Jackson Bill to Bring Sunshine, Accountability to Corporate and Other Tax Breaks Passes Senate Floor

June 22, 2020

SACRAMENTO –As California addresses the economic impacts of the coronavirus, Senator Hannah-Beth Jackson (D-Santa Barbara)’s Senate Bill 956 to bring oversight and accountability to billions of dollars in certain corporate and other tax breaks passed off the Senate floor today on a 25 to 13 vote. The bill now moves to the Assembly.

Senate Bill 956 would require evaluation of certain California tax credits and exemptions for their effectiveness as well as economic, social or any other benefits to the state. These tax credits and exemptions, also known as tax expenditures, are provisions in the tax code that reduce the amount of tax collected in exchange for an intended public policy objective.

Many of California’s nearly 80 tax expenditures have been on the books for decades without any scrutiny or data to demonstrate that they are achieving their public policy goals, and they carry significant costs to the state. This year, tax expenditures will reduce General Fund revenue by about $66 billion dollars.

SB 956 applies to eight corporate and other tax incentive programs that have no metrics of efficacy associated with them, no sunsetting provision, and result in revenue losses of greater than $1 billion each over 10 years.  

The bill requests the University of California to analyze these tax expenditures to determine if they are achieving the goals the Legislature intended.  Once the UC completes the analysis, its findings are presented to a nonpartisan board, which would then make a recommendation to the Legislature as to whether the tax expenditure is meeting its intended purposes, or it should be altered, continued or repealed.

“As our state contends with the economic impacts of the coronavirus pandemic, we should have full knowledge of all of our revenue generating options. Now more than ever, we need to bring transparency and accountability to tax breaks that have been on the books for decades, result in billions of dollars in lost revenue, and may no longer deliver on their promise,” said Senator Jackson.

Senate Bill 956 is supported by a broad coalition of educators, including the California Teachers Association and the California School Boards Association, as well as California Professional Firefighters.

“While schools are preparing to re-open and grappling with budget cuts and payment deferrals, the state is giving away billions of dollars in tax breaks that have never been reviewed. This is funding that would have otherwise gone to the General Fund to fund education and other vital services. CTA strongly supports SB 956, which will ensure the state is providing the necessary oversight over billions of dollars of lost tax revenue,” said E. Toby Boyd, President of the California Teachers Association.

“The legislature must not balance the budget on the backs of its most vulnerable citizens through cuts and suspensions to critical public services and infrastructure as it did in 2008. Since that time, California has spent over $85 billion solely for its top ten most expensive tax expenditures. The Proposition 98 loss due to these top credits and exemptions alone was over $35 billion. Yet as these disparities have grown, little work has been done to review existing expenditures and compare them to the state needs and priorities. We call on the legislature to embark on a holistic approach to addressing the immediate crisis. This should include the identification of new means of state revenue and opportunities to reduce budget volatility; as well as policies designed to fortify critical public infrastructure and services. SB 956 will provide necessary information to legislators as they look to repair and stimulate the economy, and render the services necessary to support Californians in need,” said Roy Ulrich, Board President of the California Tax Reform Association.

Jackson represents the 19th Senate District, which includes all of Santa Barbara County and western Ventura County.