THIS GOVERNANCE AND FINANCING
COMMITTEE WILL COME TO ORDER.
GOOD MORNING AS THE SENATE
CONTINUES TO WELCOME THE PUBLIC
AND HAS PROVIDED ACCESS TO BOTH
IN PERSON AND TELECONFERENCING
PARTICIPATION FOR PUBLIC COMMENT
WE'RE GOING TO CONTINUE THAT
TODAY FOR INDIVIDUALS WISHING TO
PROVIDE PUBLIC COMMENT VIA THE
TELECONFERENCE ORVIS THE
PARTICIPANT TOLL FREE NUMBER IS
. 877-226-8163 AND THE ACCESS
CODE IS. FOUR THREE NINE EIGHT
THREE ONE EIGHT. WE ALSO HAVE
REPRESENTATIVES WHO ARE
PARTICIPATING REMOTELY FOR
REMOTE PARTICIPANTS PLEASE MUTE
YOUR PHONES OR COMPUTERS PLEASE
SELECT ON MUTE BEFORE YOU BEGIN
SPEAKING R. I. T. PERSON I WILL
PUT YOU BACK ON MUTE WHEN YOU
ARE DONE ONCE RECOGNIZED TO
SPEAK PLEASE MAKE SURE YOU CAN
BE SEEN ON THE SCREEN STATE YOUR
NAME AND THEN YOU'RE READY TO
ADDRESS THE COMMITTEE. FOR
TODAY'S HEARING WE WILL BE
HEARING ALL OF THE PANELS OF
WITNESSES ON THE AGENDA AT PRIOR
TO TAKING ANY PUBLIC COMMENT
ONCE WE'VE HEARD ALL OF THE
WITNESSES WE WILL HAVE A PUBLIC
COMMENT PERIOD FOR THOSE WHO
WISH TO COMMENT ON THE TOPICS ON
TODAY'S AGENDA. SO WELCOME TO
OUR OVERSIGHT HEARING ON THE NEW
EMPLOYMENT CREDIT. BEFORE WE
BEGIN I'D LIKE TO ASK YOU TO
PLEASE TURN OFF ALL YOUR CELL
PHONES AND TAKE CONVERSATIONS
OUTSIDE OF THE ROOM SO WE CAN
HEAR THIS THE TESTIMONY
PRESENTED TODAY. THE NEW
EMPLOYMENT CREDIT WAS ORIGINALLY
ENACTED IN TWENTY FOURTEEN AND
HAS REMAINED UNCHANGED SINCE ITS
ENACTMENT WE'RE HERE TODAY TO
HEAR ABOUT THE PROGRESS AND
DISCUSS THE SUCCESSES AND
CHALLENGES OF THE CREDIT. YOU
KNOW WE REGULARLY HAVE
CONVERSATIONS HERE IN THE
LEGISLATURE ABOUT WHETHER THE
TAX CREDIT OR- CREDITS FOR
ACHIEVING THE GOALS THAT WE SET
OUT. ON AND IF THEY'RE BEING-
REALLY DISTRIBUTED- WITH EQUITY
IN MIND AND SO. ON THIS IS A
REALLY IMPORTANT TIME FOR US TO
HAVE THOSE CONVERSATIONS. AND
HOPEFULLY HOPEFULLY WE CAN
ADDRESS SOME OF THOSE. THE
COMMITTEE WILL FIRST RECEIVE AN
OVERVIEW FROM THE FRANCHISE TAX
BOARD OF HOW MUCH THE CREDIT HAS
BEEN CLAIMED AND WHAT BOUNDARIES
HAVE PER PREVENTED BUSINESSES
FROM CLAIMING THE CREDIT. SECOND
THE COMMITTEE WILL HEAR FROM THE
LEGISLATIVE ANALYST'S OFFICE AND
AFTER THAT WE'LL HEAR FROM THE
DEPARTMENT OF FINANCE. AS THEY
REVIEW THE GOVERNOR'S BUDGET
PROPOSAL TO EXPAND THE NEW THE
NEW EMPLOYMENT CREDIT FOR CHIP
MANUFACTURERS. FINALLY THE
COMMITTEE WILL HEAR FROM
BUSINESSES AND ADVOCATES THAT
HAVE EXPERIENCE WITH THE CREDIT
. THE NEW EMPLOYMENT CREDIT HAS
THE POTENTIAL TO HELP ENCOURAGE
HIRING IN OUR STATE. AND HIRING
IN PARTICULAR REGIONS AND-
PARTICULAR INDIVIDUALS THIS
HEARING WILL HELP US EVALUATE
WHETHER OR NOT IT MAY BE TIME TO
REWORK OR MODIFY THE CREDIT.
NOW- WELL SO- THANK YOU TO OUR
OUR AND OUR VICE CHAIR FOR BEING
HERE TODAY- AND- ONE AT- THANK
THE MEMBERS AS WELL AND WE'RE
GOING TO START AND HERE ARE
FIRST PRESENTERS AND WE'LL START
WITH THE FRANCHISE TAX BOARD.
SUSAN MAPLES THE DIRECTOR OF
ECONOMIC AND STATISTICAL
RESEARCH BUREAU AND DENNIS.
ARMSTRONG THE DIRECTOR OF
LEGISLATIVE SERVICES BUREAU.
WELCOME. GOOD MORNING MADAM
CHAIR. AND COMMITTEE MEMBERS. MY
NAME IS DENNIS ARMSTRONG AND I'M
THE LEGISLATIVE DIRECTOR FOR THE
FRANCHISE TAX BOARD ALONG WITH
ME TODAY IS SUSAN MAPLES
DIRECTOR OF OUR ECONOMIC AND
STATISTICAL RESEARCH BUREAU.
TODAY WE ARE HAPPY TO PRESENT
SOME KEY ASPECTS OF THE NEW
EMPLOYMENT CREDIT ALSO KNOWN AS
NEC. FIRST I WOULD LIKE TO
DISCUSS THE ELIGIBILITY
REQUIREMENTS TO CLAIM THE CREDIT
. THIS CREDIT IS AVAILABLE TO
QUALIFIED EMPLOYERS WHO CALL WHO
HIRE QUALIFIED EMPLOYEES RECEIVE
A CREDIT RESERVATION HAVE AN
INCREASE IN EMPLOYMENT. AND PAY
QUALIFIED WAGES FOR WORK WORK
PERFORMED IN A DESIGNATED
GEOGRAPHICAL AREA. ADDITIONALLY
QUALIFIED EMPLOYERS MUST PAY
QUALIFIED WAGES THAT EXCEED ONE
HUNDRED FIFTY BUT DO NOT EXCEED
THREE HUNDRED AND 50% OF THE
MINIMUM WAGE AT THE TIME OF
HIGHER. FOR QUALIFIED EMPLOYEES
THEY MUST HAVE BEEN HIRED AFTER
THEIR WORK LOCATION WAS DEEMED A
PART OF THE GEOGRAPHICAL AREA
AND PERFORM AT LEAST 50% OF
THEIR SERVICES IN THAT AREA. IN
ADDITION THEY MUST MEET AT LEAST
ONE OF THE FOLLOWING CRITERIA AT
THE TIME OF FIRE. THEY MUST HAVE
BEEN AN UNEMPLOYED FOR AT LEAST
SIX OF THE PREVIOUS MONTHS.
SEPARATED FROM THE UNITED STATES
ARMED FORCES WITHIN THE PREVIOUS
TWELVE MONTHS. RECEIVE THE
FEDERAL EARNED INCOME CREDIT IN
THE PREVIOUS TAXABLE YEAR. BEEN
AN EX OFFENDER QUALIFIED AN EX
OFFENDER A FELONY. OR BE A
RECIPIENT OF CAL WORKS- COUNTY
GENERAL ASSISTANCE. IN ORDER TO
CLAIM THE CREDIT THE EMPLOYER
MUST RECEIVE A TENTATIVE
CREDITED CREDIT RESERVATION FROM
THE FRANCHISE TAX BOARD WITHIN
THIRTY DAYS OF COMPLETING THE
ED'S NEW HIRE REPORTING
REQUIREMENTS. THIS CREDIT
RESERVATION REQUIRES THE
EMPLOYER TO PROVIDE SPECIFIC
INFORMATION TO CONFIRM CREDIT
ELIGIBILITY. THE EMPLOYER WOULD
THEN CLAIM THE CREDIT THE
FOLLOWING TAX YEAR ON A TIMELY
FILED ORIGINAL RETURN. TO DATE
THIS CREDIT HAS NOT BEEN
UTILIZED TO THE DEGREE THAT WAS
ORIGINALLY WERE ESTIMATED.
THOUGH THE FRANCHISE TAX BOARD
CAN'T SAY WITH CERTAINTY WHY
THIS'S AND WE DO NOT OPINE ON
POLICY MATTERS WE CAN POINT OUT
THE PRACTICAL APPLICATION OF THE
REQUIREMENTS TO MAYBE SHINE SOME
LIGHT ON THE USAGE OF THE CREDIT
. FIRST IS THE MINIMUM WAGE
REQUIREMENT. AND QUALIFIED WAGES
FOR THIS CREDIT ARE THOSE THAT
EXCEED ONE HUNDRED FIFTY BUT DO
NOT EXCEED 310050% OF THE
MINIMUM WAGE. WITH CALIFORNIA'S
MINIMUM WAGE BEING FIFTEEN
DOLLARS AND FIFTY CENTS AN HOUR
AN EMPLOYER WE NEED TO PAY WAGES
OF AT LEAST TWENTY THREE DOLLARS
AND TWENTY FIVE CENTS AN HOUR TO
BE ELIGIBLE. SOME EMPLOYERS MAY
SEE THIS WAGE AMOUNT AS HIGH FOR
A NEWLY EMPLOYED EMPLOYEE. NEXT
IS THE CALCULATION OF THE CREDIT
WHICH IS RATHER COMPLEX. FIRST
YOU MULTIPLY THE QUALIFIED WAGES
THE AMOUNT ABOVE 110050% MINIMUM
OF MINIMUM WAGE BY THIRTY FIVE
PERCENT. THEN YOU DETERMINE THE
APPLICABLES PERCENTAGE BY
DIVIDING THE NET INCREASE AND
FULL TIME EMPLOYEES BY THE
AMOUNT OF FULL TIME EMPLOYEES.
IN TOTAL YOU MULTIPLY THE
QUALIFIED WAGES BY THIRTY FIVE
PERCENT. AND THEN BY THE A
POLITICAL PERCENTAGE. THIS IS
BECAUSE THE ALLOWABLE CREDIT.
WHICH ENDS UP BEING AN AMOUNT
THAT MET THE EMPLOYER MAY DEEM
TOO SMALL TO GO THROUGH REQUIRED
REQUESTING THE CREDIT. ALSO
EMPLOYERS MAY FIND IT DIFFICULT
TO FIND EMPLOYEES THAT MEET THE
QUALIFIED EMPLOYEE REQUIREMENTS
LISTED ABOVE. TWO FINAL ITEMS OF
NOTE. ONE IS THAT CERTAIN
BUSINESSES ARE EXCLUDED FROM
UTILIZING THIS CREDIT. TEMPORARY
HELP. RETAIL TRADE SERVICES
THEATER COMPANIES FOOD SERVICES
CASINOS AND CASINO HOTELS AN
ALCOHOLIC DRINKING PLACES ARE
ALL EXCLUDED FROM CLAIMING THIS
CREDIT. FINALLY THIS CREDIT IS
REQUIRED TO BE FILED ON A TIMELY
FILED ORIGINAL RETURN. THIS
MEANS THAT A TAXPAYER IS
PRECLUDED FROM CLAIMING THIS
CREDIT IF THEY EITHER FILE THEIR
INCOME TAX RETURN LATE OR
PERHAPS FORGOT TO CLAIM THE
CREDIT ON THEIR ORIGINAL RETURN
. THIS CONCLUDES MY PORTION OF
THE PRESENTATION AND I WILL NOW
TURN IT OVER TO SUSAN TO DISCUSS
FB'S REPORTING REQUIREMENTS OF
THE NEC. THANK GOODNESS. EACH
YEAR THE FRANCHISE TAX BOARD IS
REQUIRED TO PRODUCE A REPORT THE
NEW PLANNING CREDIT WAS SOBER
FOR TWO IS NEC. AND PROVIDED TO
THE JOINT LEGISLATURE SLATED
BUDGET COMMITTEE BY MARCH FIRST.
