedings, regardless of their viewpoints they express. We will not permit conduct that would disrupt or disturb others or impede the orderly proceedings of this legislative proceedings. We will not accept any disruptive behavior or incite any threatening or violence in this hearing.

Please be aware the violence of these rules-- a violation of these rules may be subject to removal or other enforcement action. I want to remind everyone that the committee has a Suspense File and that the details will be on the website for your review, so take a look on the website and you will act accordingly. In summary, bills with revenue impact of more than 150,000 will not be eligible for a vote immediately after the presentation. Instead, we will refer to the Suspense File.

To reinstate, if the bills increase or decrease revenue by more than 150,000, it will be automatically referred to the Suspense File. This enables the committee to holistically consider the proposal before us and to better prioritize policy changes, which is especially important to this year's, given the projected budget conditions. Accordingly, no bills on today's agenda will be eligible for a vote. It will automatically be referred to our Suspense File. With that, I will call on our secretary, Miss Highlander, to please call the roll to establish a quorum.

[Roll call]. We have a quorum.

Great. A quorum has been established. We will now move to our first item on the agenda, which is AB 1565. Our former Vice Chair, Mr. Ta, Assembly Member, would you please come and have a seat? And you may proceed when ready. Again, File Item Number One: AB 1565: Ta. And your witnesses are present?

Yes.

Great. I just wanna advise your witnesses, you have two minutes each on your presentations in support of AB 1565. You may proceed when ready.

Good morning, Chair and committee members. I'm here to present AB 1565, a bipartisan bill to help formerly incarcerated individuals secure employment within a year of their release. I'd like to thank the chair for supporting this bill as a principal co-author and Assembly Member McKinnor for supporting this bill as a co-author.

According to California Department of Correction and Rehabilitation, over 60% of formerly incarcerated people are unemployed for a year after release. With that work, they struggle to support themselves and their families, and many turn back on crime.

This lead to 60% reoffending rate within three years. However, if they secure employment or the chance of reoffending drop significantly is crucial to help these people find work as they pay their debt to society and deserve a second chance.

Under the Fair Chance Act, employer with five or more employees cannot ask about conviction history during the hiring process. Micro-businesses with fewer than five employee are the same, but they're struggling in California economy. These businesses make up nearly 90% of private businesses and 40% of the workforce.

Small-business owner absorb all potential risk onto themselves when running their businesses. AB 1565 offer 5,000 tax credit to micro-businesses that hire a formerly incarcerated person within a year of release, provided that person is employee for at least six months. This allow ample opportunity for employee to prove their worth.

This bill support micro-businesses and public safety while also allowing for redemption for people who really want a chance at their new life. This bill mirror a provision in federal law, something that California should take the lead in. AB 1565 is a compassionate measure that is a win-win for society, formerly incarcerated people, and small businesses. I want to thank, again, Honorable Chair and committee members, and I respectfully ask for your aye vote. And I have my witness.

Thank you very much. Two minutes each. You may proceed when ready.

Good afternoon, Chair and members. I remember driving around with you in LA a few years ago on one of your bills. It's nice to see you again. So since then, I think some of you remember me from-- I represent the California Civil Liberties Advocacy. I'm Matty Hyatt.

I also have my own small firm now, Capital Access, and we are actually-- I'm taking on small-business clients now. I've been telling them about this bill. So, I'll just say that-- I'll speak for CCLA for this bill, but I'll say that our organization has been actively engaging with the business stakeholders, and the conversations that we've had, even with the Chamber of Commerce, National Federation of Independent Business, and other other small groups, even right here in Sacramento, we're hearing that people want practical tools that make it easier to hire people who are trying to rebuild their lives after incarceration.

Many employers have told us directly that they would use this tax credit if it were available. They like the federal tax credit, and I've talked to them about, hey, you know, we've got these incarcerated problems and, you know, we have a workforce problem too. People with records, it's hard for them to get jobs, and we can't hire them as well.

So, you know, we want something that gives people second chances, but small businesses also understand that this carries a lot of risk when they hire people that were formerly incarcerated. But I really do feel that this bill helps offset the risk, and it makes it a lot easier to give them the opportunity while still upholding the principles of public safety.

