Economy and Taxes Publications

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Hearing Handout

California's Use Tax

February 28, 2011 - Presented to Assembly Revenue and Taxation Committee

Hearing Handout

California's Enterprise Zone Programs

February 16, 2011 - Presented to Senate Governance and Finance Committee

Hearing Handout

California's Enterprise Zone Programs

February 7, 2011 - Presented to Assembly Budget Subcommittee No. 4 on State Administration and Revenue and Taxation

Presentation

Perspectives on the State's Tax Structure

February 3, 2011 - Presented to the Senate Select Committee on Recovery, Reform, and Realignment. February 2, 2011.

Report

The 2011-12 Budget: The Administration's Revenue Accrual Approach

January 31, 2011 - For four of its budget proposals, the administration uses a new approach for accruing (attributing) revenues to each fiscal year. In the administration's budget figures, this approach increases revenues available for the 2011-12 budget process by over $700 million and decreases the 2011-12 minimum funding guarantee for schools and community colleges by $1.5 billion below what it would have been otherwise. We find that the administration's new accrual approach—while imperfectly executed in its forecast—has some merit. It would move state budget accounting closer—in some respects—to generally accepted accounting principles. We fault the administration for not describing the new approach and its implications more clearly in its public budget documents and recommend that the Legislature take steps to require more transparency in the future.

Other

Single Sales Factor: Letter to Senator de León

January 6, 2011 - This responds to Senator de León's request for additional information on the single sales factor apportionment.

Report

California’s Fiscal Outlook: The 2011-12 Budget

November 10, 2010 - Our forecast of California’s General Fund revenues and expenditures shows that the state must address a budget problem of $25.4 billion between now and the time the Legislature enacts a 2011‑12 state budget plan. The budget problem consists of a $6 billion projected deficit for 2010‑11 and a $19 billion gap between projected revenues and spending in 2011‑12. Similar to our forecast of one year ago, we project annual budget problems of about $20 billion each year through 2015‑16. We continue to recommend that the Legislature initiate a multiyear approach to solving California’s recurring structural budget deficit. In 2011‑12, such an approach might involve $10 billion of permanent revenue and expenditure actions and $15 billion of temporary budget solutions. In 2012‑13, 2013‑14, and 2014‑15, another few billion of permanent actions each year could be initiated, along with other temporary budget solutions, and so on until the structural deficit was eliminated.

Hearing Handout

Overview of Proposition 26

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

Other

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.

Hearing Handout

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).

Report

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.

Hearing Handout

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.

Report

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)

Hearing Handout

California's Enterprise Zone Program

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

Other

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.

Economy and Taxes Staff

Chas Alamo
(916) 319-8357
Employment, Labor Law, and Property Taxes
 
Ann Hollingshead
(916) 319-8305
State Budget and Federal Funding
 
Lourdes Morales
(916) 319-8320
Local Government
 
Nick Schroeder
(916) 319-8314
Public Employment, CalPERS, and Elections
 
Brian Weatherford
(916) 319-8337
Corporation Tax and Insurance
 
Angela Short
(916) 319-8309
Teachers' Retirement Policy/ Child Welfare/ Community Care Licensing
 
Brian Uhler
(916) 319-8328
Deputy Legislative Analyst: Economy, Taxes, and Labor
 
Justin Garosi
(916) 319-8359
Personal Income Tax
 
Seth Kerstein
(916) 319-8365
Sales and Excise Taxes and Demographics