THE REPORT INCLUDES INFORMATION
ABOUT THE NUMBER AND THE DOLLAR
AMOUNTS CLAIM OF THE CREDIT
CLAIMED FOR THE MOST RECENT TAX
YEAR AVAILABLE. IN ADDITION THE
REPORT PROVIDES A COMPARISON OF
THE TOTAL DOLLAR AMOUNT OF
CREDITS CLAIMED. UNDER THIS
SECTION WITH RESPECT TO THE
DEPARTMENT'S ESTIMATE. FOR THE
MOST RECENT TAX YEARS FOR WHICH
WE HAVE DATA TWENTY NINETEEN
THROUGH TWENTY TWENTY ONE.
NEARLY TWELVE POINT EIGHT
MILLION IN NEW EMPLOYMENT
CREDITS WERE ALLOWED ON
APPROXIMATELY ELEVEN HUNDRED
RETURNS OVER THAT THREE YEAR
PERIOD. THIS AMOUNTS TO AN
AVERAGE OF AROUND THREE HUNDRED
SIXTY THREE TAXPAYERS AND FOUR
POINT TWO MILLION PER YEAR. NEW
RESERVATIONS OVER THE SAME
PERIOD AVERAGE AROUND ELEVEN
HUNDRED PER YEAR WITH ANNUAL RE
CERTIFICATIONS REQUIRED IN ORDER
TO CONTINUE TO GENERATE
QUALIFIED WAGES DURING THE FIVE
YEAR PERIOD ALLOWED. THOSE
AVERAGE NEARLY TWENTY TWO
HUNDRED EACH YEAR FROM TWENTY
NINETEEN TO TWENTY TWENTY ONE.
DURING THE FIRST FEW YEARS OF
THE PROGRAM FTV IDENTIFY THAT
SUMMER TURNS CLEANING NEC DID
NOT QUALIFY AND DISCOVERED THAT
SOME TAX PREPARERS SOFTWARE. IN
ADVERT ONLY CLAIM THE NEC IN
LIEU OF OTHER CREDIT SUCH AS THE
ENTERPRISE AND CREDIT. IN OTHER
CASES FTV DISALLOWED A NUMBER OF
FIRST AND SECOND YEAR NEC
CLAIMS. FOR NOT MAKING A
RESERVATION. AS A RESULT FTV
UNDERTOOK MULTIPLE OUR REACH
EFFORTS OVER THE YEARS TO TRY TO
HELP EDUCATE TAXPAYERS AND TAX
PROFESSIONALS. ABOUT THE CREDIT
AS WELL AS BOOST UPTAKE THESE
EFFORTS INCLUDED DISTRIBUTING
INFORMATIONAL BROCHURES AT SMALL
BUSINESS EVENTS THROUGHOUT THE
STATE. INCLUDING INFORMATION
ABOUT ANY SEEIN CALIFORNIA TAX
UPDATE PRESENTATIONS TAX
PROFESSIONALS. LOS ARTICLES
NFB'S NEWS ONLINE NEWSLETTER.
WORKING WITH THE STATE
TREASURER'S OFFICE FOR THE
CALIFORNIA BUSINESS INCENTIVE
GATEWAY ALSO KNOWN AS **** BIG
PORTAL. TO INCLUDE ANY C.
INFORMATION. MAINTAINING AN
INTERACTIVE WEBSITE WITH CREDIT
INFORMATION AS WELL AS ONLINE
MAPPING RESERVATION AND
EMPLOYMENT CERTIFICATION TOOLS.
AND WORKING WITH THE CALIFORNIA
DEPARTMENT OF TECHNOLOGY TO KEEP
THE DGA MAP FOR CENSUS TRACTS
FUNCTIONING AND USEFUL FOR
TAXPAYERS. HOWEVER DESPITE THESE
EFFORTS AFTER HE DID NOT SEE THE
NUMBER OF RESERVATIONS INCREASE
SUBSTANTIALLY IN SUBSEQUENT
YEARS. IN OUR MOST RECENT NEW
EMPLOYMENT CREDIT REPORT
PUBLISHED IN MARCH OF TWENTY
TWENTY THREE WE DID SEE THE
NUMBER OF RETURNS CLAIMING THE
CREDIT DECLINE FROM FOUR HUNDRED
AND THREE IN TWENTY NINETEEN. TO
THREE HUNDRED SEVENTY EIGHT IN
TWENTY TWENTY AND THREE OH NINE
IN TWENTY TWENTY ONE. HOWEVER
TOTAL CREDITS CLAIMED ROSE FROM
THREE POINT SIX MILLION IN
TWENTY NINETEEN TO FOUR POINT
TWO MILLION IN TWENTY TWENTY AND
FOUR POINT NINE MILLION IN
TWENTY TWENTY ONE. WITH NOT ALL
TIMELY RETURNS HAVING BEEN
PROCESSED AT THE TIME OF THIS
PUBLICATION. AND WHILE IT'S
DIFFICULT TO SAY SPECIFICALLY
FROM YEAR TO YEAR WHICH
INDUSTRIES BENEFIT FROM THIS
CREDIT IT DOES APPEAR THAT
SKILLED TRADE INDUSTRIES SUCH AS
CONSTRUCTION. ELECTRICAL
PLUMBING ROOFING AND WELDING
TYPE COMPANIES HAVE BEEN REGULAR
RECIPIENTS OF THIS CREDIT OVER
THE YEARS. A LIST OF COMPANIES
CLAIMING ANY SEEK TAX CREDITS BY
TAX YEAR ALONG WITH AMOUNTS
CLAIMED. AND THE NUMBER OF NEW
JOBS CREATED IS AVAILABLE AND IF
TO THIS WEBSITE. AT THIS TIME
WE'D BE HAPPY TO TAKE ANY
QUESTIONS YOU MIGHT HAVE THANK
YOU. THANK YOU VERY MUCH- YOU
KNOW WHAT I NEGLECTED TO ALSO
INTRODUCE THAT- BRIAN OHLER FROM
THE LEGISLATIVE ANALYST'S OFFICE
SO WE CAN. WELCOME HIM TO THE
TABLE THAT WELL WE CAN TAKE
QUESTIONS AT THE END OF THE
ENTIRE PANEL SO. APOLOGIES
BECAUSE SPENT THIS WHOLE TIME
SITTING THERE. WELCOME THANK YOU
MADAM CHAIR BRIAN YOU ARE FROM
THE ILIO- AND SO I WANT TO FOCUS
MY COMMENTS TODAY ON THE KIND OF
THIS ISSUE THAT WE'VE HEARD A
LITTLE BIT FROM THE FTV ABOUT.
THE UNDER UTILIZATION OF THE
CREDIT ESPECIALLY COMPARED TO
WHAT WAS EXPECTED EARLY ON WHEN
THE CREDIT WAS ADOPTED SO TO
GIVE A LITTLE BIT OF CONTEXT-
WHEN THE CREDIT WAS PUT IN PLACE
IN TWENTY FOURTEEN THE
DEPARTMENT OF FINANCE ESTIMATED.
THAT IT WOULD THERE WOULD- IT
WOULD COST THE STATE SIXTY NINE
MILLION DOLLARS IN TWENTY
FIFTEEN AND SO WE'VE HEARD FROM
IT TO BE. THAT THAT NUMBER IS
MORE LIKE THREE TO FIVE. THREE
TO FIVE MILLION A YEAR- AND SO-
THE FIRST QUESTION THAT COMES TO
MIND IS YOU KNOW WHY DO SO WHY
ARE SO FEW- BUSINESSES USING THE
CREDIT WE HEARD A LITTLE BIT
FROM A TO B. AGAIN AND JUST ADD
A LITTLE BIT MORE DETAIL ON THAT
SO. ONE IS THAT THE WAGE
THRESHOLD- IS RELATIVELY HIGH
ESPECIALLY WHEN CONSIDERING THAT
THE TARGET POPULATION SO IF WE
LOOK AT- KIND OF OCCUPATIONAL
WAGE DATA THIS MAINTAINED BY ET
DE. OF THE OCCUPATIONS OF THE
TRACK WAGES FOR ABOUT HALF OF
THEM HAVE STARTING WAGES THAT
ARE BELOW THE 150% OF THE
MINIMUM WAGE YOU'RE IMMEDIATELY
KIND OF RULING OUT ABOUT HALF OF
THE OCCUPATIONS IN THE STATE.
AND THEN ONLY ABOUT 6% OF
OCCUPATIONS HAVE STARTING WAGES
THAT ARE WITHIN FIVE DOLLARS OF
THE- OF THE 310050% THAT'S
REQUIRED TO GET THE KIND OF THE
FULL BENEFIT OF THE CREDIT SO
YOU HAVE. A KIND OF A PRETTY
NARROW SUBSET OF WORKERS WHO
THIS CAN CAN APPLY TO- A SECOND
ELEMENT. IS THE CAR IS THIS.
SHARE OF THE HIRING COSTS IN
MOST CASES SO WALL AN EMPLOYER
MIGHT BE ABLE TO GET- 20% OF
THEIR TOTAL WAGE COSTS FOR
SOMEONE IF THEY'RE PAYING THE
MAXIMUM AMOUNT OF THREE HUNDRED
AND- 50% OF MINIMUM WAGE- IN
MOST CASES MOST OF THESE WORKERS
ARE PROBABLY GOING TO BE HIRED
SOMETHING CLOSER TO THE HUNDRED
AND FIFTY PERCENT- IN FOR THOSE
WORKERS THE CREDIT REPRESENTS
MORE LIKE A FEW PERCENT. OF THE
TOTAL WAGE COSTS FOR THE
EMPLOYER WHICH- MAY NOT BE
ENOUGH TO REALLY MOVE THE NEEDLE
FOR A LOT OF EMPLOYERS- SO.
ANOTHER QUESTION THEN IS YOU
KNOW WHETHER OR NOT- THE FACT
THAT THE CREDIT IS BEING USED SO
SELDOM- IS THAT. A PROBLEM OR
NOT- AND I THINK IT'S IMPORTANT
KIND OF START OFF FROM A BIG
PICTURE AND THINK ABOUT IT CAN.
YOU KNOW THE TRADE OFFS THAT
ECONOMIC DEVELOPMENT PROGRAMS
FACE. ON THE ONE HAND OF COURSE
WE WANT THE PROGRAMS TO BE
ATTRACTIVE TO THE TARGET A
POPULATION WE WANT. BUSINESSES
TO WANT TO USE. OF THE PROGRAMS
- BUT THERE IS A TRADE OFF WE
FACE- WE ALSO WANT TO MAKE SURE
THAT WE'RE WE'RE TARGETING THE
FINANCIAL INCENTIVES. ONLY
TOWARDS. EMPLOYERS ENCOURAGING
THEM TO DO ACTIVITIES THEY
WOULDN'T HAVE DONE OTHERWISE TO
HIRE SOMEONE THAT. THEY WOULDN'T
HAVE HIRED IN THE ABSENCE OF THE
CREDIT. AND ALSO WE YOU KNOW.
