Assembly Standing Committee on Revenue and Taxation

Wanna say good afternoon, and welcome to the hearing on the Assembly, convene a revenue taxation. Before we take up bills on our agenda today, I will address some housekeeping items. First, I would like to remind advocates to submit position letters one week prior to the hearing in order for the organizational position to be reflected in the bill analysis. I also want to remind everyone that our committee has a suspense file. The details about the process is spelled out on our committee rules posted on our website.

In summary, bills with a revenue impact of more than a 150,000 will not be eligible for a vote immediately after their presentation and instead will be referred to our suspense file. Accordingly, only one bill on the agenda will be voted on today. That will be file item number four, SB 1165, Caballero. The Chair recognized we don't have a quorum as of yet, so we will act as a subcommittee, and we will proceed with our first author.

And we will immediately go to file item number two, Seyarto. Thank you very much, Senator, for being here. We would like to invite any witnesses you have with you solo today. Okay. With that being said, you may begin when ready. Thank you very much.

Playing hooky from floor session, be able to accommodate, your guys' scheduling.

Oh, very good

So thank you, honorable Chair. I'm here to present SB 888. First, I'd like to thank the committee for working with my staff on this important bill. SB 888 addresses a critical flaw in the system that unfairly penalizes disabled veterans by counting their disability benefits as income when determining their eligibility for the disabled veterans property tax exemption.

In recent years, both California and the Federal Government have recognized that disability benefits are fundamentally different from earned income. In two the 2024 session, the legislature and Congress acted to remove disability income from government housing eligibility calculations. SB 888 simply extends that same principle to property tax relief for our disabled vets. Disability compensation is not a source of wealth. It is a recognition of service connected injuries and a loss of earning capacity and falls under the category of an insurance.

This bill is a proactive step to keep 100% disabled veterans in their homes and reduce their risk of homelessness or housing instability by ensuring that the tax code does not punish them for receiving disability compensation. SB 888 simply excludes VA service connected disability compensation from the calculation of household income for purposes of the low income disability or disabled veterans property tax exemption. So veterans are not penalized for receiving the benefits that they have so deservedly earned. I respectfully ask for an aye vote when the time comes.

Thank you very much. Anyone in the room wishing to speak in support of this measure, would you please come to the microphone? I just need your name, your organization, and this is a support position.

David Kuta, test commander of the VFW, supporting 85,000 veterans, combat veterans. I'm strongly in support of this measure.

Thank you very much, sir, and thank you for your service. Anyone in the room wishing to add on? Seeing none, Any primary opposition? Please come up and take a seat at the table. Seeing none.

Anyone in the room wishing to speak in opposition of this measure? SB 888. Seeing no one wishing to speak in opposition, wanna bring it back to the dias. Any members on the dias? Hearing and seeing none.

Mister Seyarto, just one question for you. Yes, sir. Do other states consider, this income for purpose of of determining eligibility for their veterans for property tax breaks?

A majority of the states do not. There are a couple of states that still do. I would have to look get back to you on the exact states that they are, but most of them do not.

Thank you very much for that. Appreciate it. That satisfied my question. You may close if you wish.

I just would like hopefully, we can consider the plight of our disabled veterans and their ability to stay in their homes, and this bill would help them do that. And when the time comes, respectfully ask for an aye vote or thoughtful consideration when it goes to suspense.

Thank you very much. We we don't have a quorum as of yet. Oh, we do. Okay. We have miss Quirk Silva join us. We're gonna pause for a moment and gonna call on our secretary to call to establish a quorum.

[Roll Call]

We have a quorum. So that item will be referred to our suspense file, and thank you very much.

Thank you.

We're still waiting for authors. I understand that the Senate is still in still in session.

I know the we don't have a consent.

No consent calendar.

It was last week. No worries.

No problem.

[Background]

You must know thin By memory. No. Senator Senator Niello, welcome. You may have a seat. So we're gonna move to file item number three since we have a author, SB 1053. And, Senator, do you have witnesses with you?

The, I I don't think so.

No. Okay. Well, you may begin when ready, and welcome.