What I think makes AB 1565 especially compelling is it's not just a compassionate policy, but it's also good on the fiscal side of things. So let's just try to break some of these things down. According to the California Department of Corrections and Rehabilitation, employment dramatically changes outcomes for people returning home from prison. We've been talking about this for years actually. When a formerly incarcerated person finds a job within one year of release, the likelihood of recidivism drops from 60% to just 16%.

So in other words, having a job reduces the chance of going back to prison by more than two-thirds. So it would reduce the prison population, reduce crime, and et cetera. Right now, the same department reports about 60% of people released from prison are unemployed within their first year back in society, and that more than 60% will reoffend within three years if nothing changes. These are the numbers that CDCR-- pretty much undisputed at this point. So these are the costs that we have.

According to CDCR, basically incarcerating one person in the state costs us about a $133,000 per year. So offering a $5,000 tax credit to micro-businesses for hiring formerly incarcerated persons, that keeps them employed for six months. If that job helps that person stay out of prison, the math is pretty simple.

Thirty seconds.

The state spends $5,000 but avoids roughly $133,000 in incarceration cost. That's a net savings of more than $128,000 for a single person. So, this fiscal analysis, you know, we've got the Franchise Tax Board, and I'll try to wrap it up and say that, I think that this rare bill gets us a chance to improve public safety, reduce recidivism, reduce the prison populations, and we're in a budget crisis right now, so if this can help save the state some money, why not? Thank you.

Thank you very much. Next witness, two minutes, please.

Good afternoon, Chair and members. My name is Elizabeth Kim. I currently serve as the policy director at Initiate Justice. I bring twenty years of legislative and public policy experience to my role. I am also a professor of social justice, a lawyer, and former ledge staffer.

I am also formally incarcerated. I came home after serving time for a felony conviction for possessing something that is now legal to possess in California. I'm also a daughter of long-time small-business owners, and because of that, I bring a unique perspective to this issue. I understand the real risks that go into hiring decisions for small businesses, and I also understand the hope of someone coming home who just needs to be given a second chance to rebuild their life. People with felony records face enormous barriers to employment.

Studies show that having a criminal record can reduce the likelihood of receiving a job callback by nearly 50%. I know this personally. I remember sitting across from employers time after time after coming home knowing that the moment they saw the felony on my record that I might not just-- I might not get that job.

But I'm also living proof of what happens when someone who is formally incarcerated is given a second chance and meaningful employment. Because employers were willing to take that chance on me, I was able to expunge my record, return to school, earn a law degree, and my career to public service.

Today, I pay more than a lot of taxes, and I've dedicated my life to public service. None of that would have been possible without employers who are willing to look beyond my record and see my potential, and that's why this bill is important. Thank you.

Thank you very much, and thank you for testifying before this committee. Thank you very much. Next, we will have anyone in the room that's wishing to speak in support of, I need your name, your organization, and this is just in support of. Please approach the microphone. Name and organization in support of AB 1565.

Nicole Robinson with the California Chamber of Commerce, in support.

Thank you very much. Hearing and seeing no one else wishing to speak in support, anyone-- primary witnesses in opposition, would you please come forward? And if-- okay. Great. You have two minutes, and you can proceed when ready. Thank you.

Thank you so much. Good afternoon. Dani Kando-Kaiser, here on behalf of the California Tax Reform Association. CTA is a nonprofit organization of labor, public health, education, and public interest groups which advocates for fair taxes in a healthy public sector. Our goal is to seek progressive reform in California's tax system that will improve equity while providing a stable and fair tax base for state and local government.

We are respectfully in opposition to AB 1565 today. While we greatly appreciate the intent of encouraging the hiring of ex-felons, employment tax credits have never been shown to be effective in reaching social goals that they are intended for with many similar bills having come before this legislature.

The high cost of an employee means that the employer will hire the best employee, not one with a tax credit, even one as generous as $5,000. The state has many programs in existence to help the formerly incarcerated reach employment, which are far more targeted and likely to be more effective than the tax credit and which can be enhanced if necessary through the budget. We ask for a no vote. Thank you.

Thank you very much. Anyone in the room wishing to speak in opposition, would you please approach the microphone? Your name, organization, opposition. Hearing and seeing none, I wanna bring it back to the committee. Any members? Okay. Mr. DeMaio and then Ms. McKinnor.

