Economy and Taxes Publications

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Overview of Proposition 26

September 29, 2010 - Presented to Joint Hearing of Senate and Assembly Committees on Revenue and Taxation


Preliminary Analysis of the 2011-12 Budget Conference Committee Tax Swap Proposal

August 12, 2010 - At the August 11, 2010 informational hearing of the Senate Revenue and Taxation Committee we discussed our preliminary analysis of the conference committee tax swap proposal. This responds to Senator Wolk's request that we provide further information on our analysis.


AB32: Letter to Assembly Member Dan Logue Regarding Evaluation of the ARB's Updated Economic Analysis

June 16, 2010 - This responds to Assembly Member Logue's request that we provide an evaluation of the updated economic analysis prepared by the California Air Resources Board of its Scoping Plan for implementing AB 32 (Núñez).


Reconsidering the Optional Single Sales Factor

May 26, 2010 - The February 2009 state budget agreement changed the apportionment formula used to determine California taxable income for firms that also operate in other states. While the current formula considers the location of firms’ sales, property, and payroll, starting in 2011 firms will have the option to consider only their sales. This policy is intended to encourage firms to produce in California and sell into other states. In this report, we examine the rationales for different approaches to apportionment and evidence from California and other states on how changes to apportionment laws affect both economic activity and tax revenue. Our findings indicate that: (1) a formula with a higher weight on sales and lower weights on property and payroll promotes job growth to some extent; (2) with most states’ formulas now based only on sales, the old formula that used property and payroll could put some California producers at a competitive disadvantage; and (3) allowing firms to choose their formula every year arbitrarily favors some firms over others. We recommend that the state require all firms to use the single sales factor, which would help the state’s competitiveness while limiting the cost to the budget.


AB32: Letter to Assembly Member Dan Logue Regarding Potential Economic Leakage

May 13, 2010 - This responds to Assembly Member Logue's request that we conduct a qualitative analysis of the costs of California taking actions to address the climate change issue, without there being a shared consensus and involvement across the nation in terms of how the issue is addressed. Specifically we were asked to look at the costs California would likely incur following the implementation of AB 32 through the California Air Resource Board’s Scoping Plan, compared to states that do not have similar policies in place.


Evaluating the Sale-Leaseback Proposal: Should the State Sell Its Office Buildings?

April 27, 2010 - Recent legislation authorized the Department of General Services (DGS) to sell and then lease back 11 state-owned office properties. The sale-leaseback is designed to free up the state’s equity in the buildings to provide one-time revenue for addressing the state’s current budgetary shortfall. We estimate that the sale of buildings would result in one-time revenue to the state of between $600 million and $1.4 billion, but that annual leasing costs would eventually exceed ownership costs by approximately $200 million. Over the lives of these buildings, we estimate the transaction would cost the state between $600 million and $1.5 billion. The Legislature will need to weigh how these costs compare to other alternatives for addressing the state’s budget shortfall. In our view, taking on long-term obligations—like the lease payments on these buildings—in exchange for one-time revenue to pay for current services is bad budgeting practice as it simply shifts costs to future years. Therefore, we encourage the Legislature to strongly consider other budget alternatives.

(Short video introducing this report)


California's Enterprise Zone Program

March 10, 2010 - Presented to Senate Revenue and Taxation Committee


AB32: Analysis of Two Studies by Varshney and Associates

March 9, 2010 - This responds to Assembly Member De León's request relating to California’s regulatory environment and AB 32 (Núñez), the Global Warming Solutions Act of 2006 (Chapter 488, Statutes of 2006). Specifically, you have asked that we analyze the methodologies, data, and reliability of the findings of two studies by Varshney and Associates. In our response, we summarize the methodologies and analyses contained in these two studies, discuss their findings, and provide our assessment of the analyses supporting their conclusions.


AB32: Analysis of the Net Impact On California Jobs

March 4, 2010 - This responds to Senator Cogdill's request for an analysis of the net impact on jobs in California that would occur as a result of the implementation of AB 32 (Núñez), the Global Warming Solutions Act of 2006, Chapter 488, Statutes of 2006. In our response, we briefly summarize the basic provisions of AB 32 and its planned implementation through the California Air Resources Board’s (CARB’s) Scoping Plan (SP), discuss the avenues by which the SP would potentially affect California jobs, and present the jobs-related effects of the SP as estimated by CARB. We then comment on CARB’s analysis and offer our own view about how the SP might affect jobs.


Revenues and the 2010-11 Budget

February 3, 2010 - Presented to Senate Budget and Fiscal Review Committee


LAO Analysis of COTCE Revenue Proposals

January 12, 2010 - Presented to Assembly Revenue and Taxation Committee


California's Fiscal Outlook: The 2010-11 Budget

November 18, 2009 - Our forecast of California’s General Fund revenues and expenditures shows that the state must address a General Fund budget problem of $20.7 billion between now and the time the Legislature enacts a 2010–11 state budget plan. The budget problem consists of a $6.3 billion projected deficit for 2009–10 and a $14.4 billion gap between projected revenues and spending in 2010–11. Addressing this large shortfall will require painful choices—on top of the difficult choices the Legislature made earlier this year.


California Postwar Economic Developments

November 17, 2009 - Presented to Senate Labor and Industrial Relations Committee


Should the State Consolidate Its Revenue Agencies?

June 10, 2009 - Presented to Senate Committee on Revenue and Taxation


May Revision Revenue Proposals

June 3, 2009 - Presented to Budget Conference Committee

Economy and Taxes Staff

Chas Alamo
(916) 319-8357
Personal Income Tax, Employment, and Labor Law
Ross Brown
(916) 319-8345
Property Taxes, Bonds, and the Economy
Ann Hollingshead
(916) 319-8305
State Budget and Federal Funding
Lourdes Morales
(916) 319-8320
Local Government, Housing, and Homelessness
Nick Schroeder
(916) 319-8314
Public Employment, CalPERS, Elections, Veterans Affairs
Bidusha Mudbhari
(916) 319-8363
Corporation Tax and Economic Development
Brian Uhler
(916) 319-8328
Deputy Legislative Analyst: Economy, Taxes, and Labor
Seth Kerstein
(916) 319-8365
Sales and Excise Taxes and Demographics