Thank you very much. Appreciate that. And I am here to present SB 1053. Similar to my bill last year, which was SB 603, which passed out of this committee on a bipartisan support, Existing law provides that property tax base year value of real property that is substantially damaged or destroyed by a governor declared disaster may be transferred to a comparable property located within the same county that that's acquired or newly constructed within five years after the disaster as a replacement property.

This has the benefit to the homeowner who homeowners who are navigating, obviously, a very difficult time dealing with a disaster and reap and the rebuilding process affecting their property.

Recent fire events have shown that five years has proven to be a difficult time, timeline to get replacement property built. In recognition of this dilemma, the legislature has extended the five year, period numerous times, to accommodate for a longer period. SB 663, Allen in 2025, AB 1500, Irwin in 2023. I could go on, but in the interest of time, just know that it's been done several times.

Given the unprecedented wildfires in Los Angeles last year and the risk California continues to face, it's going to be a huge challenge to see any rebuilding completed in five years.

It's time for the legislature to consider allowing the local land and tax use authorities to make this decision on an ongoing basis, whether it's fire, floods, mudslides, earthquakes. We have our share of disasters here. Local boards of supervisors are closer to the problems affecting their communities and can adjust the time period if needed.

SB 1053 authorizes the county board of supervisors of any county affected by a disaster declared by the governor on or after 01/01/2026 until 01/01/2034 to extend the five year time period to transfer property tax base year values by up to three years for properties located in that county or to the same property affected by the disaster. I as I said, I do not have a witness with me. I am performing without a safety net and am prepared to take questions.

Thank you very much, Senator. Appreciate, your your testimony and bring this bill before us. We wanna open up to the, audience. Anyone here wishing to speak in support of ten fifty three, would you please approach the microphone, your name, your organization, and this is support?

Good afternoon. Laura Summercott on behalf of the California Assessor's Association in support. I wanna thank the author for writing this bill. Thank you.

Thank you. Seeing no one else approaching, primary opposition to this measure. You have the same right. Please come to the table. Seeing no one anyone in the room wishing to add on in opposition.

Seeing no one I'm gonna bring it back to the dais, my colleagues, anyone seeing and hearing. No one wishing to speak? So, Senator, thank you very much for bringing this measure before us. I know you had, brought a measure before us prior. Just one question.

Is there any particular reason you chose to broaden the scope of this bill when the similar, but narrow bill last year, SB, 603 was held in appropriations?

Well, it was suggested in appropriations. But when you think about it, it really makes sense, to allow a person to have the same rights with regard to the property that was destroyed in the disaster. So they have that flexibility.

Got it. Thank you very much. Senator, you may close if you wish.

I respectfully ask an aye vote.

Thank you very much. This item is a suspense candidate, and this will revert to our suspense file. Thank you very much for appearing, and that's it.

Thank you.

Thank you.

Very much.

Hope some of your other colleagues will escape as well and come over here. I would also like to recognize we have some interns from treasurer Fiona Ma with us observing today, and so they're here. Wanna recognize them for being with us. So welcome, and thank you very much for being here. Some interns.

Hopefully, you'll get a lot out of today's Hearing in Revenue and Taxation. So welcome.

Senator, welcome. You may take a seat at the table. Thank you very much for coming. We appreciate it. So we will be file item number five, SB 1407, and you have witnesses. We have your witnesses. You have two minutes each. And, Senator, you may begin opening up when ready.

Okay. Thank you, Mister Chair and and members. Thank you. I know we're all pressed for time, so I'm gonna get right to it. I'm going to present to you and very proudly Senate bill 1407.

Veterans like all Californians are struggling with high cost of living. Veterans who want to live in our wonderful state of California, but they too are feeling the squeeze in current economic conditions, which is why as Chair of the Senate Committee on Military and veterans affairs, I partnered with state treasurer, Fiona Ma, and my counterpart in the Assembly. You're Chair of the Military and Veterans affairs as Chair Schiavo, and to introduce Senate bill 147.

It is coauthored by vice Chair Gonzales and cosponsored by the San Diego military advisory council. Senate bill 1407 is an opportunity to serve those who served our country.

It is a message to our California veterans that we have their backs. We still love them. We appreciate them, and we will continue to honor them. It will be this bill, it will exempt the first $40,000 of a veteran's military retirement pay as well as a surviving spouse benefit payment from the state taxes as long as they make a $125,000 or less as a single or head of household filer or $250,000 as a married couple. Between two 2010 and 2022, Californians lost over 24,000 military retirees.