Thank you, and I wanna applaud you, Assembly Member Ta, for sticking with this bill. It was a smart bill a year ago. It's still smart today. I really appreciate our colleague, Assemblywoman McKinnor, for joining as a co-author. This is just common sense, it's bipartisan, it's a second chance, and it is fiscally responsible. A $5,000 tax credit?

I mean, we're starting off basically at a modest level to see if it works. I think it will work, and we can review it and evaluate it. For the opposition, I am surprised, but you mentioned other government programs that are available. Can you give me one example, two examples of other government programs for these formerly incarcerated individuals wanting a second chance?

Yeah. I myself worked with an organization called CROP, Creating Restorative Opportunities and Programs, a very successful program that started in the Bay Area and I believe is rolled out throughout the rest of the state. I'm no longer representing them, but I did that in the past.

And what was the cost per unit there? The cost per person?

I wish I could remember. I'm sorry. But we did it through the budget and, oh my gosh, it was an uphill battle, but it's been really successful and there are similar programs like that that are in existence as well.

You mentioned you did it through the budget, which is an uphill battle, whereas this would be a tax credit that would be privately initiated so that employers could look at an individual, identify their needs and what the individual offers, and it cuts out the middle man.

It cuts out all the government bureaucracy. I would venture to guess that you bring me any of these programs that you say are alternatives, and they're probably more than $5,000 per individual of taxpayer support. So I'm puzzled by the opposition because this is such a strategic testing of this concept. And it has worked in other states, and that's why I really hope that in the spirit of bipartisanship, in the spirit of giving people a second chance, that we explore this this year.

It did not proceed past the committee level last year. My hope is that in the Appropriations Committee that we can get it out of the suspense process and get it to the floor. Thank you, Mr. Ta.

Really appreciate that.

Ms. McKinnor.

Yes. I would also like to commend the Assembly Member. You know, me and my colleague, we don't agree on things all the time, but on this one we do. I think this is a smart bill. I'm not a big fan of tax credits, but on this one, I think it's worth it.

And, yes, CROP is a great organization and they do great work but, you know, it's a lot of people who came out of prison and out of jails, and so, if we can get them to work, if we have businesses that are willing to employ them and give them that second chance, that's huge for justice, the justice community, and so, I'd love to see this go as far as we could go. So I'm with you, Assembly Member Ta. Thank you for your work.

Thank you very much. Hearing and seeing none, I would like to ask the author a question. This committee, in fact, passed this bill out, and it was held in Appropriation, and so I was also a supporter of this bill; think that it's a good policy bill.

Question: how will eligible small businesses learn about the tax credit and the opportunity to hire employees that would qualify under this bill? How would you get the word out so that small businesses will know about it if in fact it's passed both Houses and governor's signed into law? How will we get the word out?

Well, I really appreciate the question, and that is really, really important and that really good question. So if the bill is lucky enough to be passed and signed to law, I just want to make sure that I will work with all of my colleagues across the state.

So we have to advocate the bill because I think that this is a direct opportunity that we provide, like, a better future for formerly incarcerated individuals. So I think that if the bill signed to law-- and you have my promise. I will work with every single district in the state to make sure that we continue to advocate for this program. Yes.

Great. Thank you very much. Seeing no other member wishing to be recognized, Assembly Member Ta, you may close if you wish.

Yeah. I want to thank you so much. I want to thank the Chair for being my principal co-author, and I want to thank the comment from my colleagues. I think this is a bipartisan bill, and I think that the bill really, really helpful for our community and for our society, so I respectfully ask for your aye vote.

Thank you very much. This bill we'll refer to our Suspense File. We thank the witnesses and also the author for coming forward. Thank you very much. Next, we will move to File Item Number Two: AB 1596, Davies. Welcome, Ms. Davies.

Welcome.

Do you have any primary witnesses with you?

No.

Okay. You may proceed when ready.

Thank you, mister chair. Members, today, I'm here to present ab 1596. I would like to start off by thanking committee staff who are working with my staff on this measure. Members, a b 1596 is a common sense measure to give a five year sales tax holiday for the purchase of infant car seats. According to the consumer's report, the average cost of an infant car seat ranges from $50 to $550.