WANT TO AVOID HAVING- THE
DOLLARS GO TOWARDS ACTIVITIES-
THAT THE LEGISLATURE MAY NOT
HAVE INTENDED TO BE ENCOURAGING-
AND THE NEW EMPLOYMENT CREDIT
ATTEMPTS TO KIND OF BALANCE THIS
TRADE OFF BY BEING. VERY
NARROWLY FOCUSED AS WE'VE HEARD-
YOU KNOW IF YOU THINK ABOUT
AGAIN CONSIDERING THE THAT WE'RE
TALKING ABOUT KIND OF HARD TO
HIGHER POPULATIONS IN THAT THAT
THERE IS A RELATIVELY HIGH. WAGE
THRESHOLD. IT'S REASONABLE TO
THINK THAT A LOT OF THESE YOU
KNOW A LOT A LOT OF BUSINESSES
WILL BE MAKING THESE KINDS OF
HIRES WITHOUT SOME SORT OF
FINANCIAL INCENTIVE SO. BY
HAVING THIS NARROW TARGETING YOU
ARE KIND OF PUSHING THE BALANCE
ONE WAY ON THAT THAT TRADE OFF
OF. OF TRYING TO BE YOU KNOW
VERY SAFE ABOUT- ONLY PROVIDING
INCENTIVES WHERE THEY MIGHT
ACTUALLY KIND OF MOVE THE NEEDLE
FOR EMPLOYER AND ALSO. THINKING
ABOUT THE HISTORICAL CONTEXT OF
ENTERPRISE ZONES IT'S NOT
ENTIRELY SURPRISING- THAT THE
NEW EMPLOYMENT CREDIT WAS
CRAFTED IN THIS NARROW FASHION
GIVEN. THAT SOME OF THE CONCERNS
THAT AROSE WITH ENTERPRISE ZONES
WHEN THEY WERE ELIMINATED IN
TWENTY THIRTEEN. TO WEAR THAT-
THERE WAS KIND OF A GENERAL-
ACADEMIC CONSENSUS THAT IT WAS.
NOT AN EFFECTIVE PROGRAM IN PART
BECAUSE IT WAS A TOO BROADLY
TARGETED. FINDING ARE THE ALSO.
WERE KIND OF A NUMBER OF-
STORIES IN ANY ABOUT ANECDOTES
ABOUT MAYBE- MISUSE OF THE OF
THE ENTERPRISE OWN CREDITS AND
USE YOU KNOW USE FOR PURPOSES OF
THE LEGISLATURE. MIGHT NOT HAVE
INTENDED IT TO BE USED FOR AND
SO- THE NARROW TARGETING AT THE
NEW POINT CREDIT WAS IN PART.
YOU KNOW REFLECTING SOME OF THE
INTENT AT LESSONS LEARNED FROM
THE ENTERPRISE ZONE PROGRAM- AND
I THINK WE YOU KNOW WE WOULD
AGREE THAT THE NARROW FOCUS. OF
THE NEW EMPLOYMENT CREDIT-
GENERALLY- DOES MAKE SOME SENSE-
CALIFORNIA DOES HAVE A BROADLY
SCOPED KIND OF A JOBS PROGRAM
WHICH IS THE CALIFORNIA COMPETES
PROGRAM- THAT DOES HAVE A NUMBER
OF. ADDITIONAL KIND OF OVERSIGHT
MECHANISMS WITH THE COMPETITIVE
ALLOCATION IN OVERSIGHT- THAT
DISCREDIT DOESN'T AND SO IT DOES
MAKE SENSE FOR THAT TO KIND OF
MAIN. ST THE STATE'S KIND OF
MAIN FOCUS FOR A BROAD BROADLY
FOCUSED CHILD PROGRAM- THAT
BEING SAID I THINK THERE ARE. WE
DO THINK THERE ARE SOME SOME
THINGS THAT THE LEGISLATURE
COULD CONSIDER TO KIND OF-
BROADEN THE MARGINS OF THIS
PROGRAM TO TRY TO MAKE IT. MORE
USEFUL FOR EMPLOYERS AND MAYBE
HELP FURTHER SOME OF THE GOALS
OF THE PROGRAM. ONE WOULD BE TO-
RIGHT NOW- FOR- AN EMPLOYER TO
BE ELIGIBLE FOR THE CREDIT THE
EMPLOYEE HAS TO PERFORM. AT
LEAST HALF OF THEIR THEIR WORK
WITHIN THE- DESIGNATED AREAS
ANOTHER OPTION COULD BE TO
EXPAND THAT. NOT TO JUST WHERE
THE WORK IS PERFORMED BUT WHERE
THE WORKERS ARE LIVING SO-
EITHER A WORK OR A RESIDENCE-
REQUIREMENT FOR RECEIVING THE
CREDIT. ANOTHER OPTION COULD BE
TO ALLOW ADDITIONAL INDUSTRIES.
TO BE ELIGIBLE AND IN PARTICULAR
YOU KNOW CONSIDERING INCLUDING
RETAIL AND RESTAURANTS- IN THE
THIRD OPTION COULD BE LOWERING
THE WAGE SPECIAL PERHAPS. BRING
IT DOWN TO MINIMUM WAGE AND
THINKING THE CREDIT THING IN THE
CREDIT MORE AS A- AS A WAY OF
ENCOURAGING WORKERS TO YOU KNOW
BOOST WAGES MORE THAN YOU KNOW
THE LAW WOULD REQUIRE THEM TO
PAY- SO THAT I'D BE HAPPY TO.
TAKE ANY QUESTIONS. VERY GOOD
THANK YOU VERY MUCH. ASCENDERS
HERE TO. THANK YOU- FIRST A
DEFINITION TIMELY FILED THAT
APRIL FIFTEENTH JUNE SIXTEENTH.
THE DOCTOR AUGUST SIXTEENTH OR
OCTOBER SIXTEENTH WHICH IS THE
TIMELY FINAL QUESTION. TO ME
IT'S ALL OF THE ABOVE. AB RIGHT
INTO BUSINESSES IT'S SOMETIME
AFTER APRIL FIFTEENTH IT DOES
INCLUDE THE EXTENSION BECAUSE OF
THE EXTENSIONS ALL THE WAY TO
OCTOBER SIXTEENTH IS TIMELY
FILED FLORIDA COUNTY OR FATHER
YES SIR OKAY. SO THAT THAT HELPS
A LITTLE BIT- SO YOU KNOW WHAT
I'M KIND OF HEARING IS THAT WE
HAVE CREATED A TAX CREDIT. FOR
UNDER PRESSURE UNDER EMPLOYED
PEOPLE. TO BE EMPLOYED AND WE
WANT THE EMPLOYERS TO DO THEM
THE FAVOR OF HIRING THEM. TAKING
A CHANCE MAYBE ON PEOPLE THAT
SOMETIMES PEOPLE SEE YOU KNOW
HEY. I DON'T KNOW IF THAT PERSON
IS GOING TO BE THE BEST
EMPLOYEES THAT THAT SIGNED UP
FOR THIS JOB. AND THEN WE MAKE
THEM GO THROUGH A PROCESS IT'S
ALMOST IMPOSSIBLE. AND IT'S KIND
OF LIKE WHEN YOU GET THE REBATE.
YOU KNOW YOU GET A YOU GET
SOMETHING YOU HAVE A REBATE. AND
THEN YOU GO THROUGH ALL THE
RULES OF THE REBATE AND YOU
THROW IN THE TRASH. IS IT TWENTY
BUCKS IS JUST NOT WORTH IT. AND
THAT'S WHAT I'M SEEING HERE. AND
THAT'S NOT TO SAY THAT IT'S NOT
HELPING SOME PEOPLE I THINK WE
JUST UNDERESTIMATED HOW MANY
PEOPLE HOW MANY EMPLOYERS. AFTER
LOOKING AT THE GAUNTLET OF STUFF
WOULD SAY. OH YEAH WE'RE IN ON
THIS. BECAUSE IT'S NOT WORTH IT
TO THEIR BUSINESS. AND THEY'RE
AND THEY'RE MENTAL HEALTH TO TRY
TO GO THROUGH A PROCESS. THAT IT
IS ESSENTIALLY AT THE END OF
THEY MIGHT FAIL. BECAUSE IT
MIGHT NOT EVEN BE. ELIGIBLE FOR
IT. SO YOU'RE YOU'RE YOU WANT
THE GOOD WILL OF THE EMPLOYERS.
BUT WE'RE PUTTING THEM THROUGH A
PROCESS THAT THAT MAKES THAT
GOOD WILL NOT WORTH IT TO THEM.
AND SO I THINK I'M SEEING THAT
PROBLEM BUT IT'S NOW. BUT IT'S
STILL HELPING PEOPLE. AND SO THE
PEOPLE THAT HELP THAT'S GREAT
THAT JUST MEANS THERE'S MORE
MONEY BEING ALLOCATED THEN WE
PROBABLY NEED TO. UNTIL THE NEED
ARISES. AND I THINK THAT'S MORE
OF WHAT WE SHOULD BE LOOKING AT
IS HOW DO WE MAKE IT EASIER FOR
THE EMPLOYERS. TO ACCESS THIS
AND PARTICIPATE BECAUSE THAT'S
WHAT WE'RE ASKING TO DO
PARTICIPATE. AND WHEN YOU HAVE
SOME YOU TO PARTICIPATE
SOMETHING IN SOMETHING. YOU KNOW
YOU DON'T BEAT HIM OVER THE HEAD
. YOU KNOW IF YOU KIND OF
WELCOME THEM AND THEN TRY TO
MAKE THE PROCESS. EASY ENOUGH
WHERE THEY THEY FEEL LIKE
INCENTIVIZE TO USE. AND AND THIS
DOESN'T LOOK LIKE THAT ALTHOUGH
SOME PEOPLE HAVE GOTTEN THROUGH
IT AND GOTTEN SOME HEALTH. YEAH
AND YOU KNOW SO IT'S NOT YOU
DON'T SCRAP THE PROGRAM. BUT YOU
MAY LOWER THE EXPECTATIONS OF
WHO'S GOING TO USE IT. AND THEN
THE BUDGET IS ADJUSTED
ACCORDINGLY. AND IF MORE PEOPLE
START USING IT BECAUSE WE'VE
MADE A BETTER PROGRAM. THEN YOU
CAN ADJUST THE BUT UP A LITTLE
BIT SO THOSE ARE MY COMMENTS OR
QUESTIONS THANK YOU. VERY MUCH
AND THIS IS REALLY THE REASON
FOR THE OVERSIGHT HEARING IS FOR
US TO FIGURE OUT IF THERE'S SOME
CHANGES. TO SOME OF THESE- WELL
THE DETAILS ARE WITH THE
LEGISLATURE IMPOSED ON IT ON THE
PROGRAM AND THE QUESTION BECOMES
YOU KNOW. IT DIDN'T WORK OUT
EXACTLY LIKE WE THOUGHT IT WOULD
WORK SO- CENTER BLITZER. YES
HELLO GOOD MORNING THANK YOU FOR
THE INFORMATION YOU PROVIDED
IT'S VERY INTERESTING THIS IS MY
FIRST- HEARING ON THIS COMMITTEE
SO I'M TIME EAGER TO DIVE IN
HERE- SO. ONE OF THE THINGS
THAT. THAT STOOD OUT TO ME WAS
THAT IT FOR TRYING TO HIRE THESE
HARD TO HIRE POPULATIONS. I'D
LOVE TO KNOW THE DATA ON HOW
MANY INDIVIDUAL EMPLOYERS AND
EMPLOYEES WERE HIRED BECAUSE-
THE INFORMATION ABOUT IT BEING
THE SKILLED TRADES THAT ARE
LARGELY USING THIS- BURKE WE
COULD HAVE. LIKE ONE EMPLOYER
WHO HIRES ALL WHO WHO WHO GETS
THREE TO FIVE MILLION DOLLARS IN
THESE TAX CREDITS. AND THAT'S
THE ONE THAT'S FIGURED OUT HOW
TO RUN THE GAUNTLET HERE IN
PHILADELPHIA- FIGURE THIS OUT
SO. SO THAT WAS A DATA POINT
THAT I DIDN'T. KNOW IF WE WOULD
PROVIDE IT BUT I WAS CURIOUS
ABOUT. SURE I HAVE SOME
INFORMATION SO WHAT HAPPENS IS
THAT THEY HAVE TO- EACH YEAR IN
ORDER TO GET THE CREDIT. THEY
HAVE TO MAKE A RESERVATION SO IF
THEY GET AND IT'S A RESERVATION
PER EMPLOYEE. SO TWO THINGS
HAPPENED THEY HAVE- RESERVATIONS
FOR NEW EMPLOYEES EACH YEAR SO
THOSE ARE NEW HIRES. BUT THE
CREDIT CAN ALSO BE USED OVER A
FIVE YEAR PERIOD SO EACH YEAR.
IF THE EMPLOYEES STILL WITH THEM
THEY HAVE TO DO WHAT'S CALLED A
RECERTIFICATION. SO THEN
ANNUALLY THEY WOULD COME IN AND
MAKE A RESERVATION RECERTIFY
THAT THEY ARE IN FACT AN
EMPLOYER WHO STILL QUALIFIES.