As a retention challenge and as it grows, we must recognize the physical policy plays a role in long term decisions. Keeping veterans in California must be a priority. This bill opens that door. As of 01/31/2023, about a 127,000 military retirees in California received total monthly payments of over $362,000,000 or about 4,300,000,000 annually from the United States Department of Defense. Having that money stay in California is vital to our economy and to the families of the veterans.

About 25,000 survivors in California received total monthly payments just over 39,000,000 or about 468,000,000 annually. They can take those benefits elsewhere. We need to keep them here in California. That is money that would otherwise enter our local economies, fund businesses, create jobs, generate sales tax, but most importantly, support our economy. California's current tax structure discourages long term service and drives away mid career leaders weakening our state's ability to meet homeland defense, wildfire, disaster response, and civil support missions.

Additionally, over 810,000 national security jobs depend on our ability to attract and keep these highly skilled veterans and military retirees in our state of California, many of whom embark on second civilian careers in their early forties when they retire from the military. They, in turn, come in with experience, knowledge, and skill that the state of California cannot lose. And the state tax, the local revenues can really help our veterans.

Through second careers, a rioting a a a retiree household can contribute 50,000 or maybe even a 100,000 in taxable income annually to their families, to the state, aside from their federal retirement. This bill is accumulation of countless veterans and families telling us it just isn't enough.

We're gonna go ahead and hopefully fulfill this dream of 40,000, but it barely touches the surface. This isn't about revenue losses to the state. It's about how we make veterans, people who we know and love in our neighborhoods, our families, make them whole, make them feel welcome to come to California. This bill keeps revenue in California. Remember, these men and women, when they retire, they take the job, the skills, this retirement pay elsewhere along with their benefits.

We need to keep them in California, and this bill will do exactly that. So it keeps industries and their workforce in California. Their knowledge and their skills, it keeps jobs in California. This exemption on state taxes keeps veterans once again here at home with their families where they started. And with me today, I have Patrick Henning, chief deputy treasurer, and VFW state commander David Kuta. And with that, I respectfully ask your aye vote.

Thank you very much. As a reminder, witnesses, you have two minutes each. You may proceed when ready.

I'll be brief, Mister Chair. Thank you for the opportunity. As the Chair of veterans affairs mentioned. Fiona Ma is very proud to be a sponsor of 1407 and appreciate the work that you all do helping keep our state viable and productive in our economy as well as in our people. This bill is about supporting our veterans.

So we can't just do in our words and at different moments throughout the year, but we have to do in our policies. 1407 is a meaningful step recognizing the service and sacrifice of our military veterans by further exempting military retirement survivor benefits from the state income tax. The treasurer views this as an investment as the Senator well put in our service members.

That type of experience that they have through the their military service is something that is so valued by the California associate of power patrolmen as well as PORAC and our local fire entities that they've all come on in support of this legislation. This is not just about, who we are as a state.

This is about honoring our veterans and making sure that we have the workforce well into the future and taking advantage of the training that has already gone on at the federal level and making sure that the state continues to be able to produce law enforcement as well as fire and other public safety workers and servicemen and women.

Thank you very much. Next witness.

Committee chairperson Gipson.

If you can move closer to you can move closer to the microphone.No problem.

Committee Chair Gipson, committee members, honored guests. My name is David Kuta. I'm sergeant first class, United States Army retired. I served nearly 30 unit thirty years in uniform, and today I continue to serve our citizens as a California state employee considering retirement. I choose California.

The army brought me here in 2009 and I stayed because I love this state. But today, like many retirees, military retirees, I'm facing a difficult decision. Can I afford to stay? SB 147 is not just a policy, it directly affects whether veterans like me remain in California or take our skills, experience, and contributions elsewhere. I speak not only for myself, but in my role as a veteran of foreign wars commander of California.

Representing over 85,000 combat veterans and their families as well, their auxiliary, and more than 135,000 military retirees across the state. I can tell you this, we are leaving. We are leaving for states to recognize our service, not just with words, but with action. States that do not tax military retirement pay. I've had countless conversations with fellow retirees who have already moved, and their message is consistent.