For a young family struggling to pay bills, a car seat that cost even 200 or $550 can be a real strain on the monthly budget. No family should have if ever have to choose between safety of their child and having enough money in the bank. Mister chair, I wanted to give you an example of what this could mean for a family. California has a base sales tax of 7.25. If this bill were implemented and the 7.25% sales tax were eliminated on a car seat that cost 300, for example, a family could save potentially $21.75.

Now this may not seem like a lot, but let me put that in terms that could help. $21.75 is a payment for roughly four gallons of gas, at least it was. It is the equivalent for a grocery store dinner meal or to help pay, co pay for a family young family with a child for newborn wellness checkups. I understand historically this committee has raised issues on these types of bills because they shrink our tax base. But families leaving California because they can't afford to live here will shrink our tax base faster, more severe than any policy put in place.

I went by saying as legislators, we are making child passenger safety more accessible and affordable for every parent in our state, and that is the goal of AB 1596. Thank you so much. And at the appropriate time, I respectfully ask for an aye vote. Thank you.

Thank you very much. Because you have no witnesses, I'll go immediately to the audience. Anyone in the room wishing to speak and support you, please line up. K. Hearing and seeing none. Any primary opposition, we wanna invite you to come to the table and speak in opposition to assembly bill 1596 Davies. I know you.

Good afternoon. My mic on. Good afternoon. Dani Kando-Kaiser again on behalf of CTRA. Regretfully, we do have to oppose this bill.

We absolutely appreciate the intent of the bill, but tax exemptions for car infant car seats are far more costly and less efficient than targeted benefits, we believe. California has multiple programs in counties that are mandated by the state and financed by traffic safety funds, court fines, and public health budgets. These programs include education and installation of car seats, which are provided by county health departments and numerous nonprofit organizations to make sure that no family is without a car seat. If California's current programs are found to be efficient, we believe that they can be enhanced far more efficiently than with this tax exemption, and we ask for a no vote. Thank you.

Thank you very much. Anyone in the room wishing to speak in opposition on a b 1596 would you please line up, state your name, your organization? Hearing and seeing none, wanna bring it back to the dais. K. No one wishing to speak.

I have a question for the author. A sales tax exemption benefits benefits everyone, even those who can easily afford the product. Is it isn't it there Yeah. So, miss Davies, for a car seat, what was the price that you quoted for for a car seat?

The savings or the the the right now, they're going for around 200 to $550 for a car seat.

You said $550 for a car seat?

Yes.

Wow. Okay.

And a lot of families obviously have more than one child that need to be in a car seat.

Is there a more targeted way to assist those who really needs them? And that's the question that I have. Is there a targeted way?

You know, while fines and noncompliance acts are deterrents, they often treat a financial barrier for the families who are already struggling to afford safe up to date car seats. By eliminating sales tax, we ship the strategy from punitive to proactive, and I think that's something as an incentive to do it.

Mhmm. K. Got it. No other questions? Mister DeMaio, I see the wheels turning. No? Okay. Thank you very much. Miss Davies, thank you very much for your presentation. You may close at this time.

I respectfully ask for a aye vote.

Thank you very much. This, bill will be referred to our suspense file. We wanna thank you and also, the opposition for coming. Thank you very much. With that, what we'll go to file item number three, AB1668, miss Pellerin. Thank you very much.

Hello. You may begin with ready your primary witness.

Yes. Hi. Thank you, mister chair and members. For more than forty years, the welfare tax exemption has proven to be an important tool in protecting habitat for some of California's unique flora and fauna and for providing recreational opportunities and natural beauty to Californians. The tax exemption for open space properties has a sunset date of 01/01/2027, and allowing the sunset to expire will increase the cost to a point where land trust may be unable to afford to maintain and steward important natural lands. Accordingly, the land could be put up for sale and pending a state intervention to protect these natural lands could be purchased by a developer. So a b 1668 simply extends the sunset for the welfare tax exemption for five years so that the land trust can continue to steward our vital natural lands.

And with me to testify in support is Caroline Godkin, executive director of the California Council of Land Trust.

Thank you very much. You have two minutes.

Good afternoon, members of the committee, chair Gibson. My name is Caroline Godkin, and I am the executive director of the California Council of Land Trusts. We're really grateful to Assemblymember Pellerin for bringing forth this bill today. The California Council of Land Trust is a member organization, and we represent the interest of the some 100 over a 100 land trusts throughout the state of California. Land trusts are nonprofit organizations who protect land of all types and ecosystem, deserts, farmlands, working lands, and and everything else throughout the state and have protected close to 5,700,000 acres.