AND THAT THE EMPLOYEES OF LIKE
FOR EXAMPLE WORKING 50% OF THE
TIME IN THE IN THE- GEOGRAPHICAL
AREA SO THEY RECERTIFY EACH
YEAR. SO IN A MONTH. LET'S SEE
IN NINETEEN TWENTY AND TWENTY
ONE WE HAD- AN AVERAGE OF ABOUT
ELEVEN HUNDRED. NEW EMPLOYEE-
RESERVATIONS AT AN AVERAGE OF
ABOUT TWENTY TWO HUNDRED. ANNUAL
RE. CERTIFICATION OKAY SO- WHEN
YOU SAID ELEVEN. THAT'S IN. BUT
HOW MANY EMPLOYER- EMPLOY. THERE
WAS ABOUT SIXTY IT WAS ABOUT
SIXTY SEVEN SIXTY EIGHT FOR- BED
TWENTY TWENTY IN THE TWENTY
TWENTY ONE TAX YEAR. SO THOSE OF
THE EMPLOYERS THAT ARE COMING IN
AND DOING THE RESERVATIONS
THAT'S ONE EMPLOYER BUT THEY
COULD BE MAKING A AS YOU
MENTION. SEVERAL RESERVATIONS
FOR EMPLOYEES. AND THAT AND
THAT'S ALSO DIFFERENT THAN WHO'S
CLAIMING THE CREDIT BECAUSE THE
CREDIT IS CLAIMED BY NOT ONLY.
IF YOU HAVE LET'S SAY AN S.
CORPORATION THE S. CORPORATION
CAN TAKE THE CREDIT THEY GET A
THIRD TO- OFFSET THE- PERCENT A
HALF. THAT THEY PAY ON THE-
THEIR TAX RETURNS BUT THEN THAT
CREDIT ALSO FLOWS THROUGH TOLD
THE SHAREHOLDERS SO THEN YOU CAN
SEE A LOT OF. PERSONAL INCOME
TAX PAYERS ALSO REPORTING CREDIT
ON THEIR RETURNS SO IT IS A
LITTLE BIT OF A COMPLEX THING
BUT I'M JUST. TRYING TO- KIND OF
EXPLAIN WHY THE NUMBERS ARE A
BIT DIFFERENT BUT I THINK TO
ANSWER YOUR QUESTION. IN IN-
TWENTY AND TWENTY ONE WE HAD
AROUND SIXTY SEVEN SIXTY EIGHT-
EMPLOYERS MAKE RESERVATIONS FOR
THE CREDIT. SO I GUESS I WOULD
ASK THE PANEL IF WE THINK THAT
THAT IS A GOOD NUMBER BECAUSE TO
ME THAT SEEMS. FOR THE
COMPLEXITY OF THIS PROGRAM AND
THE AMOUNT OF ADMINISTRATIVE
COSTS AND YOU KNOW IS THAT TO I
DON'T KNOW IF THAT'S REALLY
MEETING THE GOALS TO ONLY HAVE
SIXTY EMPLOYERS IN THE ENTIRE
STATE BEING ABLE TO ACCESS THIS-
AND I WOULD. I ALSO JUST I
WOULDN'T- SUGGEST. THAT WHEN WE
HAVE A 83% OF CLAIMS WERE
INVALID. OF THE EIGHTEEN HUNDRED
AND TWENTY NINE- CLAIMS EIGHTY
THREE WERE INVALID TO ME IT DOES
SEEM LIKE WE HAVE A PROCESS
PROBLEM. BECAUSE THESE ARE THESE
ARE- EMPLOYERS WHO ARE TRYING.
YOU KNOW AND THERE ARE A LARGE
NUMBER AS MY COLLEAGUE I THINK
POINTED OUT WHO WHO DECIDE NOT
TO TRY. BECAUSE IT'S TOO
COMPLICATED BUT THESE ARE ONES
THAT ACTUALLY ARE TRYING SO. SO
IT DOES SEEM LIKE WE NEED SOME
REFORM IN THAT AREA. AND THEN
THE ONE OF THE OTHER OF POINTS
THAT I THINK IS WHAT'S REALLY
IMPORTANT IS- OR OR OR THINGS
THAT STILL. TO ME IS THAT I
WOULD LIKE THIS TO A- SO THAT
ARE UNDER YOU TO UNDER- EMPLOYED
WOMEN WHO GET HIRED. AND HI WHEN
ITS TRADES ELECTRICAL AND THAT
THE LIST THAT YOU DESCRIBED BY.
PERCEIVE THAT TO BE A VERY MALE
DOMINATED PROFESSION. AND
PROFESSIONS AND SO IT'S VERY
IMPORTANT THAT WE CONTINUE OF
COURSE TO SERVE THE TRADES BUT
ALSO IF WE'RE TRYING TO PROVIDE
A TAX CREDIT IN THE MORE GENERAL
SENSE TO HAVE. PART TIME
POPULATIONS BE HIRED SOME OF THE
EARLIER THIS- BACK DOCUMENTOS
PROVIDED. IT DID SEEM LIKE SOME
OF THESE HAVE MAYBE CHANGED IN
TERMS OF WHO. WHO WERE TARGETING
SO IT IT'S IT IT DOES SAY THAT
IT USED TO INCLUDE LOW INCOME
FAMILIES WITH CHILDREN. I DON'T
KNOW IF THAT STILL ONE OF THE
CATEGORIES BUT BUT THERE MIGHT
BE MORE WOMEN HEADED HOUSEHOLDS
IN THAT CATEGORY- BUT BUT WAYS
TO MAKE SURE THAT. THAT WE THAT
WE'RE INCENTIVIZING THE HIRING
OF WOMEN TO NOT JUST THE HIRING
OF MATT. SO I THINK THAT A
GENDER- LOOK WOULD BE SOMETHING
THAT'S IMPORTANT HERE- AND THEN
LET'S SEE THAT MY LAST. THE LAST
THING WAS I THINK IT'S A REALLY
GREAT POINT ABOUT THE AVERAGE
SALARY HAVING TO BE TWENTY THREE
DOLLARS PER HOUR- ARE AVERAGE
HOURLY WAGE MEANS THAT WHAT
TYPES OF EMPLOYERS ARE REALLY.
IS THIS REALLY APPEALING TO
ESPECIALLY AND HIGHER POVERTY
LOWER INCOME COMMUNITIES SO
THAT. THAT ARE YOU KNOW WE MIGHT
WE MIGHT BE KIND OF MISSING HERE
SO LOWERING THAT THAT AMOUNT TO
ME SEEMS LIKE THAT MIGHT MAKE
SENSE AS WELL. SO AND I ASSUME
WE'RE GOING TO GET TO THE
FUTURE. AND THE NEXT- THE NEXT
PERSON WHO SPEAKS BUT THIS
QUESTION OF EXPANDING IT INTO
THE SEMI CONDUCTOR CHIP RESEARCH
AND DEVELOPMENT. SO- I DO HAVE A
LOT OF QUESTIONS ABOUT IF THE
SAME POPULATIONS WOULD BE NEED
TO BE HIRED INTO THAT AND THAT'S
WHAT I ASSUME YOU'RE NOT
COVERING THAT PART. THAT THAT'S
WHAT I THINK THE NEXT PAN SOME
FIND WILL BE. ON THAT ONE OKAY
OKAY THANKS VERY MUCH. SENATOR
DOLLY. THANK YOU- THE- CHAIRMAN
. ASIDE WANTED I'M AN EMPLOYER.
AND I WANT TO GET A LITTLE
BACKGROUND ABOUT HOW WE OPERATE
SO YOU CAN MAYBE UNDERSTAND THE
CHALLENGES THAT. WE FACE. AS
TRYING TO GET A WORKFORCE. AND
WHEN WE TALK ABOUT HARD TO
EMPLOY PEOPLE THERE'S A REASON
THEY'RE HARD TO EMPLOY THERE'S A
LOT OF CHALLENGES. WHEN IT COMES
TO. MAKING SURE THEY'RE ABLE TO
GET THE JOB DONE AND ACTUALLY
HAVE TO MAKE A PROFIT I KNOW
THERE'S A LOT OF PEOPLE THIS
BILL IN IT. THINK THAT THAT'S A
BAD THING BUT WE HAVE TO MAKE A
PROFIT IN THE DAY TO STAY IN
BUSINESS. AND SO- MY WIFE AND I
HAVE OVER THE YEARS TRY TO
EMPLOY A HARD EMPLOYEE PEOPLE
PEOPLE OUT OF PRISON PEOPLE HAVE
ADDICTION ISSUES. AND WHEN THE
MINIMUM WAGE WAS AT NINE DOLLARS
AN HOUR. YOU CAN TAKE A RISK ON
A PERSON AND TRY TO YOU KNOW
TEACH THEM THAT THEY NEED TO
SHOW UP ON TIME. THE NEW NOT BE
ON THEIR PHONE THAT THEY NEED TO
ACTUALLY PROVIDE A SERVICE FOR
THE COMPANY. AND THAT'S THAT'S
FINE WE MOVE THE MINIMUM WAGE UP
TO FIFTEEN DOLLARS AN HOUR AND-
AT THAT POINT. IT'S LIKE OKAY
I'M I GONNA PAY FIFTEEN DOLLARS
AN HOUR. FOR AN INDIVIDUAL WHO
HAS NO. EXPERIENCE THAT ACTUALLY
EVEN SHOWING UP FOR WORKING AND
GETTING THE JOB DONE. AND ON TOP
OF THAT YOU HAVE PAYROLL TAXES.
TELL YOU THAT FIFTEEN DOLLARS AN
HOUR IS A STARTING SPOT. AND
THEN YOUR WORKERS COMP IS BASED
OFF OF EVERY DOLLAR FOR OUR THAT
YOU PAY. YOUR UNEMPLOYMENT TAX
WHICH IS NOW. GONE UP BECAUSE OF
ALL THE FRAUD WE HAD WITH THE E.
D. SO THAT'S ANOTHER COST IS
ADDED ON TO THAT PAYROLL COSTS
SO WHEN YOU GET TO. FIFTEEN
DOLLARS AN HOUR YOU'RE TYPICALLY
PAYING. ALL IN COST OF TWENTY
THREE TO TWENTY FOUR DOLLARS AN
HOUR FOR THAT EMPLOYEE. THAT'S A
FACT THAT'S THE TRUTH THAT'S
THAT'S WHAT REAL PEOPLE DEAL
WITH EVERY DAY IN CALIFORNIA. SO
WHY WOULD YOU THEN. HIRE
SOMEBODY WHO REALLY DOESN'T HAVE
THE SKILLS THAT YOU NEED. AND
TRY TO GO THROUGH THE GAUNTLET
OF THINGS YOU HAVE TO HAVE TO
GET TO MEET THAT. CRITERIA TO
ACTUALLY EMPLOY THAT PERSON SO.
AND THIS IS ACROSS THE BOARD
PEOPLE I WORK WITH IN OUR
BUSINESS WHO ARE ALL TRYING TO
HIRE PEOPLE THERE'S A SHORTAGE.
OF NON SKILLED I'M TALKING
ABOUT. YOU KNOW YOU CAN DRIVE
THROUGH IN AND OUT AND THERE'S A
SIGN AT IN N. OUT THERE'S A SIGN
IT. CALLS JUNIOR THERE'S A SIGN
EVERYWHERE YOU GO TO GET. A
HAMBURGER. PAYING TWENTY
SOMETHING DOLLARS AN HOUR TO GET
A PERSON TO FILL THE SPOT. AND
MANY EX MANY RESTAURANTS SAY HEY
WE KIND OF THE PEOPLE THAT
SHOWED UP TODAY. BECAUSE THEY'RE
HERE AT LEAST AND WE THANK THEM
FOR THEIR SERVICE. SO THE
WORKFORCE POOL IS VERY LIMITED
WHEN IT COMES TO SKILLED. AND
WHEN I SEE SKILLED I MEAN JUST
PEOPLE THAT WILL SHOW UP AND
ACTUALLY. BE THERE EVERY DAY. IF
YOU HIRE SOMEBODY AND YOU HAVE.
