SB 113 — Economic relief: COVID-19 pandemic.

Summary

(1) Existing law, the California Emergency Services Act, authorizes the Governor to proclaim a state of emergency when specified conditions of disaster or extreme peril to the safety of persons and property exist, and authorizes the Governor to exercise certain powers in response to that emergency, including, but not limited to, making expenditures from any fund legally available in order to deal with actual or threatened conditions of the state of emergency. On March 4, 2020, the Governor proclaimed a state of emergency in response to the 2019 novel coronavirus disease (COVID-19) pandemic. Pursuant to specified provisions relating to the prevention and control of communicable diseases, the State Public Health Officer ordered all individuals living in the state to stay home or at their place of residence except as needed to maintain continuity of operations of the federal critical infrastructure sectors, as specified. Pursuant to authority under specified provisions of the California Emergency Services Act, the Governor issued Executive Order No. N-33-20 requiring all residents to immediately heed those state public health directives. Existing law, the California Small Business COVID-19 Relief Grant Program, requires the Office of Small Business Advocate within the Governor's Office of Business and Economic Development to allocate grants to qualified small businesses affected by COVID-19 and the related health and safety restrictions, such as business interruptions or business closures incurred as a result of the COVID-19 pandemic, in accordance with specified criteria. This bill would create the California Emergency Relief Fund as a special fund in the State Treasury to provide emergency resources or relief relating to state of emergency declarations proclaimed by the Governor. The bill would transfer from the General Fund to the California Emergency Relief Fund $150,000,000 for purposes relating to the COVID-19 emergency proclaimed by the Governor on March 4, 2020. The bill would appropriate $150,000,000 from that fund to the Office of Small Business Advocate for a closed round to fund small business grant applications waitlisted from previous rounds of the California Small Business COVID-19 Relief Grant Program. (2) Existing law establishes the Water and Wastewater System Payments Under the American Rescue Plan Act of 2021 and creates the California Water and Wastewater Arrearage Payment Program for administration by the State Water Resources Control Board upon appropriation, as specified. Existing law authorizes community water systems to apply for program funds to assist customers who have past-due bills from the COVID-19 pandemic bill relief period, as defined. Existing law requires community water systems to allocate payments received under the program as bill credits to customers, as provided, to help address past-due bills incurred during the COVID-19 pandemic bill relief period. If there are sufficient funds appropriated for purposes of the program, existing law requires the state board to use the remaining funds to establish a similar program for funding wastewater treatment provider arrearages and shortfalls. Existing law also establishes within the Department of Community Services and Development the California Arrearage Payment Program (CAPP) under which specified electric and gas utilities are authorized to apply for CAPP funds, on behalf of their customers in arrears, and requires the utility to use any funds received, as specified, to offset customer arrearages that were incurred during the COVID-19 pandemic bill relief period, as defined. Existing law prohibits service from being discontinued due to nonpayment for those customers included in a utility's CAPP application while the department reviews and approves all pending CAPP applications, and requires the utility applicant to waive any associated late fees and accrued interest for customers who are awarded CAPP benefits. Existing law requires the utility applicant to issue CAPP benefits to customers as bill credits to help address the eligible past due balance. Existing law requires the department to report specified data to the Legislature and on its public-facing internet website relating to distribution of CAPP benefits. This bill would require that any assistance or relief authorized by, and provided by a community water system, a wastewater treatment provider, or a utility applicant to an individual pursuant to, those acts be treated in the same manner as the federal earned income refund for purposes of determining the individual's eligibility to receive benefits under specified public social services laws. The bill would also prohibit any assistance or relief from being taken into account as income, or as resources for a period of 12 months from receipt, for purposes of determining the eligibility of the individual, or any other individual, for benefits or assistance for any other state or local program, as provided. The Personal Income Tax Law and the Corporation Tax Law, in conformity with federal income tax law, generally define "gross income" as income from whatever source derived, and provide various exclusions from gross income. This bill, for taxable years beginning on or after January 1, 2021, and before January 1, 2026, would exclude from gross income any amount of bill credits received by a customer from a community water system, wastewater treatment provider, or utility applicant pursuant to those acts. The bill would repeal these provisions on December 1, 2026. (3) The Sales and Use Tax Law, in lieu of specified credits allowed under the Personal Income Tax Law and the Corporation Tax Law for qualified expenditures paid or incurred by a taxpayer for the production of a qualified motion picture, allows a qualified taxpayer or affiliate to make an irrevocable election to (A) claim a refund of qualified sales and use taxes previously paid during a specified period not exceeding the income tax credit amount and (B) apply that income tax credit amount against qualified sales and use taxes imposed on the qualified taxpayer in the reporting periods in the 5 years following the reporting period for which the claimant was required to file its most recent sales and use tax return, as specified. Existing law prohibits the total amount of refunds or credit offsets claimed in lieu of qualified motion picture tax credits that would otherwise be allowed for a taxable year beginning on or after January 1, 2020, and before January 1, 2023, from exceeding $5,000,000. This bill would limit this prohibition to taxable years beginning on or after January 1, 2020, and before January 1, 2022. Existing law provides that, for taxable years beginning on or after January 1, 2020, and before January 1, 2023, for those amounts that are in excess of $5,000,000 for that taxable year, the claimant may offset that excess credit amount, or assigned portion, against the qualified sales and use taxes imposed during the reporting periods in the 5 years following and including the reporting period beginning on and after January 1, 2024. This bill would limit these provisions to taxable years beginning on or after January 1, 2020, and before January 1, 2022, and would instead provide that, for those amounts in excess of $5,000,000, the claimant may (i) elect to obtain a refund, subject to specified limitations, of the qualified sales and use taxes paid or offset that excess credit amount, or assigned portion against the qualified sales and use taxes imposed, during the reporting periods that occur during the 2021 calendar year or (ii) the claimant may offset the remaining excess credit amount, or assigned portion, against the qualified sales and use taxes imposed during the reporting periods in the 5 years following and including the