This exemption has worked really well and as the assembly member said, has really allowed those precious funds to be used to steward and to maintain these lands. This this exemption has been in place since 1971, I believe. And it really has freed up, vital resources for land trusts to be able to continue to do their work. We respectfully ask for your support to continue this great program and certainly happy to answer any questions.

Thank you, mister chair. Mark Fenstermaker was asked to register support for the Center for Natural Lands Management, The Nature Conservancy, and the Trust for Public Land. Thank you so much. Good

Thank you very much. Anyone in the room wishing to speak in support of Assembly Bill 1668 would you please line up? And we'd like to have your name, your organization, and this is in support of AB 1668.

Afternoon. Jeff Darlington, Placer Land Trust in support.

Good afternoon. My name is Mark Drew, executive director for the Eastern Sierra Land Trust and a member of the CCLT and here to, request your support. Thank you. Thank you.

Good afternoon, John Henry Drew, member of the public. In support.

Thank you. Fantastic. Any primary opposition to 1668, I wanna invite you to come up. Hearing and seeing none, I wanna invite members on the dais to speak, mister DeMaio?

I wasn't gonna speak on the bill, but I I do support the bill. I think it's pretty common sense, and I I, you know, think that this should be seen as a bipartisan effort. I just wanna note that, there are some lobby groups that, you know, seem to be against certain bills, because of loss of revenue, and then they're silent on other bills. That's certainly within your, you know, prerogative, but it really diminishes, I think, the credibility of your argument when it's selective. So I'm glad that there is no opposition to this bill, I hope that we can get it passed.

And I hope that the opposition to the other bills evaluate whatever criteria that you're using to oppose.

Just one question for the author. Do you intend to ask Section 41 provision to comply with the committee's policies on tax expenditure?

Absolutely. Yes.

Great. Thank you very much. Seeing no further questions from the dais, thank you very much. You may close if you wish.

Thank you so much. Yes. We have lots of support for this bill. No opposition. I respectfully ask your aye vote.

Thank you very much. This bill is referred to our suspense file. Thank you very much to your witness. We'll be moving to file out of number four, ab 1690. Assemblymember Ahrens. The only member in the legislature, Patrick. Right. You have any primary witnesses in support? They may also join you.

We have some witnesses here.

And you may proceed when ready.

Thank you, mister chair and members. AB 1690 aims to ensure that future generations of California's children and young families receive the the the support that they critically need during this cost of living crisis and into the future. Under current law, the young child tax credit is applicable to families with children under the age of six, but the cost of raising a child persists well past that age as we know. Having experienced homelessness, insecurity, food insecurity, and, I know firsthand the struggles that many of our families are facing, trying to afford the high cost of living in California. Parents should not have to choose between necessities and having to access essential resources should be a standard for right for everyone.

Joining me today is Jamie Bender who has lived experience as a recipient of the young child tax credit, and Nishi Nair, an analyst from the California Budget and Policy Center.

Thank you very much, and welcome. You have two minutes each. Whoever wants to go first.

I can start. Good afternoon, Chair Gipson and members of the committee. My name is Nishi Nair, and I'm a policy analyst at the California Budget and Policy Center, a nonpartisan research and analysis nonprofit that works to expand opportunities and promote well-being for all Californians. As affordability pressures grow and debilitating federal cuts to the safety net from HR one begin to materialize, already high poverty rates are likely to rise. This is why expanding California's young child tax credit to support more families with low incomes is especially important right now.

Refundable tax credits like the state and federal earned income tax credits are proven tools for pulling families out of poverty. California's YCTC reinforces these impacts by reaching roughly 400,000 families across the state each year. Most families receive the maximum credit, which is enough to cover the cost of six months of utilities for a family living in LA County. Currently, however, about 60% of families with low incomes are excluded from the credit. For a parent with one child making $15,000 per year, they qualify for about $1,700 worth of benefits in combined YCTC and Cal EITC credits when their child is five.

However, when their child turns six, the family is only eligible for the Cal EITC, which results in an almost 70% decrease in benefits. On top of this benefits cliff, many families with the lowest incomes, in addition to mixed status households, are excluded from the full federal child tax credit. The YCTC fills in crucial gaps left by the federal CTC, but does not reach enough California families. Extending extending the credit to families with older children would help reach more low income families left behind. California currently spends six times more on corporate tax breaks than on tax credits for low income families.