THEM OPERATING A- MACHINE. ON
THE FARM AND THEY'RE NOT THERE
TO OPERATE THE MACHINE THAT
MEANS FIVE OTHER PEOPLE. CAN'T
WORK BECAUSE THE OPERATOR THE
MACHINE ISN'T THERE THAT DAY.
THESE ARE THE CHALLENGES THAT WE
ARE FACED WITH. AS EMPLOYERS IN
THE STATE OF CALIFORNIA. ON TOP
OF THAT WE CONTINUE TO DRIVE THE
COST. OF EMPLOYMENT UP AND WHEN
YOU START TALKING ABOUT. HARDEN
PLOY THERE'S A REASON THEY'RE
HARD TO PLAY THERE HAVE A LOT OF
OTHER. THINGS YOU HAVE TO DEAL
WITH TO GET THEM TO ACTUALLY DO
THE JOB AND GET THE JOB DONE
WEATHER NO MATTER. WHERE THEY
LIVE. IT'S A ACROSS THE STATE
SO. IN MY MIND I I'M GONNA GIVE
AN EXAMPLE OF A BILL I VOTED FOR
LAST YEAR THAT. WAS IT WAS A-
CALL MOTOR DOT BILL THAT.
ALLOWED PEOPLE TO WHO HAD. LOST
THEIR DRIVER'S LICENSE FOR
WHATEVER REASON TO BE ABLE TO.
GET TO WORK. AND GET THEIR
LICENSE BACK SO THEY CAN
ACTUALLY GET TO THE JOB.
ESPECIALLY IN RURAL AREAS WHERE
YOU HAVE TO TRAVEL TO GET YOUR
JOB YOU HAVE TO HAVE A DRIVER'S
LICENSE TO GET A JOB. THAT'S
THAT'S AN INCENTIVE THAT WORKS
FOR AN EMPLOYER WHO HAS SOMEBODY
WHO'S- FALLEN ON HARD TIMES. I
JUST WANT TO SAY THAT. YOU KNOW.
AS AN EMPLOYER. I'M NOT GOING TO
TAKE THE RISK ON THAT AND YOU
HAVE TO GO THROUGH A PROGRAM
THAT IS SO CUMBERSOME. WHEN I
CAN JUST GO AHEAD AND PAY THE
TWENTY. FIVE DOLLARS AN HOUR.
CAN YOU ACTUALLY GET AN EMPLOYEE
WHO IS. GONNA SHOW UP TO WORK
AND ACTUALLY DO THE JOB. SO IF
WE WANT TO INCENTIVIZE.
COMPANIES TO DO HARD TO EMPLOY
PEOPLE WE HAVE TO COME UP WITH
WAYS. THEY GIVE THEM THE ABILITY
NOT TO HAVE TO PAY. IF YOU GO
23100% THE MINIMUM WAGE
REMEMBER. YOUR PAYROLL TAXES
GOES UP 3% TO BECAUSE ALL THOSE
OTHER COSTS ARE IN THERE. SO WHY
WOULD YOU DO THAT. FOR A TAX
BREAK IT'S NOT GOING TO HELP YOU
YOU COULD JUST PAY. A HUNDRED
AND 50% MORE AND YOU ACTUALLY
GET A QUALIFIED PERSON. THAT'S
WHY PEOPLE DON'T USE THE
PROGRAM. THAT'S WHY I WOULD USE
THE PROGRAM BECAUSE I WOULD JUST
RATHER GO. PAY THAT SMALLER
AMOUNT AS A HIGHER WAGE YOU GET
A SKILLED WORKER. SO THOSE ARE
THE CHALLENGES THAT YOU'RE GONNA
BE FACED WITH. UNTIL YOU COME UP
WITH THE WAY THAT TRULY. HELPS
OUT EMPLOYER. HAVE THE ABILITY
TO BE ABLE TO RECOUP THOSE COSTS
. BECAUSE IF YOU'RE GONNA PUT A
NUMBER ON IT UP 3100% I'M GONNA
HAVE TO PAY THAT THAT THAT THAT
TAX CREDIT ISN'T REALLY THERE.
BECAUSE THE PAYROLL. TAXES ARE
SO HIGH. SO WE NEED TO LOOK AT
POLITICALLY WE NEED TO TALK TO.
PEOPLE WHO ARE TRYING TO DO IT.
BECAUSE IF YOU LOOK AT THE
SKILLED WORKERS BECAUSE THOSE
ARE HIGH PAYING JOBS AND THEY
ONLY HAVE A PIPELINE OF TRAINING
THOSE PEOPLE. TO GET THERE
THAT'S WHY YOU HAVE SUCH A SMALL
AMOUNT I MEAN IT'S ABSURD TO
THINK. THAT WE ONLY HAVE SIXTY
SEVEN PEOPLE ACCESSING THE
PROGRAM WE HAVE. MILLIONS OF
BUSINESSES IN CALIFORNIA THAT
WOULD LOVE TO TAKE ADVANTAGES
AND HELP THOSE. DISADVANTAGED
PEOPLE GET A JOB. THANK YOU
THOSE ARE JUST COMMENTS I KNOW
YOU. DON'T HAVE A SILVER BULLET
TO FIX IT BUT THAT'S THE
CHALLENGE THAT OWN PLOY- FACES
EVERY DAY IN THE STATE OF
CALIFORNIA. AN EMPLOYEE IN THE
AND CALL THE- EMPLOYEES ARE THE
HIGHEST COST. THE HIGHEST COST
OF DOING BUSINESS IS NOT THE
CAPITAL. THAT YOU PUT INTO THE-
TO THE BUSINESS IT'S THE EVERY
DAY COST OF AN EMPLOYEE AND IT'S
THE HIGHEST RISK. YOUR
ACCEPTABLE THE LAWSUIT HERE
ACCEPTABLE TO. MOTIONS RULES ALL
THESE THINGS THAT COME THROUGH
OUR- RISK IS BASICALLY BASED OFF
OF THE EMPLOYEES THAT YOU HAVE.
SO THOSE ARE THE CHALLENGES THAT
WE FACE IN CALIFORNIA AND
CALIFORNIA. BY FAR IS THE
HARDEST PART OF STATE THAT I'M
AWARE OF TEMPLATE PEOPLE AND TRY
TO REDUCE THAT RISK. THANK YOU.
THANK YOU SENATOR DOLLY I
APPRECIATE YOUR- YOUR PRACTICAL-
A- FRAMEWORK FOR. TALKING ABOUT.
HIRING AND PICK SOME OF THE
CHALLENGES- THIS IS A- A TAX
CREDIT THAT THE LEGISLATURE. YOU
KNOW PASSED IS SUPPORTED AND GOT
SIGNED SO THE QUESTION BECOMES-
FOR THIS PARTICULAR PANEL
BECAUSE I THINK WE'RE GOING TO
HEAR WHAT THE GOVERNOR PROPOSED
IN THE NEXT. NOT NEXT SECTION
AND THEN FROM THE EMPLOYERS AT
THE END RIGHT- AND I THINK. IT
WAS A CENTER BREAKS FOR THAT
TALKED ABOUT THAT HOW MANY
PEOPLE APPLIED FOR IT AND THEN
DIDN'T. THEY WERE DISQUALIFIED-
IF IN FACT THOSE PEOPLE HAD-
QUALIFIED WHAT WOULD HAVE BEEN
THE DIFFERENCE TO MAKE THEM CALL
TO HELP THEM TO QUALIFY CAN YOU.
CAN YOU QUANTIFY 30% DID THEIR
SEARCH 20% DID THIS. MAIDMENT
ELIGIBLE I DON'T KNOW THAT I'M
FAMILIAR WITH THE STATISTIC BUT
I DID WANT TO SHARE A LITTLE BIT
MORE ABOUT THAT STATISTIC THAT I
GIVE ABOUT THE NUMBER OF
CORPORATIONS. THAT WE SAW WITH
RESERVATIONS I CLAIM THE CREDIT
WE ARE TALKING ABOUT CODE YEARS
IN TWENTY AND TWENTY ONE AND ONE
OF THE- REQUIREMENTS OF THE
CREDIT IS THAT THEY HAVE A NET
INCREASE. IN QUALIFIED- IN
EMPLOYEES SO FOR EXAMPLE IF A
COMPANY WHO IT HALL HIRED
QUALIFIED EMPLOYEES HAD A NET
DECREASE IN OVERALL EMPLOYEES
THEY WOULD NOT BE ENTITLED TO
THE CREDIT SO IN THE COMING
YEARS I THINK WE HAVE TO BE YOU
TO CONSIDER THE FACT THAT A LOT
OF PEOPLE WERE LAID OFF. AND SO
THE EIGHT IN ORDER TO CLAIM
THOSE CREDIT IN THOSE YEARS THEY
DID HAVE TO- THEY DID HAVE TO
HAVE A NET INCREASE OF THAT
COULD BE ONE OF THE REASONS WHY
BECAUSE AS I MENTIONED IN MY
REMARKS WE DID SEE THE NUMBER OF
TAX PAYERS- WHO CLAIM THE CREDIT
GO DOWN. BUT THE DEATH THE
DOLLAR AMOUNT WENT UP. TO YOUR
COMMENT PROBABLY ABOUT YOU KNOW
THE BRIDGES HAVING BEING SO HIGH
BECAUSE WE'RE TRYING TO YOU
KNOW. BUSINESSES ARE TRYING TO
FIND LABOR. HAVING TO PAY MORE
SO WE DID SEE THE CREDIT. AMOUNT
CLAIMS GO UP BUT THE NUMBERS
WENT DOWN. AND SO I JUST WANTED
TO ADD THAT LITTLE BIT ABOUT THE
BECAUSE THEY DID ONLY GIVE THE
TWENTY AND TWENTY ONE STATISTICS
FOR BUSINESSES THAT. THAT GOT A
RESERVATION AND CLAIM THE
CREDIT- SO I'M NOT REALLY SURE
ABOUT THE 86% I KNOW IN THE
BEGINNING WE DID SEE FOLKS WHO-
WERE CLAIMING THE CREDIT BUT- WE
DID. NOTICE THAT SOME PEOPLE
HAD. THOUGHT THAT THEY WERE
CLAIMING THE EASY CREDIT BECAUSE
THE EASY CREDIT ALSO HE HAS
CARRY OVER PROVISIONS IN IT EVEN
THOUGH IT IS SUNSET WE STILL
HAVE PEOPLE CLAIMING THE EASY
CREDIT. SO I'M NOT EXACTLY SURE
WHY WE HAD EIGHTY SIX PERCENT-
THAT WERE WERE INELIGIBLE BUT A
LOT OF THINGS- IT'S BECAUSE THEY
DIDN'T HAVE THE HEY WERE PAYING
HIGH ENOUGH WAGES- BUT ALSO THAT
PIECE ABOUT. THE RECERTIFICATION
IF THE EMPLOYEES NO LONGER
WORKING 50% IN THE- GEOGRAPHICAL
AREA- OR IF- THE WAGES ARE
AREN'T UNION YOU KNOW. EXCEEDS
THREE HUNDRED FIFTY OR BELOW ONE
HUNDRED AND FIFTY THAT. DENTIST
ABOUT HOW COMP. THE CALC. CAN BE
AND ALSO IF THEY DON'T HAVE AND
THAT INCREASE EMPLOYEES IT
DOESN'T MATTER ANY OF THOSE
OTHER PIECES. THE NETWORK-
CREDIT IS ZERO. SO THAT- THAT
THAT MILA FOR DETERMINING
WHETHER- BEER ELIGIBLE FOR THE
CREDIT OR NOT. WITH THAT IS THAT
SOMETHING THAT'S IN THE STATUTE.
