California Farm Bureau Federation Friday Review 7/20/07

This morning (Friday, 4:00 am), the State Assembly passed the budget, trailer bills, and an economic stimulus package. The Conference Report contains full funding of the Williamson Act subventions to counties and no fees on landowners in the State Responsibility Area. We can only assume that the Assembly Republican's got a firm commitment from Governor Schwarzenegger that he would not line-item veto the $39.1M in subventions in returns for Republican votes necessary to pass SB 77 (approved 56 to 23) and the trailer bills. For the record, the eight Republican voted "AYE" on SB 77 were Adams, Aghazarian, Berryhill, Blakeslee, Emmerson, Keene, Niello, and Villines.

The $140M in tax incentives provided to multinational corporations, the movie industry, maritime and airline industries, and businesses engaged in research and development are the first since the Ag Tax Relief package was tied to passage of the State Budget in 2001. The other major compromise issue included the Legislature agreeing with the governor’s desire to shift $1B from mass transit agencies to the state’s general fund. The revenue was generated from the sales tax on gasoline that rose dramatically due to this year’s spike in gas prices. The following are the budget and trailer bills:

SB 77 (Conference Report)

SB 78 (Amendments to Conference Report)

SB 79 (Transportation)

SB 80 (Higher Education)

SB 81 (Corrections)

SB 82 (Administration of Justice)

SB 83 (Health)

SB 84 (Human Services)

SB 85 (Environment)

SB 86 (General Government)

SB 87 (Gov’s Tax Items including the permanent repeal of the Teacher Retention Tax Credit)

SB 88 (Prop. 1B Implementation)

SB 89 (Ed Fund)

SB 90 (State Chief Information Officer)

SB 91 (Ed Fund part 2)

SB 92 (Charter Schools)

SB 98 (Economic Stimulus Package)

The economic stimulus package (approved 51 to 19) contains the following five provisions:

“Hyper-weighted Sales Factor” for multinational corporations subject to the unitary tax (see AB 1591)
Movie Production Tax Credit (see SB 740)
Alternative Increment Credits for the Research and Development Tax Credit (see AB 751)
Clean Marine Fuels Tax Incentive Act (see AB 846)
Jet Fuel Exemption (see SB 359)

 

The effective date for each provision above is for taxable years beginning on or after January 1, 2009 and each provision contains a 5-year sunset date. It should be noted that Senator Perata has publicly stated his strong opposition to SB 98, so it is unclear whether the Senate will pass the measure. The Senate was supposed to convene at 11 am this morning.