California's cost of living is high, and taxing military pensions makes it harder for all of us to stay. This bill is about competitive competitiveness. Excuse me. Military retirees bring leadership, they bring technical expertise, and they bring workforce readiness. These are exactly the skills California needs to remain strong in both established industries and emerging sectors.

But right now, we are exporting that talent to other states. SB 1407 gives California a choice. Do we continue to fall behind in retaining military retirees or do we take meaningful action to support them? I ask that you support this step the the step forward. Passing this bill sends a clear message.

California values military retirees and is willing to back that up. We stood for this country. Today, I'm asking California to stand for us. I appreciate your time. Thank you very much. And if I have any if you have any questions for me, I would be willing to entertain. Thank you.

Thank you very much. Thank you very much for your service to this country. Anyone in a room wishing to speak in support of this measure, your name supports your organization and supports.

Good afternoon. Thank you. My name is Tom D'agostino with Aaron Reed and Associates and today representing the Vet Fund Foundation and strong support. Thank you.

Good afternoon. Jack Worston from Nossman on behalf of the County Of Monterey in support.

Thank you.

Good afternoon. Ryan Sherman with the California Narcotic Officers Association and Riverside Sheriffs Association in support.

Thank you. Primary witness in opposition of this measure. Anyone in the room in opposition? Hearing and seeing none. Anyone in the room want to speak in opposition of this measure, please come forward.

Hearing and seeing none coming forward, wanna bring it back to the dais. Miss Quirk Silva, you're recognized.

I wanna appreciate and thank the author for bringing this forward and also the speakers. And this is an important bill as we know that last year, there was a, I think, a significant celebration to start at, exempting 20,000, but this would double that.

And I would hope that we'll be back the year after that and the year after that and the year after that because, as was noted, we have a huge, enlisted population of veterans in the state of California, of course, San Diego being one of the hubs, but other areas as well, Monterey, others.

I just had a young nephew who's 23 that just finished his drill sergeant school and graduated last week, And he's down at Coronado and is all of 23, but we know retirement comes very young for for many of our enlisted men, sometimes about the age of 40, 45, depending on when they enlisted. And we do wanna retain them.

We want them not only, staying here in in California raising their families, but also giving back to the state in other ways that they have become experts at, whether it's health care, whether it's in engineering, whatever their skill set is. And we know that they do the math. And the math does not add up when they are looking at retirement dollars. So with that, I would move the bill. Second.

This is suspense item. Suspense item.

Oh, sorry.

Yeah. Thank you very much.

That's right.

Yeah.

Sorry.

Anyone else on the

get in this committee.

We appreciate all the support we can get.

Anyone else wishing to speak on this item? I have one question for the author. Curious. Several other states also include age as a criteria, such as providing a large exclusion for those 55. Have you considered that approach?

I'd love to do that. There are just so many things that we're learning from other states because, remember, we are the bottom end. I think for a while, there was California just was not helping our veterans with anything like this. And 38 other cities or states already ahead of us. So we I think we're the the last one now to give a tax break on our state taxes to veterans.

So there's other benefits, no doubt. Because as a veteran who's completely 100% disabled is able to send his children to college to our Cal State schools. But, again, someone who's disabled like that, his income after being a drill sergeant for twenty some odd years, his income might only be 40,000 as a retiree. But if he's fortunate enough to get a job at, say, 80,000 here in California, that puts some other threshold. Remember, it's $125.

He wouldn't get anything. So you're absolutely right, Assembly member. As California embraces its veterans as it's doing now, you know, with CalVet now getting on that home loan program that we're we're really working hard to get get through and have the governor sign it. But these are little baby steps when it comes to trying to take these veterans and keep them in California. We've gotta be able to say, in California, we do not tax our veterans' pension.

If we can have one day say that we do not tax our veterans' pensions, imagine the number of veterans would stay in the California. And if I may, with your respect, make that my closing. Respect ask for your aye vote.

Well, I well, we will accept that as you close. I wanna say thank you very much. Since you've been elected in the Senate, you have always championed the causes of veterans, our military men and women in uniform. And each year since I've been here, I've always looked forward to voting, on the floor because I don't sit on any committees voting on the floor. You have always championed veterans issues and appreciate your leadership in this space.