YES YES IN AND- IT WAS SAID
BASED ON OTHER. MY LOT OF TIME
TO WE DO IS WE PICK UP THE
LANGUAGE. THAT ARE USED IN OTHER
TAX CREDITS AND USE THAT BECAUSE
THEN YOU CAN. IT'S EASIER IN
TERMS OF THE LEGISLATURE TO
UNDERSTAND IS THAT THIS IS
BASED. ON WHAT WE DID IN THE
SAID THEIR TAX CREDIT SO IT'S
GOING TO WORK. KIND OF THING IS
IT IS IT. IS IT LANGUAGE THAT
WAS USED FOR HAS BEEN USED IN
OTHER TAX CREDITS- HIRING. TAX
CREDITS OR WAS THIS JUST. WHAT
IS IT RELATED TO GUESS IS WHAT
I'M STE. WITH THIS WHY MAKE IT
SO COMPLICATED. THIS WAS A
UNIQUE- EQUATION FOR THIS
SPECIFIC BILL- SO YOU KNOW THE
COMPLEXITY OF IT IS. THERE'S A
LOT OF THINGS THAT WENT INTO
THIS CREDIT AND THE REASON WHY
WAS DESIGNED THE WORD THE WAY
THAT IT WAS SIMILAR TO WHAT MR
MUELLER WAS SPEAKING ON- AND SO.
THE COMPLEXITY OF THE
CALCULATION WHICH IS SOMETHING
SPECIFIC TO THIS PARTICULAR
CREDIT NOT BROUGHT IN FROM A
DIFFERENT. AND HIRING CREDIT
OKAY AND IS THERE A- A LOT OF
TIMES THE PURPOSE OF MAKING
THINGS COMPLICATED IS SO THAT
IT'S NOT OVERSUBSCRIBED FOUR
YOU'RE TRYING TO REACH A GOAL.
THAT IS- HARD TO REACH AND SO
YOU FIGURE OUT A WAY TO SET IT
UP BASS CAN YOU THINK OF ANY
REASON WHY IT NEEDS TO BE THAT
COMPLICATED I'M TRYING TO FIGURE
OUT IF THERE'S WAYS WE CAN
SIMPLIFY THIS SO THAT. PEOPLE
CAN- LOOK AT THIS BUSINESSES AND
SAY IT WORKS FOR ME OR IT
DOESN'T WORK FOR ME- WITHOUT
HAVING TO GO THROUGH A
COMPLICATED CPA CALCULATION.
SURE- OF THAT MYSTERY LOOKS
BECAUSE THAT. YEAH I MEAN I
THINK SO. AS I MENTIONED IT- WE
WOULD SUGGEST THAT IT DOES MAKE
SENSE TO IN GENERAL KEEP THE
KIND OF NARROW FOCUS OF THIS
PROGRAM BUT I DID MENTION THAT I
OUTLINED A FEW OPTIONS FOR KIND
OF MAKING INCREMENTAL CHANGES
YOU'RE- YOU'RE HITTING ON
ANOTHER ONE HERE WITH THE KIND
OF THE NET EMPLOYMENT
REQUIREMENT- AND YOU KNOW YOU'RE
GONNA HAVE A PANEL OF. OF KIND
OF FOLKS FROM THE EMPLOYER
COMMUNITY UP LATER IN IN IN
ANOTHER IMPORTANT CONSIDERATION
WOULD BE. PLACES WHERE- IT SEEMS
LIKE YOU KNOW WE HAVE PROCESS
THAT ISN'T REALLY CONTRIBUTING
TO THAT KIND OF- IMPORTANT
NARROW FOCUS OF THE PROGRAM YOU
KNOW. DECIDING WHETHER OR NOT
ALL THAT PROCESS IS NECESSARY IT
WOULD ALSO BE A GOOD IDEA. YOU
KNOW I THINK YOU KNOW ONE THING.
BY THAT YOU MEAN EXCUSE ME FOR
INTERRUPTING YOU BUT FOR EXAMPLE
THE RESERVATION REQUIREMENTS.
SURE SO. JUST SO IT DOESN'T GET
OVERSUBSCRIBED AT THE BEGINNING
BUT IF I. IF I WERE NOT EVEN
USING 10% OF THE CREDIT MAYBE
THAT RESERVATION MAY NOT BE
NECESSARY I THINK THAT THERE ARE
A LOT OF PEOPLE ALSO THAT ARE-
THE DENIED THE CREDIT BECAUSE
THEY DID GET A RESERVATION AND
THAT RESERVATION PROCESS IT'S
PRETTY QUICK. THEY HAVE TO DO
WITHIN THIRTY DAYS OF HIRING THE
NEW EMPLOYEE. SO IF THEY AREN'T
IF THEY'RE JUST HIRING THE
EMPLOYEE AND NOT THINKING ABOUT-
THE NEW EMPLOYMENT CREDIT AND
MAYBE THAT YOU KNOW THE TAX
PROFESSIONALS SUGGEST LATER ON
THAT THEY COULD HAVE QUALIFIED.
THEY MAY TRY TO CLAIM THAT
CREDIT NOT REALIZING THAT THEY
DIDN'T GET THE. RESERVATION SO
THEREFORE WOULD BE DENIED. I'M
JUST WONDERING WHETHER THAT THE
REASON FOR THE RESERVATION IS SO
THAT YOU DON'T IT'S NOT
OVERSUBSCRIBED. AND YOU KNOW
FROM THE GET GO THAT YOU'RE
EITHER GOING TO BE ELIGIBLE FOR
. YOU MAY BE ELIGIBLE FOR IT OR
NOT BUT I'M JUST TRYING TO
FIGURE OUT WHAT'S WHY THE
RESERVATION. TO TYPICALLY THE
RESERVATION SYSTEMS ARE CREATED
TO ALLOCATE THE CREDIT LIKE USE
THAT LIKE YOU'RE SAYING MANTRA
TO. ENSURE THAT IT'S NOT OVER
SUBSCRIBED. WE HAVE BEEN
DEVELOPING THE CREDIT
RESERVATION. ALTHOUGH IT IS ONE
OF MANY STEPS TO TAKE THE CREDIT
IT IS WE HAVE MADE IT AS
SIMPLIFIED AS POSSIBLE- SO THAT
TAXPAYERS AREN'T OVERWHELMED
WHEN THEY GO ON TO OUR WEB PAGE
TO. TO RESERVE THE CREDIT. YEAH
JUST JUST ONE FINAL THOUGHT
MADAM CHAIRMAN I THINK- YOU KNOW
ONE THING TO BE CAREFUL ABOUT
IS- YOU KNOW I THINK THERE'S
BEEN A NUMBER OF GOOD POTENTIAL
IDEAS TO EXPLORE WITH IN TERMS
OF MAYBE CHANGES TO THE CREDIT.
ONE THING TO CONSIDER WOULD BE
THAT THERE COULD BE A
DISADVANTAGE TO. MAKING A HOLE
IN A WHOLESALE CHANGE TO THE
CREDIT MAY YOU KNOW CHANGING THE
RESERVATION CHANGE AND THEN- YOU
KNOW CHANGING THE LIMIT ALL
THESE THINGS ALL AT ONCE- YOU
KNOW IN TERMS OF- ONE BEING ABLE
TO SEE YOU KNOW. WHAT BENEFIT DO
WE GET FROM EACH OF THOSE
CHANGES- BUT THE OTHER IS THAT
AGAIN MAYBE A LITTLE BIT GOING
BACK AND LEARNING SOME OF. THE
LESSONS FROM KIND OF THE
ENTERPRISE OWN EXPERIENCE AND-
YOU KNOW BEING CAUTIOUS ABOUT
YOU KNOW NOT GOING TO LET YOU
KNOW ALL. TOO FAR BACK TOWARDS
YOU KNOW THE OLD PARADIGM THAT
THIS CREDIT WAS YOU KNOW I THINK
IN SOME SENSE INTENTIONALLY
WRITTEN. VERY TIGHTLY TO AVOID
THAT I THINK WE'VE NOW HAVE
ENOUGH. EXPERIENCE TO SEE. MAYBE
A LITTLE BIT TOO YOU KNOW A
LITTLE BIT TOO TIGHT WE CAN LOOK
AT SOME OF WAYS. FICTIVE BUT
THINKING ABOUT OKAY WHAT ARE A
FEW THINGS WE CAN DO NOW LOOK AT
IN A COUPLE YEARS DO WE STILL
NEED TO EXPAND IT MORE
INCREMENTAL APPROACH MAY BE. ONE
WAY OF ENSURING THAT WE KIND OF
DON'T GO GO BACK TO THE YOU
KNOW. PART ON THAT WE WERE WE
WERE TRYING TO AVOID BEFORE. GOT
IT I APPRECIATE THAT VERY MUCH
THANK YOU. YES SENATOR. THANK
YOU I MEAN IT JUST REALLY SEEMS
TO ME THOUGH THAT ONE OF THE
BIGGEST PROBLEMS IN THE- IN THE
INITIAL THE INITIAL REASON THIS
WAS SO OVERSUBSCRIBED WAS
BECAUSE- STATE LAW ALLOWS CITIES
AND COUNTIES. TO DRAW THESE
CENSUS TRACTS TO INCLUDE THESE
HUGE SECTIONS THAT WERE NOT
PREDOMINATELY LOW INCOME OR POP
OR BEHALF OR HAVE HIGH LEVELS OF
POVERTY. AND SO. AND OF COURSE
YOU KNOW THAT THAT ALONE JUST
SEEMS LIKE IT WOULD BE IT'S SUCH
A BIG FACTOR SO. IT SEEMS LIKE
THE PENDULUM'S REALLY SWINGING
HERE SO WE HAD IT REALLY
OVERSUBSCRIBED. THEN WE CREATED
A PROGRAM THAT WAS SO
CONSTRAINED AND- YOU HAVE TO
REALLY RUN THE GAUNTLET AND-
MEAN TO ME IT SEEMS LIKE
ELIMINATING. THE RESERVATIONS
ENTIRELY AND TO SAY YOU KNOW TO
EXPECT SOMEONE TO HAVE THE
SOPHISTICATION WHICH MEANS
HIRING THE CONSULTANTS AND THE
ATTORNEYS AND THE ACCOUNTANTS
WHO HAVE THE SOPHISTICATION TO
KNOW. IF YOU'RE GOING TO HIRE
THIS PERSON WITHIN THIRTY DAYS
YOU HAVE TO TELL THE GOVERNMENT
ABOUT IT. I MEAN THAT JUST SEEMS
TO. ME RIDICULOUSLY ONEROUS- AND
SO YOU KNOW ELIMINATING SOME OF
THESE THINGS ENTIRELY AND
RECOGNIZING THAT BECAUSE WE
DON'T HAVE THE SAME SYSTEM. OF
CITIES AND COUNTIES MANAGING
THESE ENTERPRISE ZONES AND
DRAWING THE CENSUS TRACTS THAT
CREATED THE OF. IN MANY WAYS
THAT THAT. YOU KNOW IT WE'RE IN
A DIFFERENT ENVIRONMENT
BASICALLY. SO YOU'RE- URGING
CAUTION BUT IT JUST SEEMS LIKE
WE'RE SO FAR OVER HERE WITH THIS
PROGRAM. AND THE AMOUNT OF
THINGS YOU DESCRIBED THAT WHERE
IS THE GOVERNMENT TRYING TO GET
MORE INVOLVEMENT GOING OUT AND-
TALKING ABOUT IT IN SOME TRYING
TO EXPLAIN IT AND HAVING. THE
EDUCATIONAL SEMINARS AND ALL
THIS IT JUST SEEMS LIKE A
COMPLETE WASTE OF TIME LIKE
LET'S CREATE. A SYSTEM THAT'S
ACTUALLY STRAIGHT FORWARD AND
NOT HIRE ALL THESE PEOPLE TO TRY
TO GET PEOPLE INVOLVED IN A- A
PROGRAM THAT IS. SO CONSTRAINED
SO TO ME THAT SEEMS LIKE IT'S A
REALLY CLEAR CLEAR. FROM WHAT
WHAT THE STATUS SHOWS. I WOULD
LIKE TO MAKE. COMMENT YOUR IN
REGARDS TO THE IN. OF THE- IT
ISN'T TO NOTE AS WE'VE BEEN
MENTIONING THAT THERE ARE A LOT
OF DIFFERENT ASPECTS OF THE
CREDIT THAT LEAD TO THE
COMPLEXITY- AS MISS MAPLES
MENTIONED EARLIER. THE CREDIT
RESERVATIONS THAT WERE ACTUALLY
MADE THERE'S QUITE A FEW OF
THEM. IT'S JUST ABOUT THE
ELIGIBILITY OF THEM JUST WEREN'T
THERE ONCE THEY'VE ACTUALLY
TRIED TO CLAIM THE CREDIT OR WE
EVALUATED. THE EMPLOYERS THAT
ARE CLAIMING THE RESERVATION SO
IT'S IMPORTANT NOTE THAT THAT.
