Budget & Taxes

Existing sales and use tax laws impose taxes on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state. The Sales and Use Tax Law provides various exemptions from those taxes, including an exemption for the gross receipts from the sale of, and the storage, use, or other consumption in this state of, food products for human consumption, as specified. This bill would specify that "food products" includes infant formula. This bill would take effect immediately as a tax levy.

The California Constitution generally limits ad valorem taxes on real property to 1% of the full cash value of that property. For purposes of this limitation, "full cash value" is defined as the assessor's valuation of real property as shown on the 1975–76 tax bill under "full cash value" or, thereafter, the appraised value of that real property when purchased, newly constructed, or a change in ownership has occurred. The California Constitution specifies that "newly constructed" does not include the construction or reconstruction of seismic retrofitting components, as defined by the Legislature. Existing law, pursuant to that constitutional authorization, defines seismic retrofitting components to mean seismic retrofitting improvements and improvements utilizing earthquake hazard mitigation technologies. Existing law, pursuant to constitutional authorization, also excludes from the definition of "newly constructed" the construction or installation of certain fire sprinkler systems, or other fire extinguishing systems, fire detection systems, or fire-related egress improvements. This bill would require the State Board of Equalization to clarify that a home hardening retrofitting improvement, as defined, to an existing structure is considered nonassessable repair and maintenance, provided that the improvement does not add square footage, change the property's use, include structural reconfigurations, or include substantial rehabilitation.

Existing law requires the Treasurer to invest, or deposit into banks and other financial institutions, specified state moneys designated as surplus as a part of the Pooled Money Investment Account and determined to be available for that purpose by the Pooled Money Investment Board. Existing law generally requires banks and other financial institutions to deposit with the Treasurer securities in a value at least 10% in excess of the amount deposited with the institution to be eligible to receive deposits of state funds, except as specified. This bill would create within the Pooled Money Investment Account the Community Reinvestment Account from which deposits shall be made to institutions that meet specified performance standards including verified small business lending in underserved census tracts and first-time or first-generation home buyer lending. The bill would require the Treasurer to transfer $4 billion from the Pooled Money Investment Account to the Community Reinvestment Account. Because the moneys invested and reinvested as part of the Pooled Money Investment Account are continuously appropriated, this bill would make an appropriation. Notwithstanding the above-described securities requirement, this bill would instead require securities, for a deposit from the Community Reinvestment Account or under the Small Business Lending Time Deposit Program, to be in an amount in value of at least 90% of the amount deposited with the institution. The bill would require the Treasurer to deposit moneys from the Community Reinvestment Account with qualified institutions that have committed to specified lending activities, including, among other things, that at least 50% of the moneys from the account are used for affordable housing lending, as defined and specified. The bill would require institutions that receive deposits from the Community Reinvestment Account to submit quarterly, nonidentifying, performance reports to the Treasurer and the Treasurer to publish the data it receives in a publicly available report.

The Leroy F. Greene School Facilities Act of 1998 provides for the adoption of rules, regulations, and procedures, under the administration of the Director of General Services, for the allocation of state funds by the State Allocation Board for the construction and modernization of public school facilities. Existing law establishes the Charter Schools Facilities Program within the Leroy F. Greene School Facilities Act of 1998 to provide funding to qualifying entities for the purpose of establishing school facilities for charter school pupils. Existing law requires that a 50% matching share be provided by charter schools applying for facilities funding under the program. Existing law requires the California School Finance Authority, in consultation with the board, to adopt regulations for the program, including, among other regulations, the process for determining the manner in which the applicant will pay its local matching share, including the method for determining lease payments to be made in lieu of the local matching share. This bill would, commencing January 1, 2028, for filing rounds opened on or after January 1, 2028, if the 50% local share matching obligation or lease payments would result in the applicant charter school suffering an undue financial burden, as provided, require the authority to notify the board and authorize the board to reduce the 50% local share matching obligation or lease payments, and correspondingly increase the grant amount, as necessary for the school to reach a reasonable level of debt service. The bill would require the authority, in consultation with the board, to adopt regulations for that purpose and would require the authority and the board to adopt the method for determining whether the 50% local share matching obligation or lease payments would result in the charter school suffering an undue financial burden, in consultation with the department and the County Office Fiscal Crisis and Management Assistance Team. The bill would also make conforming changes.