And thank you for always being there and raising the the conscious level of our men and women in uniform. And, again, thank you for your leadership to this country. This is a suspense item, and we were referring this item to our suspense file. So thank you very much. Thank you, witnesses, for coming.

Appreciate it. Thank you very much. Thank you.

[Background]

So, I know that miss Caballero was Senator Caballero was here, but we have, Mister Padilla here first unless you wanna

Since the senator's been waiting a long, I'm happy to let Senator Caballero go, Mister chairman, if that's all.

That's fine. Thank you very much. So we will go to... Senator Padilla's giving way to Senator Caballero. So we go to file item number four, SB 1165. Thank you very much, Senator, for being here and waiting patiently. Your witness. Great. Thank you very much. You may proceed when ready.

Thank you, Mr. Chair, for the opportunity to present SB 1165, which improves tax compliance and promotes fairness for law abiding contractors by improving coordination between state agencies. Current law allows the Contractor State License Board, or CSLB, to suspend a contractor's license if they have an outstanding unpaid taxes.

However, the California Department of Tax and Fee Administration, CDTFA, lacks the statutory authority to share taxpayer information with CSLB to facilitate collection and enforcement. As a result, CDTFA is unable to easily utilize CSLB licensing as a compliance and collection tool. Current outstanding CDTFA tax liability for construction contractors is approximately $42.5 million, which has serious consequences for the state budget.

To address this issue, the bill authorizes the CSLB to access limited tax information from CDTFA. The bill preserves flexibility for taxpayers who are actively complying through an installment payment agreement, and increased and consistent tax compliance will help ensure revenues owed to the state and local government are collected and used to support essential services.

SB 1165 will improve coordination between state agencies to level the playing field for integrity driven contractors while encouraging responsible business practices. With me to testify in support today is Dani Kando-Kaiser representing the California Tax Reform Association. Respectfully ask for your aye vote.

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

Good afternoon. Dani Kando-Kaiser on behalf of the California Tax Reform Association in strong support. As folks may know, CTRA is a nonprofit organization of labor, public health, education, and public interest groups, which advocates for fair taxes in a healthy public sector. And 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 the state and local government.

CDTFA collects California's sales and use taxes, a critical source of revenue for both state and local governments, particularly during challenging budget years. Despite this, CDTFA lacks the statutory authority to share necessary information with the CSLB to facilitate its enforcement upon unpaid taxes. As a result, CDTFA is unable to fully utilize licensing as a compliance and collection tool.

SB 1165 would authorize CDTFA to share limited tax information with the CSLB for enforcement purposes and allows them to request that CSLB suspend, deny, reinstate, or refuse to renew its contractor's license when that contractor has significant tax debt. It also establishes clear notice requirements to ensure due process for contractors and preserve flexibility for taxpayers who are actively complying through installment payment agreements. For these reasons, we urge your aye vote.

Thank you very much. Anyone in the room wishing to speak in support of this measure, SB 1165, would you please come to the microphone? Hearing and seeing no one approaching. Primary witness in opposition to this measure. Hearing and seeing none. Anyone in the room wishing... Okay. Don't need to finish that statement. Bring it back to the dais. Anyone... Yeah. This is a... Yes. This is a vote item. It's been moved by Mr. Carrillo, and it's been second by Ms. Sanchez. This is a do pass to the Assembly on Appropriation. Okay. Okay. You wanna close?

Yeah. Respectfully ask for your aye vote.

Thank you very much. Madam Secretary, please call the roll.

The motion is do pass to Appropriations. [Roll Call]

That bill has seven votes, and that bill is out. Thank you very much.

Thank you. Appreciate it very much.

Senator Padilla, file item number 1, SB 420. Thank you very much for your patience, Senator. File item number one, SB 420. You may begin when ready. You have your witnesses.

It's ready. Thank you very much. Good afternoon, Mister chairman and members. I'm pleased to present SB 420. I wanna thank you and your staff for working diligently with our office on this bill, and we will continue working on language to ensure we achieve the bill's intent.

This bill ensures that organizations tied to private immigration detention centers for profit cannot claim charitable tax exempt status and be exempted from local property taxes solely because they're enabling entity or organizes nonprofits. For years, nonprofits have been supported, through the California welfare exemption for the valuable work that they do to benefit local communities.