This shows that California has the resources to better meet the needs of communities facing affordability pressures and federal threats. The state has the opportunity to use the tools already at its disposal and expand the YCTC to all low income families with dependent children. Thank you for your time.

Thank you very much. Next witness, two minutes.

Good afternoon, members of the committee. Thank you for the opportunity to speak today. My name is Jamie Bender, and I'm here in support of AB 1690 in the effort to expand the young child tax credit to families with children older than the current age cutoff of six. I'm speaking to today not only as a California resident, but as a parent and as a student. My daughter just turned six this month, which makes this issue especially personal for my family.

Under this current policy, families like mine are right at the point where we lose access to the young child tax credit, even though our financial responsibilities of raising a child don't suddenly disappear when they turn six. In fact, they increase. As a student parent, I work hard to balance school parenting and the cost that come with raising a child in California. The young child tax credit helps families afford everyday essentials like food, clothing, school supplies, housing, and childcare. For many families like mine, these funds make a real difference in maintaining stability and meeting basic needs.

The reality is that raising a child is expensive past the first six years. School costs, after school care, clothing, activities, and health care all add up. Expanding the young child tax credit to include families with children up to the age of 18 would ensure that families continue receiving support as they work hard to build stability. Programs like this are one of the most effective ways we can reduce poverty while investing in the long term well-being of California's children and families. For parents like me pursuing education while raising children, this support isn't just helpful and makes progress much more attainable.

When families have increased financial stability, children gain the opportunity to succeed in school, and parents are more present. It also increases them staying healthy and thriving their communities. Expanding this credit is an investment, not only in families, but in the future of California itself. I respectfully urge you to support AV 1690 to ensure that more families can access this critical support. Thank you for your time and consideration.

Thank you very much. Any, members in the room wishing to speak in support of 1690 should you please line up, Name your organization and this is support.

Hi. Amy Costa, Full Moon Strategies on behalf of Golden State Opportunity and strong support.

Thank you very much.

Hi, chair Gipson and members. Danielle Bautista with United Ways of California as well as the Prosper California Coalition, a proud cosponsor of AB 1690 and strong support. Thank you.

Thank you very much.

Hi. Thank you so much, chair. Sam Wilkinson with Grace End Child Poverty in California as well as the National Council of Jewish Women in California and Equal Rights Advocates in strong support. Thank you so much.

Thank you.

Laura Muther with the Lutheran Office of Public Policy in California. We are in support, and it's also a priority legislation for the Stronger California Coalition.

Thank you.

Yesenia Rabancho with End Child Poverty in California, also sharing support for Western Center on Law and Poverty and the Friends Committee on Legislation. Thank you.

Thank you.

Ejiro Okoro with United Way California Capital Region in strong support.

Thank you very much. Any additional community members wishing to speak and support? Hearing and seeing none. Primary, witness in opposition to this measure of 1690. Hearing and seeing none, wanna bring it back to the dais. Any members wishing to speak or ask any questions? Hearing and seeing none, guys did a good job. Mister Ahrens, you may close.

Thank you, mister chair. I will just say that this is exactly what our constituents, want us to focus on. This is exactly, the type of bill that helps alleviate the high cost of living, helps alleviate poverty. For every dollar invested in this program, we get $2 back in economic activity. This is an investment in our economy, and there's nothing more bipartisan than saying, take the money away from the government and put it back in individual people's hands.

They know how to raise their children better than the government does. This should be bipartisan and unanimous out of this committee. Thank you so much for the consideration. I respectfully ask for your aye vote.

Thank you very much. This bill will refer to our suspense, file. Thank you very much. Mister Witness, thank you very much for appearing. Next up is file number five. AB1698, Mr. Alanis. Also, you have primary witnesses and support. They're very good. You may receive when ready.

Alright. Thank you, chair members. Ab 1698 is a common sense bill that would offer a tax credit for restaurants with with 50 or less employees who comply with food handler certification laws. In 2023, sb 476 created a new requirement for employers to pay for their employees' food handler cards. The bill also required employers to compensate employees for the time spent obtaining a food handler card, which is roughly about two hours.