Existing law authorizes a public agency to establish a contractual assessment program, under which public agency officials and individual property owners may enter into voluntary contractual assessments to finance certain improvements to real property, as specified. To finance those improvements, existing law authorizes a public agency to issue bonds, or to advance its own funds and later sell bonds to reimburse itself for those advances. Under the program, those bonds or advances would be repaid through the voluntary contractual assessments, which constitute a lien against the lots and parcels land, as specified. To establish a contractual assessment program, existing law requires the legislative body of the public agency to adopt a resolution that, among other things, provides certain details of the program, including the kinds of projects and the geographic area within which properties would be eligible for financing under the program. Existing law authorizes a public agency to establish a contractual assessment program to finance certain kinds of improvements that are attached to real property, including energy or water efficiency improvements. This contractual assessment program is commonly known as a Property Assessed Clean Energy (PACE) program. The California Financing Law requires the Commissioner of Financial Protection and Innovation to license and regulate persons who administer a contractual assessment program on behalf of a public agency, as specified. Existing law, the Wildfire Safety Finance Act (act) , authorizes the legislative body of any public agency that has accepted the designation of Very High Fire Hazard Severity Zone to create a voluntary contractual assessment program to finance wildfire safety improvements, as specified. The act defines "wildfire safety improvements" as, among other things, permanent wildfire resilience and safety improvements fixed to existing real property. The act prohibits a wildfire safety improvement financed under the act from being used as a part of a project to construct a new home or to rebuild or reconstruct a home that was destroyed or damaged in a fire. Existing law repeals the Wildfire Safety Finance Act on January 1, 2029. This bill would indefinitely extend the operation of certain provisions of the Wildfire Safety Finance Act and would revise the requirements on a legislative body of a public agency to establish a voluntary contractual assessment program under the act. In this regard, the bill would eliminate the requirements that the legislative body accept a designation of Very High Fire Hazard Severity Zone. The bill would instead authorize any public agency that has established a PACE program or established a special tax relating to a specified community facilities district to enter into voluntary contractual assessments with property owners to finance the installation of wildfire safety improvements, as defined. The bill would, until January 1, 2035, modify the projects eligible for financing under the act to, among other things, include wildfire safety improvements consisting of Class A fire-rated roofs, enclosed eaves, fire-resistant vents, multipane windows, and other wildfire safety improvements identified in regulations adopted by the Department of Insurance, as specified. The bill would also, until January 1, 2035, include improvements that contribute to the defensible space Zones 1 and 2 of a property, which includes the space between 0 and 100 feet from each side and from the front and rear of the structures that can be fixed to a building or structure, as specified. The bill, until January 1, 2035, would require a program administrator providing wildfire safety improvements to have a hardship program that includes a process for requesting that a program administrator remove a lien if a wildfire destroys the property or improvements. Existing law requires a program administrator to submit, for each PACE program it administers, a biannual report to the public agency that includes certain information, including the number of PACE assessments funded, by city, county, and ZIP Code. This bill would require that report to include the total number of wildfire safety improvements, including the average cost of each product type. The bill would also require the report to include the estimated total amount of savings produced by the wildfire safety improvements installed in the calendar year by city, county, and ZIP Code. The bill would require a program administrator providing wildfire improvements to file a report to the appropriate policy committees of the Legislature by January 1, 2030, that includes the information included in the above-described report provided to the public agency, information relating to complaints regarding the wildfire safety improvements, and a description of the above-described hardship program, as specified.