Unfortunately, a very disturbing recent investigation in my district revealed that the Brawley Community Foundation, a nonprofit organization that owns an ICE detention facility in Imperial County, avoided paying at least, as far as we know so far, $6,000,000 in property taxes through California's welfare exemption.

Although the foundation claims to support community development, create jobs in a high unemployment region, and reduce strain on governmental agencies, much of its activity and revenue are connected to the Imperial Regional Detention Facility, which is operated by a for profit private prison contractor.

This investigation also dug a little deeper and found a disturbing history at this facility, which has been noted for operating often with poor conditions, utilizing the employment of solitary confinement, failing to provide adequate medical care, which has also, resulted in two in custody deaths at this facility.

Subsidizing these facilities with charitable tax exemptions at the expense of local schools and local services betrays the community, and then the mission that nonprofits alleged to serve. This bill closes that loophole in California's rev and tax code by preventing organizations connected to immigration, detention, or deportation efforts, and qualifying for charitable property tax exemptions in the future. I'm pleased to be joined today by Jennifer Fearing on behalf of the California Association of Nonprofits and Ryan Sherman with the Riverside Sheriffs Association.

Thank you very much, and welcome. You have two minutes. We have one to start.

Thank you. Thank you. Good afternoon, Mister Chair and members. Jennifer Fearing on behalf of Count On Profits in support of SB 420. Count On Profits is a statewide policy alliance of more than 10,000 organizations and serves as the voice for California's nonprofit community.

The California welfare exemption is meant for charitable nonprofits, but the case at hand is enabling a taxpayer subsidy as noted of at least $6,000,000 in property taxes associated with operating as the landlord for an ICE detention center. As our CEO observed in the KPPS report regarding the Brawley Community Foundation's ties to this facility, quote, that does not to me sound like a charitable purpose. Abusing the tax code in this manner is harmful to our sector by first, eroding the public's trust.

The entire nonprofit sector relies heavily on public trust and the understanding that tax exemptions are granted in exchange for genuine public benefit. When a charitable designation is used to shield multimillion dollar private prison contractors from local property taxes, it degrades the public's confidence in legitimate nonprofits.

Second, it starves public resources. By siphoning away millions of dollars in property taxes under the guise of charity, these operations directly deprive local municipal budgets, public schools, and community infrastructure of vital funding. This forces actual community focus organizations to stretch even thinner to fill gaps. SB 420 clarifies existing law to declare that a property is not considered exempt when part of any when any part of it operates as a detention center run by a for profit company.

Without SB 420's reform, taxpayers may continue subsidizing ICE detention centers through reduced property taxes.

This is a necessary common sense fix to protect the integrity of California's welfare exemption and ensure public resources are reserved for public good. We thank Senator Padilla for pursuing this legislation which Count on Profits strongly supports, and we urge your yes vote.

Thank you very much. Next witness, please.

Thank you, Mister Chair. Members, Ryan Sherman with the Riverside Sheriff's Association, strong support of SB 20 420, which ensures that organizations that own private extension centers, cannot claim the charitable tax exempt status, solely because they're organized as nonprofits. Our association has lengthy history of opposing private prisons and detention facilities and supporting legislation that curtail their operations.

Government should not be in the position in the business of subsidizing the taxes payable from private nonprofit corporations by permitting them to use our top nonprofit entities created to avoid paying taxes the rest of us must pay. These for profit corporations are a public safety nightmare, especially when it comes to staffing and training.

Real law enforcement officers are compelled to come in and clean up the destruction, harm resulting from the numerous riots, killings, and escapes. For example, in San Bernardino County, the sheriff's office last year received 249 emergency calls on their 911 system from the privately operated Atalanta ICE processing center owned by GEO Group, which is largest private prison and detention facility operator in the world. That's nearly five calls per week every week.

These private prison companies whose stock is publicly traded on Wall Street owe a fiduciary obligation to maximize profits for their shareholders. They have a well documented history of cutting corners and overcharging to meet their financial goals.

This includes creative taxes and accounting gimmicks to secure various government subsidies and tax breaks in addition to their grotesquely inflated billings for the services to simply lock up people. Private for profit detention corporations tarnished the good work of dedicated sworn correctional officers and their associations, which seek to improve the professional standards incorrect in custodial facilities. For these reasons, we respectfully ask an aye vote.