JUST REMOVING THE CREDIT
RESERVATION I'M NOT SURE THAT
THAT'S- WHAT SOLVE NECESSARILY
THE ISSUE THAT YOU GUYS ARE
MENTIONING TODAY. IT WOULD
REQUIRE MULTIPLE FACETS OF THE
CREDIT BEING AT. THREE
REVALUATION. VERY GOOD NO I
UNDERSTAND THAT IT'S A QUESTION
OF. I DO THINK IT IT MAKES SENSE
TO TAKE AN INCREMENTAL APPROACH
IS THE QUESTION IS WHAT'S THE
FIRST INCREMENT. THAT SHOULD BE
DONE AND HOPEFULLY WE GET THAT
FROM THE EMPLOYER PANEL. WE HAVE
AN OPPORTUNITY TO ME. TO FOLLOW.
FOLLOW THIS PANEL SO. ARE THERE
ANY MORE QUESTIONS OF THESE THIS
PANEL. THANK YOU VERY MUCH I
APPRECIATE YOUR YOUR-
INFORMATION TODAY WAS VERY
HELPFUL. VERY HELPFUL THANK YOU.
THANK YOU RIGHT NEXT FOR IN HERE
FROM NICK THOMAS WHO'S THE
BUDGET ANALYST WITH THE
DEPARTMENT OF FINANCE- ON THE
GOVERNOR'S PROPOSAL.
WELCOME MISTER THOMAS. BUT THIS
IS NOT CORRECT. EARNING MADAM
CHAIR AND MEMBERS OF THE
COMMITTEE- THIS IS NICK THOMAS
WITH THE DEPARTMENT OF FINANCE-
I JUST WANT TO MAKE A QUICK
COMMENT ON THAT DISCUSSION ON
THE RESERVATION SYSTEM- BEFORE
WE JUMP INTO THE
ADMINISTRATION'S PROPOSAL. SO
ONE REASON FOR HAVING A
RESERVATION SYSTEM IS TO ENSURE
THAT WE'RE NOT NECESSARILY
SUBSIDIZING BEHAVIOR THAT
ALREADY WOULD HAVE HAPPENED-
THAT'S ALWAYS KIND OF A
CONSIDERATION WITH- TAX
EXPENDITURES SO IN THIS CASE. WE
WANT TO ENSURE THAT EMPLOYERS
ARE ALSO LOOKING SPECIFICALLY AT
THIS INCENTIVE AND MAKING
DECISIONS BASED ON THAT SO
THAT'S ONE REASON HAVE A
RESERVATION SYSTEM- SO JUMPING
INTO OUR PROPOSALS AS PART OF
THE GOVERNOR'S BUDGET- THE
ADMINISTRATION IS PROPOSING AN
EXPANSION OF THE NEC. FOR TAX
YEARS TWENTY TWENTY THREE
THROUGH TWENTY TWENTY FIVE- BY
EXEMPTING CERTAIN SEMICONDUCTOR
COMPANIES- FROM THE CREDITS
GEOGRAPHIC REQUIREMENTS- AND
THIS IS PART OF THE STATE'S
OVERALL STRATEGY TO. COMPETE FOR
FEDERAL DOLLARS UNDER THAT
FEDERAL CHIP ACT- SO IN ORDER TO
QUALIFY FOR THIS EXEMPTION. THE
COMPANY WOULD NEED TO FALL UNDER
NAICS CODE THIRTY THREE FORTY
FOUR- WHICH ENCOMPASSES
SEMICONDUCTOR AND ELECTRONIC
COMPONENTS. AND THEY WOULD ALSO
HAVE TO APPLY WERE ALSO APPLY
FOR OR PLAN TO APPLY FOR FEDERAL
FUNDING AVAILABLE THROUGH THE
CHIPS ACT- IN THE FIRST YEAR-
THE COMPANY CLAIMS THE CREDIT
FOR A QUALIFIED EMPLOYEE- THE
PROPOSAL ALLOWS FOR SELF
CERTIFICATION THAT THEY PLAN TO
APPLY FOR FUNDING. DUE TO THE
UNCERTAIN OF TIMING OF THE SHIPS
ACT APPLICATION PROCESS- AND
ALSO THE POSSIBILITY FOR
COMPANIES TO USE THE NEC AND
THERE ARE CHIPS ACT
APPLICATIONS- COMPANIES WHO
APPLIED FOR THE NEC. WOULD STILL
BE SUBJECT TO ALL OTHER NEC
REQUIREMENTS- WITH THE EXCEPTION
OF THE GEOGRAPHIC REQUIREMENTS-
AND THEY WOULD ALSO HAVE THE
ADDITIONAL MAKES CODE
REQUIREMENTS- I WOULD ALSO NOTE
THAT AN EMPLOYEE CAN QUALIFY FOR
UP TO FIVE YEARS- AND THE
COMPANY WOULD NEED TO BE ABLE TO
PROVIDE DOCUMENTATION UPON
REQUEST- TO HAVE TO BE AFTER.
THE FIRST YEAR- THAT THE DID
APPLY FOR FEDERAL FUNDING AND
THE CHIPS- ALONG WITH OTHER
PROPOSALS INCLUDING AT THE
EXTENSION OF THE CALIFORNIA
COMPETES GRANT PROGRAM- AN
EXISTING PROGRAMS SUCH AS THE R.
NINETY CREDIT- AND THE SALES AND
USE TAX- MANUFACTURERS
EXEMPTION- THIS PROPOSAL IS PART
OF THE STATE'S OVERALL CHIPS ARE
TRASHY WHICH AIMS TO INCENTIVIZE
SEMICONDUCTOR COMPANIES. TO
INVEST IN CALIFORNIA BASED
OPERATIONS AND LEVERAGE FEDERAL
DOLLARS. FURTHERMORE THE
PROPOSAL SUPPORTS THE STATE'S
EQUITY GOALS AND IT ALIGNS WITH
THE DEPARTMENT OF COMMERCE IS. A
GUIDING PRINCIPLE OF GENERATING
BENEFITS FOR A BROAD RANGE OF
COMMUNITIES- AND ENCOURAGES
LINKAGES TO UNDERSERVED
POPULATIONS- THE FISCAL IMPACT
OF THE PROPOSAL IS ESTIMATED AT
ONE POINT ONE MILLION DOLLARS
ANNUALLY. FROM TWENTY THREE
TWENTY FOUR THROUGH TWENTY FIVE
TWENTY SIX- AND WITH THAT I'M
HAPPY TO ANSWER ANY QUESTIONS
ABOUT THE PROPOSAL. QUESTIONS
THAT ARE WIDELY WHY WOULD YOU
EXIT TO GEOGRAPHIC AREAS THE
THOSE ARE THE DETERMINATION OF.
HOW WE KNOW WHETHER
DISADVANTAGED FOLKS WHO REALLY
NEED THE COMPANIES TO LOCATE SO
WE CAN EMPOWER THEM TO RISE UP
TO A LEVEL OF- EMPLOYABILITY YES
SO SPECIFICALLY LOOKING AT THE
GEOGRAPHIC AREAS- THAT'S ONE. SO
THERE'S ONLY CERTAIN AREAS OF
THE STATE THAT- THAT EMPLOYEES
CAN CURRENTLY WORK IN TO BE
ELIGIBLE FOR THIS CREDIT. BY
EXEMPTING THESE COMPANIES FROM
THAT REQUIREMENT WOULD MAKE IT
MORE LIKELY THAT- HARD TO HIRE
POPULATIONS WOULD BE HIRED UNDER
THE NEW EMPLOYMENT CREDIT. FOR
BASICALLY JUST REMOVES ONE
REQUIREMENT FOR THE BUSINESSES-
I UNDERSTAND RIGHT SO THEY'RE
ALL GOING TO BE LOCATED IN THE
BAY AREA WHERE IT'S ALREADY A
COMPETITIVE MARKET WHERE. I MEET
AT. THE REASON WE DO TAX CREDITS
IS TO HELP THE DISADVANTAGE-
POPULATIONS TO BE ABLE TO GET
INTO THE WORK FORCE AND NOT
STATS THE GOAL OF THE
LEGISLATION THAT WE PASSED IN
THE PAST BUT THIS IS BASICALLY
WHAT I HEARD YOU SAY WAS. WE
WANT TO DRAW DOWN THE FEDERAL
DOLLARS SO WE CAN ATTRACT THOSE
BUSINESSES HERE AND WE'RE GONNA
PUT HIM WHEREVER- THE SKILLED
FORCES THE COMPANY WILL BE THERE
SO THEY CAN ACTUALLY GET THE
PEOPLE TO BUILD THE CHIPS. A
THAT'S WHAT I HEARD HAVING AN A
ROUND ABOUT WAY THAT'S WHAT I
HEARD- I DO DOLLARS THAT AND BUT
AGAIN SO IT IS FOCUSED ON STILL
HARD TO HIRE POPULATIONS
REGARDLESS OF. WHERE THEY MIGHT
LIVE OR WORK SO. I'M EVEN THOUGH
IT'S NOT LOOKING AT SPECIFIC
REGIONS OF THE STATE NOW IT
WOULD STILL- ENCOURAGE FOLKS WHO
WOULD OTHERWISE HAVE DIFFICULTY
BEING HIRED SO IT MAKE IT MORE
LIKELY. THAT THE CREDIT WOULD BE
USED BY THESE EMPLOYERS. YES
SENATOR BAXLEY. SO BASICALLY IS
WHAT YOU'RE SAYING IS THAT. THE
ISN'T THAT THESE COMPANIES ARE
ALREADY BASED LIKELY IN THE BAY
AREA AND WE WANT TO INCENTIVIZE
HIRING CERTAIN WORKERS BUT WERE
LESS IT SOUNDS LIKE THE SUBTEXT
OF WHAT YOU'RE SAYING IS THAT
WERE ACTUALLY. LESS INTERESTED
IN HAVING A COMPANY START IN A
DISADVANTAGED AREA AND BE BASED
IN DISADVANTAGED AREAS SO THAT.
SO THAT THAT'S WHERE THE PEOPLE
THE WORK WOULD TAKE PLACE. AND
MORE INTERESTED IN JUST MAKING
SURE THAT. THAT THESE COMPANIES
ARE AS SUCCESSFUL AS POSSIBLE SO
THAT WE CAN COMPETE. AND HAVE A
SUPPLY CHAIN OF SEMICONDUCTORS
THAT WE NEED IN THIS COUNTRY IS
THAT BUT IN THE STATE IS THAT.
IS THAT DO YOU THINK THAT'S AN
ACCURATE STATEMENT THAT THAT'S
THE SUBTEXT THIS IS REALLY-
LOOKING AT THE NEXUS OF THE
CHIPS ACT IN THE CURRENT MOMENT
SO GIVEN THE FACT THAT THERE ARE
A MULTITUDE OF. BILLIONS OF
DOLLARS IN FEDERAL FUNDING ON
THE TABLE- THE ADMINISTRATION IS
LOOKING AT WAYS TO INCENTIVIZE
THAT TO TAKE PLACE IN
CALIFORNIA. AND SO IT'S REALLY
LOOKING JUST TRYING TO LEVERAGE-
THE CURRENT NEC- IN A WAY THAT
WOULD MAKE IT MORE ATTRACTIVE
TO- HELP COMPANIES THAT ARE.