Food handler cards cost anywhere from $7.95 to $15 per employee and are valid for three years. This means employers are paying upwards of $33 for each new employee they hire. These costs pile up, especially when the average turnover rate is nearly 80% across the restaurant industry. AB 1698 would help subsidize the cost these small restaurants are paying to comply with the current law. This bill would create a tax credit of up to $250 per year for food facilities in compliance.

Smaller restaurants are often family owned and community oriented, and each employee they onboard comes with several costs that can create a large burden. Given how challenging it is for these small businesses to keep their doors open, this bill is a small yet meaningful way to offer some relief. I respectfully ask for your aye vote on AB 698 when the time comes for the vote, and I thank you. And with me today is Pat Joyce on behalf of the California Restaurant Association.

Thank you very much. Two minutes.

Appreciate it. Pat Joyce on behalf of the California Restaurant Association in support of a b 1698 which would permit a qualified employer, which is a restaurant with, 50 or less employees to claim a tax credit in an amount equal to the employer cost associated with the employees food handler certification up to $250 a year over the next three years. Prior to 2024, restaurant employees typically completed the required food safety course, completed the test, and paid the $15 fee. And the underlying law was deliberately set up this way with stakeholder input from the restaurant, health department, and labor community. As a simply member mentioned, in 2023, the legislature took what was designed as a manageable set of conditions for an individual and shifted those onto restaurant employers by requiring those employers to compensate employees for the exam costs and the time it takes for them to complete the multi hour food training and test.

While obtaining a food card is relatively small and inexpensive investment, it's less than $15, requiring restaurant employers to pay for the training time and testing has been costly. As restaurant employers have continued to grapple with pandemic related policy outcomes, record high inflation, tariffs, and so many other challenges for the state's restaurant employers. To now shoulder the cost of the state's 1,400,000 food service workers is an added economic challenge. AB 698 seeks to help offset some of these new mandated costs. Neighborhood restaurants continue to face unrelenting operating challenges.

The existing food card training requirement is one that caters to the interest of food service professionals by offering them numerous choices of training providers, capping the cost of training, and making the food card their own portable property that they can take from job to job, even to competitors. Given that restaurant employers now bear those costs, a small offset as proposed under this bill is an incredibly modest approach and one that comes at a critical time. For these reasons, we ask you for your support when the time comes. Thank you.

Thank you very much. Next witness.

Just for technical assistance.

Just for technical assistance. Great. Anyone in room wishing to speak in support of assembly bill 1698? Would you please approach the microphone? Hearing and seeing none. Primary, in opposition. Testimony in opposition. Here she comes.

Thank you. Good afternoon again. Dani Kando Kaiser here on behalf of the California Tax Reform Association. A 100% in respectful opposition. A 100% tax credit represents a direct payment by the state with virtually no precedent in state tax policy.

The cost for food handling certification are fully deductible as business expenses as our compliance with other health and safety regulations as well as other regulatory costs. As recently mandated by the legislature, there are necessary costs of doing business, and therefore, a credit in any form would have no real incentive effect. We ask for a no vote.

Thank you very much. Anyone in a room wishing to speak in opposition of AB 1698? Would you please approach the microphone, name, and organization?

Good afternoon. Matt Lage with SEIU California as part of the coalition here and also in support or opposition. Excuse me.

He could he could support it.

Wanna bring it back to the dais. Any members wishing to speak? Hearing and seeing none. One question. Why should we subsidize compliance with the basic health and safety rules through the tax code?

You want that one?

Sure. I'll take a start and you can add. I would just note, again, before 2023, this was something that was a very manageable cost for employees to handle. We're talking $15 or less. And then when you shift that cost onto the employer who has to cover all the costs for all the employees, that's just another cut, you know, that they've experienced year after year. So this is a modest approach to provide a little bit of relief to the small business owners. Okay.

And if I could just add to that. I know we in this building talk about small businesses and talking about affordable everything. And we we didn't want to refund a 100% as was brought up. We just wanted them to get a tax credit on this one. $250 is actually not much in my opinion.

But to just help these businesses businesses grow and be able to actually be able to hire more people on, I think is great for everybody, for the customer, for the employee, for the employer. And so, again, I respect your eye.

Great. Thank you very much. Mister Alanis, you may close.