Thank you very much. Anyone in the room wishing to speak in support of this measure, SB 420 name organization and support.

Sure thing. Marissa Macotte on behalf of the California Assessor's Association support. Thank you.

Thank you very much. Next witness.

Chet Hewitt with the California Community Foundation in support.

Thank you very much. Primary witness in opposition in the room. Primary witness in opposition, seeing none. Anyone in the room wishing to express opposition, seeing no one coming forward, bring it back to the dais. Miss Quirk-Silva and then miss Mckinnor.

Hi. I wanna thank the author for bringing this forward. Many of you know that bills at this time of year come forward, and we don't always have a lot of time to absorb them as we're trying to get our bills out. Bills are coming to us, so forth.

And so I hadn't had a lot of preview related to this, but I wanna thank my ledge aid for actually printing out the KPBS article, which any of us who still read articles that are printed, this is 28 pages long.

And as I started reading it, I got my little highlighter out.

Like a teacher? Like a teacher?

Yeah. And I highlighted much of the article. And I have to say it's really triggering. It's really upsetting. And it's actually astounding, I guess, I would say, to understand how this could happen, really beginning in 2014.

And under the guise of a nonprofit and it actually didn't even start that way from the article. They initially started out as wanting to be a for a center for US Marshals. And I don't think anybody would have a huge upset over that, but still not in the purview of what a nonprofit is.

And I think we all went to celebrate nonprofits about a month ago or not that long ago, and not one of us, I think, would have brought up an ICE detention as our nonprofit of the year. But the irony of this is the location.

It's in the Imperial Valley, and the person that has led this effort is a farmer and is a well known farmer, which I would ask individuals what type of labor do farmers rely on, which is immigrant labor. And this sits right in Calexico, right on the border there. And to not only build, but move through the process to build a facility that is now run by ICE and say, but it brings 200 jobs.

It's just the irony that I cannot even understand to try to put my arms around. Now we've had a lot of debate here in the capital.

It could be on women's rights. It could be on on public safety. It could be on ICE on but there's places where we agree. Just right before you came, we had a seven zero vote. So we do find places, but this is absolutely a line that is solid for me and I hope for others that we cannot use public funds for this.

It's horrific, and I absolutely would not support it. I'm so glad you're bringing forward, and we need to be shining light on this so this never happens again. And we're not even talking about the millions of dollars of tax breaks that they actually have received because of this. So it's just it's almost beyond words to talk about in a rational way.

It's almost beyond when you think about the wealth of the family that's mentioned in here and how they got that because of the labor that is done in this area with farming.

Because farming absolutely does not happen without immigrant labor. And then to turn around and build an ICE facility right there. And there are many complaints and even deaths there. So I won't go down the whole ICE in the federal immigration policy, but it's directly tied. And so with that, I appreciate you for bringing this forward.

We don't have a vote today. But if it comes to us, I will be a strong yes, and I hope this never happens again using the nonprofit umbrella because it's egregious. Thank you.

Thank you very much, miss Mckinnor.

Yes. I'd also like to thank the Senator for bringing this up and for finding out about this because it is absurd to to give tax breaks to this facility. When they're trying to claim to be a nonprofit, I see that they also have been accused of not providing adequate medical care, violating detainees civil rights, and using, solid solidarity solitary confinement in retaliation. We also had, two people two immigrants die in this facility.

And so I don't think that they're doing, nonprofit work and, work that, helps the community.

Do we know how much money we would save by, closing this tax loop?

Mister chairman, and tell me

You may answer that.

Thank you, Mister chairman. Through the Chair and Assembly member, yeah, I think the preliminary investigation revealed that there was a loss to the state estimated at 6,000,000 just based on their initial review. I won't speculate further on that, but I would imagine that the extent of it probably runs a little deeper.

Well, we know we can use that $6,000,000 for Medi Cal and and food assistance and the things that people really need right now. Lastly, what message does it send to taxpayers when facilities connected to for profit operations receive the same tax treatment as churches, hospitals, and charitable organizations?

Mister chairman, if I might, I think the answer to that in my view, to the distinguished member would be it would send the it would send the signal to community that we're not on the job, that our priorities are wrong, and that our own laws that are designed to benefit our communities and our society are being in a very grotesque and cynical way turned against us and turned against the communities that we serve.