reporting period beginning on and after January 1, 2022, as specified. (4) Existing state constitutional law governing insurance taxation imposes an annual tax on the gross premiums of an insurer, as defined, doing business in this state at specified rates. Existing law governing the taxation of insurers allows as credits against the taxes imposed by those laws a low-income housing tax credit allocated by the California Tax Credit Allocation Committee, a College Access Tax Credit allocated and certified by the California Educational Facilities Authority, and a credit in an amount equal to the amount of the gross premiums tax due from an insurer on account of pilot project insurance for previously uninsured motorists, as defined. Existing law allows any excess low-income housing tax credit and College Access Tax Credit to be carried over to reduce the tax in a succeeding year, as specified. Existing law provides that, for the years 2020, 2021, and 2022, the total amount of College Access Tax Credits and uninsured motorist tax credits otherwise allowable, including any credit amount allowed to be carried over to reduce tax in the following year, shall not reduce the annual tax by more than $5,000,000 for a given year. This bill would, instead, provide that the above $5,000,000 cap applies only to the years 2020 and 2021. (5) The Personal Income Tax Law and the Corporation Tax Law, in conformity with federal income tax law, generally define "gross income" as income from whatever source derived, and provide various exclusions from gross income. Existing law reduces the amount of any credit or deduction otherwise allowed under the Personal Income Tax and the Corporation Tax Law for any amount paid or incurred by the taxpayer upon which this exclusion is based by the amount of the exclusion allowed. Existing federal law, the American Rescue Plan Act of 2021, awards restaurant revitalization grants to eligible entities, including restaurants, food stands, food trucks, bars, and brewpubs, who meet specified requirements beginning on and after February 1, 2020. Existing federal law excludes from gross income for purposes of federal income taxes any amount received in the form of a restaurant revitalization grant, as specified. Existing federal law prohibits reductions in tax deductions, reductions in tax attributes, and denials of basis adjustments, for federal income tax purposes based on that exclusion. This bill, in modified conformity with federal law, would exclude, for taxable years beginning on or after January 1, 2020, from gross income any amount received in the form of a federal restaurant revitalization grant. The bill would adopt, except as provided, the provisions of the American Rescue Plan Act of 2021 prohibiting any reduction in tax deductions, reductions in tax attributes, and denials of basis adjustments based on the exclusion from gross income. Existing federal law, the Hard-Hit Small Businesses, Nonprofits, and Venues Act, among other things, awards grants to eligible shuttered venue operators, including live venue operators or promoters, theatrical producers, and live performing arts organization operators. Existing federal law excludes from gross income for purposes of federal income taxes any amount received in the form of a shuttered venue operator grant, as specified. Existing federal law prohibits reductions in tax deductions, reductions in tax attributes, and denials of basis adjustments, for federal income tax purposes based on that exclusion. This bill, for taxable years beginning on or after January 1, 2019, and in conformity with federal law, would exclude from gross income any amount received in the form of a federal shuttered venue operator grant. The bill would adopt, except as provided, the provisions of the federal Consolidated Appropriations Act, 2021, prohibiting any reduction in tax deductions, reductions in tax attributes, and denials of basis adjustments based on the exclusion from gross income, as provided. (6) The Personal Income Tax Law and Corporation Tax Law, in modified conformity with federal income tax laws, generally allow various deductions in computing the income that is subject to taxes imposed by those laws, including a deduction for a net operating loss as specified. Existing law suspends the deduction for a net operating loss, as specified, for taxable years beginning on or after January 1, 2020, and before January 1, 2023. The Personal Income Tax Law and Corporation Tax Law generally authorize various credits against the taxes imposed by those laws. Existing law provides that, except as specified, the total credits allowable under those laws may not reduce the taxes imposed by those laws by more than $5,000,000, as provided, for taxable years beginning on or after January 1, 2020, and before January 1, 2023. This bill would reinstate the net operating loss deduction, and would remove the above-described temporary limitation on allowable credits, for taxable years beginning on or after January 1, 2022. (7) Existing law, the Small Business Relief Act, authorizes specified partnerships and "S" corporations, for taxable years beginning on or after January 1, 2021, and before January 1, 2026, to elect to pay an elective tax at a rate based on its net income, as specified, for the taxable year. The act, for taxable years beginning on or after January 1, 2021, and before January 1, 2026, allows a credit against the personal income tax to a taxpayer, other than a partnership, that is a partner, shareholder, or member of an entity that elects to pay the elective tax, in an amount equal to a specified percentage of the partner's, shareholder's, or member's pro rata share or distributive share, as applicable, of income subject to the elective tax paid by the entity. The act defines a qualified entity for these purposes as an entity that is taxed as a partnership or "S" corporation with partners, shareholders, or members that are corporations or taxpayers, but not partnerships. The act excludes a business entity that is disregarded for federal tax purposes from the definition of taxpayer, and defines qualified net income as the sum of the pro rata share or distributive share of income subject to tax under the Personal Income Tax Law, as specified. This bill, for purposes of the Small Business Relief Act, would include a partnership as an eligible partner, shareholder, or member for purposes of a qualified entity, and would include a limited liability company that is disregarded for federal tax purposes and meets specified criteria in the definition of a qualified taxpayer. The bill would also include specified guaranteed payments as qualified net income for purposes of the act. The Personal Income Tax Law provides for an alternative minimum tax and provides that, except for specified credits, no credit shall reduce the regular tax, as defined, below the tentative minimum tax. Existing law also requires credits allowed against the net tax to be applied in a specified order, including applying credits that reduce the regular tax below the tentative minimum tax before credits for taxes paid to other states. This bill, for taxable years beginning on or after January 1, 2021, would allow the elective tax credit to reduce the regular tax below the tentative minimum tax. The bill, for taxable years beginning on or after January 1, 2022, would require the elective tax credit to be applied against the net tax after credits for taxes paid to other states. (8) 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, for specified provisions, would provide findings to comply with the additional information requirement for any bill authorizing a new tax expenditure. (9) This bill would also make findings and declarations related to a gift of public funds. (10) This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.

