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Economy and Taxes Publications

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Webcast: Elizabeth Hill Provides Preliminary Comments on the Governor's Budget

January 24, 2007 - Elizabeth Hill comments on the proposed Governor's Budget in her January 24th testimony before the Senate Budget and Fiscal Review Committee.

Report

Allocating Local Sales Taxes: Issues and Options

January 24, 2007 - Recent agreements between cities and private businesses involving diversions of millions of dollars of local sales taxes have highlighted concerns raised over the years about the present “situs-based” system for allocating local sales taxes. This report looks at these concerns and discusses options for dealing with them, including expanding restrictions on financial incentives and restricting use of buying companies to divert taxes.

Report

A Report on Tax Agency Information and Data Exchange

January 22, 2007 - At the direction of the Legislature, we have worked with the tax agencies to identify a number of near-term steps that could be taken, short of full consolidation and technological integration, that could improve information and data collection and exchange, and thereby aid in tax enforcement and compliance.

Report

California's Fiscal Outlook: LAO Projections, 2006-07 Through 2011-12

November 15, 2006 - Following a year in which major revenue increases were allocated to education and other state programs, California policymakers will face a much tougher budget in 2007-08. According to our updated forecast, the state’s budget faces operating shortfalls in excess of $5 billion in both 2007-08 and 2008-09, which will require significant actions to eliminate.

Handout

California’s Economic and Budget Outlook

September 14, 2006 - A graphical presentation summarizing California’s economic and budget outlook. Presented at the Masonic Family Center in Chico California.

Report

California’s Taxation of Vessels, Vehicles, and Aircraft: Out-of-State Purchases

May 2, 2006 - In 2004, California temporarily extended, from 90 days to one year, the time that recently purchased vessels, vehicles, and aircraft must be kept out of California in order to avoid the state’s use tax. This report looks at the economic and fiscal impacts of the law change. We find that (1) the law change has resulted in a sharp reduction in out-of-state usage exemptions and an increase in sales and use tax revenues, and (2) the negative economic impacts arising from the measure do not appear to be particularly large.

Report

2006-07 Budget: Perspectives and Issues

February 22, 2006 - California has benefited greatly from over $11 billion in unanticipated increases in state revenues. Yet, due to its allocation of these funds, the 2006-07 Governor’s Budget would still leave the state with large structural budget shortfalls and an enormous amount of outstanding financial obligations. In this regard, the budget proposal misses an important opportunity to take advantage of highly favorable revenues to get the state’s fiscal house in order. We thus recommend that the Legislature reduce the amount of ongoing spending increases proposed in this budget, and use the savings to either increase reserves or pre-pay additional budgetary debt.

Report

State Fiscal Picture 2006-07

February 22, 2006 - California has benefited greatly from an over $11 billion three-year revenue increase since the 2005‑06 budget was enacted; yet, the Governor’s budget plan would still leave the state with major structural budget shortfalls and a large amount of other financial obligations outstanding. In this regard, we believe the proposal misses a real opportunity to finally get the state’s fiscal house in order by meaningfully addressing what is still a formidable fiscal problem.

Report

Perspectives on the Economy and Demographics 2006-07

February 22, 2006 - Despite a slowdown in the final quarter of the year, the U.S. and California economies generally outperformed expectations in 2005, shrugging off soaring energy costs, rising interest rates, and the impacts of three major hurricanes on Gulf Coast states. Recent monthly data on spending, employment, and production suggest that the softness that occurred in late 2005 will be short-lived, and the economy will expand at a moderate pace in 2006 and 2007. This outlook is subject to significant downside risks, however, associated with the potential for further increases in energy prices and steeper-than-expected declines in the real estate market.

Report

Perspectives on State Revenues 2006-07

February 22, 2006 - The state budget continues to benefit from healthy revenue growth. After climbing by over 8 percent in 2004‑05, the 2006‑07 Governor’s Budget assumes that revenues from the state’s major taxes will increase further by 6.2 percent in 2005‑06 and 5.7 percent in 2006‑07. The administration’s current forecast is up substantially from the estimates included in the 2005‑06 Budget Act. It is also up significantly from our office’s prior forecast presented in November 2005. In addition, for the current year and budget year combined, our revised General Fund estimates are higher than the administration’s by roughly $2.3 billion.

Report

Abusive Tax Shelters: Impact of Recent California Legislation

January 27, 2006 - In recent years, the prevalence of illegal or “abusive” tax shelters (ATS) has increased dramatically. These ATS transactions have resulted in very substantial revenue losses in California. Despite the success of an amnesty program (known as the voluntary compliance initiative program), the problems posed by ATSs have not been fully resolved. In fact, it is likely that ATSs will continue to pose tax-related policy issues for the state. Given this, it will be important that the Legislature stay on top of the ATS situation. As one approach to accomplishing this, it may want to periodically review FTB’s ATS-related activities, including how well it is allocating its budgeted resources to get the best return on ATS activities and informing the Legislature about programmatic changes that will help address the ATS problem. (Prepared in accordance with Chapter 654, Statutes of 2003 (AB 1601, Frommer), and Chapter 656, Statutes of 2003 (SB 614, Cedillo).)

Report

Cigarette Tax Stamp Purchases And Surety Bonds in California

January 25, 2006 - In October 2003, the Legislature approved and the Governor signed Chapter 867, Statutes of 2003 (AB 1666, Cogdill, which allows alternatives for the payment of cigarette tax stamps by cigarette distributors. Prior law allows cigarette distributors (which are responsible for affixing the stamps to cigarette packages prior to their sale) to defer the payment for such stamps under certain conditions, including the posting of a surety bond or other form of security. The 2003 statute reduced-on a temporary basis until January 2007-the minimum amount of the required security posted by distributors while increasing the frequency of their required tax remittances to the state from monthly to bimonthly. The measure requires the Legislative Analyst’s Office (LAO) to report on the impact of the statute.

Handout

California Enterprise Zone Program

December 6, 2005 - Presented to Assembly Committee on Jobs, Economic Development, and the Economy and the Assembly Revenue and Taxation Committee

Report

California's Fiscal Outlook: LAO Projections, 2005-06 Through 2010-11

November 16, 2005 - The state's budget outlook for 2006-07 and beyond has improved considerably as a result of a major increase in revenues and significant savings adopted in the 2005-06 budget plan. The state, however, still faces major operating deficits in the next several years.

Handout

Governor’s Budget-Related Reforms

March 3, 2005 - Presented to the Assembly Budget Process Committee on March 2, 2005.

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
 
Nick Schroeder
(916) 319-8314
Public Employment, CalPERS, Elections, Veterans Affairs
 
Brian Uhler
(916) 319-8328
Deputy Legislative Analyst: Economy, Taxes, and Labor
 
Seth Kerstein
(916) 319-8365
Sales and Excise Taxes and Demographics