Existing law, the State General Obligation Bond Law, generally sets forth the procedures for the issuance and sale of bonds governed by its provisions and for the disbursal of the proceeds of the sale of those bonds. Existing law specifies various provisions required for inclusion in a bond act. Existing law requires any state bond measure approved on or after January 1, 2004, to be subject to an annual reporting process, with the head of the lead state agency administering the bond proceeds reporting certain information about the projects being funded to the Legislature and the Department of Finance. Existing law permits this information to be provided on the agency's internet website or the state's open data portal under certain circumstances. Existing law authorizes the costs of the report to be included in the cost of administering the bond act unless prohibited by the bond act. Existing law defines various terms for these purposes, including "board." Existing law defines "board" to mean the state board, department, or agency authorized by a bond act to request the committee to cause bonds to be issued for the purpose of creating a fund that is to be expended by the board for the purposes specified in the bond act. Existing law, the Administrative Procedure Act, sets forth the requirements for the adoption, publication, review, and implementation of regulations by state agencies. For any state general obligation bond measure that is approved by voters on and after January 1, 2027, this bill would require a bond act to include specified information about the objectives of the bond expenditure and related data. The bill would also require the board to post on its internet website a notification that contains, among other information, details about the programs and projects authorized to be funded by the bond. The bill would require the board to provide a short, one page, executive summary style written report to the Department of Finance, the Legislative Analyst, and specified legislative committees that contains certain information regarding the general obligation bond, in accordance with the above-described provision permitting this information to be provided on the board's internet website or the state's online data portal. The bill would require the report to include, among other information, whether the project, grant, or other expenditure of bond proceeds has been done in a timely manner. The bill would require a bond act to include a provision requiring the cost of the report to be included in the cost of administering the bond act and would require the cost of compliance with the above-described report requirements be included in the cost of administering the bond act. The bill would exempt from the requirements of the Administrative Procedure Act the development and adoption of program guidelines, recommendations, or criteria pursuant to the bill. The bill would also make nonsubstantive and conforming changes.

The Personal Income Tax Law, in modified conformity with federal income tax laws, allows various deductions from gross income in calculating adjusted gross income. This bill, for taxable years beginning on or after January 1, 2027, and before January 1, 2032, would allow a deduction in determining adjusted gross income for a taxpayer in an amount equal to $3,000 per qualified individual, reduced by 6% of the taxpayer's federal adjusted gross income in excess of specified thresholds. The bill would define "qualified individual" for these purposes to mean the taxpayer if the taxpayer is an elderly senior and, in the case of a married couple filing a joint return, the taxpayer's spouse if the taxpayer's spouse is an elderly senior, and would define "elderly senior" to mean an individual who meets specified age criteria as of the last day of the taxable year. Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals that the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill would include additional information required for any bill authorizing a new tax expenditure. This bill would take effect immediately as a tax levy.

The Personal Income Tax Law, in modified conformity with federal income tax laws, defines "gross income" as income from whatever source derived, except as specifically excluded, and provides various exclusions from gross income. This bill, for taxable years beginning on or after January 1, 2028, and before January 1, 2033, would exclude from gross income any reparations benefit or payment, as defined, received by a taxpayer during the taxable year. Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill also would include additional information required for any bill authorizing a new tax expenditure. This bill would take effect immediately as a tax levy.

The Personal Income Tax Law allows various credits against the taxes imposed by that law, including a young child tax credit to a qualified taxpayer in a specified amount multiplied by the earned income tax credit adjustment factor, as provided. That law also allows a payment from the continuously appropriated Tax Relief and Refund Account for an amount in excess of tax liability. Existing law defines "qualified taxpayer" for this purpose to include an eligible individual, as defined, who has a qualifying child, defined to be a child younger than 6 years of age as of the last day of the taxable year, and who meets other specified criteria. This bill, for taxable years beginning on or after January 1, 2026, and before January 1, 2038, would instead define a "qualifying child" to mean a child younger than the age limit from the prior taxable year plus one year, as described. The bill, for taxable years beginning on or after January 1, 2038, would define "qualifying child" as being a child younger than 18 years of age, as described. By increasing the payments from the Tax Relief and Refund Account, a continuously appropriated fund, the bill would make an appropriation. Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals that the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill would include additional information required for any bill authorizing a new tax expenditure.

The California Beverage Container Recycling and Litter Reduction Act requires a distributor of beverage containers to pay to the Department of Resources Recycling and Recovery a redemption payment for every beverage container sold or offered for sale, as provided. The act requires the department to deposit those amounts into the California Beverage Container Recycling Fund. The act requires the fund to be continuously appropriated to the department for specified purposes, including, among other things, to pay refund values, administrative fees, and processing payments associated with the collection and recycling of empty beverage containers. The act continuously appropriates up to $15,000,000 annually from the fund to the department for quality incentive payments for empty glass beverage containers to an operator of a curbside recycling program or other certified entity, as specified. This bill would authorize the department to make quality incentive payments from the fund for empty glass beverage containers that are substantially free from contamination and used for the manufacturing of glass products in the state that are not beverage containers, as specified. By authorizing a new use for continuously appropriated funds, the bill would make an appropriation.