Bill Text

• Chaptered 02/09/22 - Chaptered Current pdf February 09, 2022
• Enrolled 02/08/22 - Enrolled pdf February 08, 2022
• Amended 02/02/22 - Amended Assembly pdf February 02, 2022
• Introduced 01/08/21 - Introduced pdf January 08, 2021
• SB113 View text html

Action History

1. February 09, 2022

   Chaptered by Secretary of State. Chapter 3, Statutes of 2022.

2. February 09, 2022

   Approved by the Governor.

3. February 08, 2022

   Enrolled and presented to the Governor at 10 a.m.

4. February 07, 2022

   Assembly amendments concurred in. (Ayes 37. Noes 0. Page 2878.) Ordered to engrossing and enrolling.

5. February 07, 2022

   In Senate. Concurrence in Assembly amendments pending.

6. February 07, 2022

   Read third time. Passed. (Ayes 68. Noes 0. Page 3495.) Ordered to the Senate.

7. February 03, 2022

   Ordered to third reading.

8. February 03, 2022

   Withdrawn from committee.

9. February 03, 2022

   Assembly Rule 96 suspended. (Ayes 51. Noes 18. Page 3480.)

10. February 02, 2022

    From committee with author's amendments. Read second time and amended. Re-referred to Com. on BUDGET.

11. February 25, 2021

    (Corrected May 14).

12. February 25, 2021

    Referred to Com. on BUDGET.

13. February 22, 2021

    In Assembly. Read first time. Held at Desk.

14. February 22, 2021

    Read third time. Passed. (Ayes 29. Noes 8. Page 272.) Ordered to the Assembly.

15. February 17, 2021

    Read second time. Ordered to third reading.

16. February 16, 2021

    Ordered to second reading.

17. February 16, 2021

    Withdrawn from committee. (Ayes 26. Noes 5. Page 201.)

18. January 28, 2021

    Referred to Com. on B. & F.R.

19. January 11, 2021

    Read first time.

20. January 11, 2021

    From printer. May be acted upon on or after February 10.

21. January 08, 2021

    Introduced. To Com. on RLS. for assignment. To print.

Sponsors

• Committee on Budget and Fiscal Review · Primary

Votes

Subjects