Well, thank you, Senator. And, you know, this status is meant for charitable giving. It is, it's limited to support our schools, our local government, and truly charitable organization. So I commend you for bringing this forward. We'd like to look at this.

Hopefully, Chair, maybe next year, we could look at that. We can actually do a audit on this facility to see exactly what they've been doing in the last several years. I'd love to see that get done. And with that, I will be supporting the bill when it comes forward. Thanks.

Thank you. Yes. Miss Carrillo.

I also wanna thank the Senator and share that I share the sentiments expressed by, Quirk-Silva and Mckinnor. You know my personal story coming here at the age of 14 from Guadalajara. Thank you for bringing this to our attention, and it's very personal to me, what I experienced through what the detainees are experiencing there.

And the fact that there's a detention facility in the city of Atlanta, city that I represent, I wanna thank you for bringing that up, and I will also be a strong supporter of it as you come back. Thank you, sir.

Mister chairman. Thank you.

Well okay. Well, thank you very much, Senator. Let me just weigh in on what my colleagues let me echo what my colleagues have already expressed. One, this is I don't believe this is what when we talk about nonprofits, this is not what we mean in terms of nonprofit. If you look at the analysis, it really just glares.

This is a bad message to nonprofits, in my opinion, in terms of how they operate, when it comes down to the outline and the grotesque, how these conditions it was already made mention of two inmates that are already passed. I wanna say thank you very much for your leadership in terms of, one, this bill coming before us. And I know the Board of Equalization also weighed in in terms of their findings as well.

And I know that I believe the the attorney general has already looked at this matter as well in terms of other potential investigations. Just all around, thank you very much for uncovering this and your leadership in this space.

I wanna be considered as a principal coauthor, if you will allow me, that I would really appreciate it. This item is, in fact, a suspense item. It will be referred to our suspense file, but I would like to give you the opportunity to close. But I wanna ask you a question. With this, one, if you could add in your close, how did you find out about this?

What led you to move in this particular direction? We would really love for your opinion in terms of what led you to bring this to us today and appreciate your leadership in this regard in this space.

Thank you very much, Mister chairman, of course, and I appreciate your collaboration and the good work you and the committee are doing as well, and your work with our office in this matter. I think, you know, the district, if I might, Mister chairman, the district I represent is very representative of the nation and the state. I'm like the guy with the trench coat who has any demographic you want. What do you want? I got and and literally every demographic.

And one of those demographics that exist within the borders of my district, which is the only district in the legislature, the only one that has the entire border with Mexico from the from the ocean to the river. And as we all know, that is an important symbiotic relationship economically, socially, in many ways. It's also a unique and challenging one. And often border communities and regions face unique issues and flavors, shall we say, of opportunism and exploitation of the communities there.

So I do a lot of work in my district around social, economic, and environmental justice issues.

And to be frank, as I've come to represent this part of the state, some of these communities that I had did not prior to join the legislature, my eyes have been opened to a number of interesting dynamics that are not healthy, sometimes not lawful, and basically get in the way of progress for these communities.

And it was through that work and through dealing with some of these old institutions in that part of my district that we came to be aware of this connection and certainly of the public broadcasting systems investigation here. And as I said earlier, I worry and I fear that this may be, in some cases, just the tip of the iceberg. But certainly, we don't want communities like this, populations like this to be exploited, and we certainly don't want our taxpayers to be taken advantage of.

And people who are in the nonprofit world trying to do public benefit good work, who deserve to take advantage of these exemptions and benefit from them, also are victims of this kind of behavior.

And it's something that we should, a, legislatively, you know, close a loophole on. And as you reference, Mister chairman, we should make sure that we're all every every department of government is taking a deep look at what is going on. And with that, I would just thank you again. I know this will go to your suspense, but at the appropriate time, of course, I would would ask for an aye vote. I thank you.

Thank you very much. And to miss Mckinnor's point, JLAC would be love I'm sure would love to have a request from you or whoever else. Thank you very much, Senator. Appreciate you.

And this item will be referred to our suspense file. Thank you very much. I think that's the last item before this body. Is there anything else?

Revenue and taxation committee stands as adjourn.