Just ask for an aye vote. Thank you very much.

Thank you very much. This bill will refer to our suspense file. Thank you and your witnesses for coming before this committee. Thank you. Our Vice Chair, Ms. Sanchez, file item number 6, AB 1620. If you have any primary witnesses, they may also approach as well.

And you may proceed when ready.

Thank you, Mr. Chair and members. I would like to thank the committee today for hearing this bill. I am proud today to present AB 1620, a measure that would make home ownership more affordable for working and middle-class families. California is in the midst of a homeowners insurance affordability and availability crisis. Major insurance providers are being forced out of our state by unreasonable regulations and expectations coming out of Sacramento.

This has left California property owners with fewer, but more expensive options, and in some cases, bare bones coverage under the Fair Plan. Though the Insurance Commissioner is committed to needed reforms, his plan initiatives will likely increase premiums in the short run. To offset this cost and make home ownership more affordable, I introduced AB 1620 to allow taxpayers to deduct the full cost of homeowners' insurance premiums for their primary residence in California from their income tax. Doing so will help many Californians achieve and maintain the dream of hon ownership.

Testifying with me today is Scott Kaufman of Howard Jarvis Taxpayers Association.

Thank you very much. Thank you very much for appearing. You you have two minutes.

Yes, sir. Thank you to the committee for having me today. I am Scott Kaufman, the Legislative Director for the Howard Jarvis Taxpayers Association. I am here today in support of AB 1620 which would allow California taxpayers to deduct the full cost of homeowners insurance premiums for their principal residence for from their income tax. Homeowners insurance premiums have been steadily increasing over the past few years and currently show no signs of stopping.

Additionally, the accidents of insurers from the market and the restrictions on new policies has left many homeowners with no choice but to resort to costly and limited coverage options. For many, especially those in high fire high wildfire risk areas, the exorbitant cost of home insurance has prompted them to sell their homes and leave California altogether. AB 1620 offers a reasonable intervention in the tax code that would offset the cost of homeowners' insurance premiums for Californians starting with the 2026 tax year and sunsetting in 2031. By providing California homeowners a tax deduction for their homeowners insurance premiums, AB 1620 offers tangible relief to homeowners grappling with escalating insurance expenses and a lack of availability.

The Howard Jarvis Taxpayer Association is proud to support this measure and urges you to support it at the appropriate time. Thank you.

Thank you very much. Anyone in the room wishing to speak in support of AB 1620, would you please step forward? Your name and your organization.

Hello. Amy Garrett with California Association of Realtors in strong support of this measure to help mitigate the ever-increasing cost of homeownership, but particularly those related to insurance premiums. Thank you.

Thank you. Hearing and seeing no one else wishing to be recognized, anyone primary opposition to 1620, would you please come forward? You may proceed when ready.

Good afternoon. Danny Kando-Kaiser, again, on behalf of the California Tax Reform Association, respectfully opposed to the bill. Providing deductions for insurance premiums means state taxpayers are called on to subsidize well-off homeowners in high-risk areas. While we understand that the insurance market has many problems, it is a problem which will have to be resolved in the insurance market, not by taxpayers. In particular, with the progressive income tax, it is clear that higher income home homeowners will benefit disproportionately from this deduction.

We ask for a no vote.

Thank you very much. Anyone in the room wishing to express their opposition to AB 1620, would you please come to the microphone? Hearing and seeing none, bring it back to you, to the dais. That's my ability. Okay. Hearing and seeing none, I have a question for you, Ms. Sanchez. Can you please explain why this is a structure, as an itemized deduction that would be available to those who would take a standard deduction? Not available, excuse me.

Sure. So, the entire goal of this, this bill was to address the affordability and the insurance crisis that is happening down the state. That is the intent. That is the end of it. So, I am happy to work with policy committee and staff to get to a place that we are happy and comfortable with if that means we're able to move it forward.

Got it. Thank you very much. And you may close if you wish.

Thank you. AB 1620 is a reasonable measure that will provide much needed relief to our California homeowners. I respectfully ask for an aye on this measure.

Thank you very—thank you very much. This bill will refer to our suspense file. Thank you very much to witness for appearing and giving your presentation. So, thank you very much.

Thank you.

With no further business being before this committee, the Revenue and Taxation Committee stands at adjourned.