LOOKING AT FUNDING THROUGH THE
CHIPS ACT. SO THAT'S THAT'S KIND
OF THE CURRENT THAT'S THE- THE
BASIS FOR THE PROPOSAL. THANK
VERY GOOD SO DO YOU- HAVE A MAP
OF THE- GEOGRAPHICAL AREAS THAT
YOU BELIEVE ARE TARGETED. BY
THIS CREDIT UNDER THE CURRENT-
YES UNDER A LOT- I BELIEVE THE
FRANCHISE TAX BOARD HAS A MAP ON
THEIR WEBSITE AND THAT WE CAN
PROBABLY. SHARE WITH THE
COMMITTEE OKAY JUST THAT JUST TO
BE SURE WE'RE TALKING ABOUT THE
SAME. YES IT'S THE FORMER
ENTERPRISE ZONES WITHIN THE
DESIGNATED. CENSUS TRACTS
THEY'RE CURRENTLY- THAT ARE
CURRENTLY QUALIFIED UNDER THE
NEC OKAY. AND SO MY QUESTIONS
ARE VERY SIMILAR TO- TO SENATOR
DOLLIES- AND I SAY. THE QUESTION
THAT I HAVE IS. WHAT IN THIS IS
PROBABLY A LITTLE BEYOND YOUR
PAY GRADE IN TERMS OF. OF A
QUESTION BUT I WANT TO PUT IT
OUT THERE ONE OF THE ISSUES THAT
IS DRIVING- COMMUNITIES IN MY
DISTRICT IS VEHICLE MILES
TRAVELED. AND THE USE OF VEHICLE
MILES TRAVELED IS PART OF A LAND
USE WHICH IS IF YOU'RE GOING TO
BE BUILDING SOMETHING IN YOUR
COMMUNITY THAT CAUSES PEOPLE TO
COMMUTE. THEN IT'S GOING TO COST
YOU MORE AND- AND- BY THE WAY
WE'RE NOT GOING TO FIX YOUR
ROADS BECAUSE THAT WOULD
INTEREST GROWTH SO MANY PEOPLE
HAVE MOVED INTO RURAL CALIFORNIA
TO LIVE BUT WORK IN IT IN AN
AREA WHERE THEY CAN EARN A
BIGGER SALARY. AND AND WHAT
THAT'S DONE IS IT'S TO RAISE THE
COST OF HOUSING IN RURAL
CALIFORNIA BECAUSE WE DON'T HAVE
THE WAGES TO SUPPORT IT. AND AND
WE CONTINUE THROUGH OUR TAX
POLICIES TO INCENTIVIZE THE
GROWTH IN THE URBAN AREAS THAT
HAVE BEEN BUILT THE HOUSING. AND
SO MORE AND MORE PEOPLE ARE
FORCED FORCED OUT AND I'M TRYING
TO FIGURE OUT- YOU KNOW
THEORETICALLY THE PEOPLE IN MY
DISTRICT MIGHT BE ABLE TO. GET A
JOB. WORKING AT A SEMI. FACILITY
BUT IF THEY'RE GOING TO HAVE TO
TRAVEL AND THEY'LL HAVE TO
TRAVEL AT LEAST TWO HOURS TO GET
ANYWHERE THAT WOULD BE NEAR. OF
THAT KIND OF FACILITY SO TO ME
HAVING THE FACILITY
GEOGRAPHICALLY LOCATED IN RURAL
CALIFORNIA WHICH IS WHERE YOU
HAVE THE LOWEST WAGES AND THE
MOST POTENTIAL FOR EMPLOYMENT-
THAT ARE CONSISTENT WITH. THIS
PARTICULAR TAX CREDIT- WE WOULD
REDUCE THE VEHICLE MILES
TRAVELED IF WE PUT IT IN IN
RURAL AND RURAL AREAS AND I KNOW
THERE'S A NUMBER OF SENATORS
SAID I'VE BEEN TALKING ABOUT
THIS VEHICLE MILES TRAVELED THE
ISSUE BECAUSE IT'S- WE WE'RE
INCENTIVIZING- BUSINESSES. IN
THE ACTIVITIES THAT WE DO IN
COMMUNITIES THAT DON'T HAVE THE
HOUSING. AND ARE GOING TO HAVE
TO BRING IN PEOPLE PEOPLE FROM
OTHER AREAS SO I AM A LITTLE
CONCERNED ABOUT THAT THAT THE-
THE GEOGRAPHICAL- ELIMINATION
BECAUSE I THINK WHAT WE REALLY
WANT TO DO IS EMPHASIZE. HIRING
PEOPLE WHERE THEY'RE AT INSTEAD
OF HAVING TO HAVE THEM TRAVEL-
TRAVEL A LONG DISTANCE BECAUSE
IN OUR- OUR GREENHOUSE GAS.
GOALS ARE. ARE- ARE NOT BEING
MET BECAUSE BECAUSE OF THAT BUT
THE OTHER THING ANNA AND I THAT
THIS IS A QUESTION- TO DO REALLY
FOR FOLLOW UP IS THAT. YOU KNOW
WE HAVE SOME NEW THAT THAT THE
FEDERAL GOVERNMENT HAS
INCENTIVIZED A NUMBER OF.
INDUSTRIAL ACTIVITIES AND- I'M
WONDERING WHY WE DON'T EXTEND.
THE TAX CREDIT TO THE KINDS OF
COMPANIES THAT THAT ARE DOING-
NEW TECHNOLOGY. TO MEET. SOME OF
THE GOALS THAT WE SET IN THE
STATE OF CALIFORNIA SUCH AS A
CARBON CAL- IN MY DISK- THERE
THAT PUT. TO DO SICKENING AMOUNT
OF CARBON SEQUESTRATION AND
CARBON CAPTURE. AND IT'S A NEW
IT WOULD FIT WITHIN THEM. THE
JOGGER DID DID THE GEOGRAPHY OF
THE CENTRAL VALLEY BUT IT IT
ALSO THE GEOLOGY AS WELL AND SO
I'M I PUT THAT OUT THERE AND
THAT'S NOT THE GOVERNOR'S
PROPOSAL I UNDERSTAND THAT BUT
IT JUST SEEMS TO ME THAT THERE
ARE SIGNIFICANT FEDERAL DOLLARS
IF I'M GOING TO TRY TO GET THAT
THE CHIPS. DOLLARS AND I HAVE NO
QUARREL WITH THAT I THINK THAT'S
REALLY REALLY IMPORTANT I THINK
WE SHOULD ALSO LOOK AT OTHER
MANUFACTURING OPPORTUNITIES THAT
HELP US MEET THE GOALS OF THE
STATE IF NOT THE COUNTRY AS
WELL- AS WE LOOK AT THIS. YEAH I
APPRECIATE THAT COMMENT- I WOULD
JUST SAY TO WITH THIS PROPOSAL-
THE. MINISTRATION TRY TO MAKE IT
VERY NARROWLY TARGETED AND PART
OF THAT WAS- RECOGNITION OF THE
REVENUE SUCH AND THAT HE MUCH
GLOOMIER SINCE BY ACT- SO THAT'S
WHEN WE WHY. WE DIDN'T. FIT
GIVEN THE NEXT OF THE ACT AND
KIND OF THE MOMENT OR AND- WE-
MADE IT VERY FOLK ON THAT.
POPULATION COME. SENATOR YES
THANK YOU THANK YOU- SO. THE
THIS WAS DONE INCOMES. WITH
INTO- IN TERMS OF THE PROPOSAL
THAT MADE IT INTO THE GOVERNOR'S
BUDGET SO. THE RESEARCH
MANUFACTURING OR RESEARCH AND
DEVELOPMENT OF SEMI CONDUCTOR
CHIPS IS BY READING THE BRIEFING
PAPER THAT. YOU'RE YOU'RE
PROPOSING A MODIFIED RESERVATION
REQUIREMENT SO THIS RESERVATION
REQUIREMENT IS FOR THE QUALIFIED
EMPLOYEE. TO BE RESERVE BEFORE
THE LAST. DAY OF THE MONTH
FOLLOWING THE CLOSE OF THE
TAXABLE YEAR. YEAH- SO SOBRE. I
MEAN SMART OF. THAT WOULD APPLY
TO THE BUSINESS. IT SEEMS LIKE
WE SHOULD CONSIDER APPLYING
THESE THINGS TOO ALL OF THE
BUSINESSES THAT ARE INVOLVED IN
THIS NOT JUST THIS ONE
PARTICULAR INDUSTRY BUT MY
QUESTION IS. THAT I NEED YOU CAN
RESPOND AS BOTH PARTS OF THAT
BUT BUT IS THAT THIS SEEMS TO BE
THE ONLY THING AT LEAST IT MADE
IT INTO THE SUMMARY. THAT'S A
PROPOSED CHANGE SO OF ALL OF
THAT THE DIFFERENT PROGRAMS THAT
DIFFERENT REASONS THAT THE NEC
HAS BEEN UNDER UTILIZED. IT
SEEMS LIKE THIS RESERVATIONS
STEM IS THE THING THAT IS THE
BIG. DEAL TO THE GOVERNOR SO I
AND I JUST WONDER IF THERE ARE
ANY OTHER THINGS THAT YOU THINK
ARE RELEVANT IN TERMS OF
MODIFICATIONS AND AMENDMENTS
THAT COULD APPLY TO THE WHOLE
PROGRAM. I GUESS I'LL TAKE BOTH
OF THOSE- SO ON THE RESERVATION
SYSTEM IT DOES MAKE A CHANGE TO
THE RESERVATION SYSTEM BUT ONLY
FOR TAX YEAR TWENTY TWENTY
THREE. AND AS THOUGH IT
CURRENTLY A COMPANY HAS TO MAKE
A RESERVATION WITHIN THIRTY DAYS
OF HIRE- FOR TWENTY TWENTY THREE
WE MADE IT WITHIN THIRTY DAYS OF
THE END OF THEIR TAXABLE YEAR.
AND THAT'S JUST GIVEN THE-
TIMELINE OF WHEN THIS WOULD BE
ENACTED SO IT WOULD BE AN ACTIVE
PART WAY THROUGH THE YEAR IN
JUNE JULY OF TWENTY TWENTY
THREE. AND SO THAT'S TO GIVE
COMPANIES- POTENTIALLY MORE TIME
AND TO ALLOW FTP TIME TO MAKE
CHANGES TO THE RESERVATION
SYSTEM. SO THE RESERVATION
SYSTEM FOR TWENTY TWENTY FOUR
AND TWENTY TWENTY FIVE WOULD
STILL BE EXACTLY THE SAME AS
WHAT IT IS CURRENTLY FOR
COMPANIES- THAT ARE. SUBJECT TO
THE EXEMPTION- AND THEN IN TERMS
OF CHANGES SO YES THERE'S A
CHANGE THE RESERVATION SYSTEM IN
TWENTY TWENTY THREE. THE PRIMARY
CHANGES REMOVING THE GEOGRAPHIC
REQUIREMENTS THAT ARE CURRENTLY
SO. I KIND OF WORKER HAS TO
PERFORM THE MAJORITY OF THEIR
WORK AND- I THEIR FORMER
ENTERPRISE ZONE OR DESIGNATED
CENSUS TRACT AND SO. IF A
COMPANY- IS APPLYING OR PLANS TO
APPLY FOR FEDERAL CHIPS ACT
DOLLARS- THEY WOULD BE EXEMPT
FROM THAT GEOGRAPHIC
REQUIREMENTS BUT THEY WOULD
STILL BE SUBJECT TO OTHER.
REQUIREMENTS. ARE CURRENTLY
UNDER THE AC. OKAY AND SO. IT
SEEMS LIKE. THIS HAS TO BE
TARGETED TO CREATE A CERTAIN
NUMBER OF JOBS AND THE
GOVERNOR'S MIND SO DO WE KNOW
WHAT THOSE NUMBERS ARE. SO IT'S
A PRETTY UNCERTAIN ESTIMATE JUST
BECAUSE THERE ARE A LOT OF.
DECISION POINTS THAT WOULD BE
MADE BEFORE THAT- WE ESTIMATE
SOMEWHERE IN THE RANGE OF.
POTENTIALLY FIFTY TWO HELLO
HUNDREDS IN THE NUMBER OF JOBS
THAT WOULD BE. ADDED BASED ON
THIS OR THAT WOULD AT LEAST BE
CLAIMED UNDER THIS CREDIT. OKAY
WELL THE AND ANY IDEAS THOSE ARE
JOBS THAT WOULD PROBABLY NOT GO
TO DISADVANTAGED PEOPLE. IF THEY
WOULD IS ALREADY OBJECT TO THE
EMPLOYEE RETIREMENT SO THEY
WOULD EITHER BE- CURRENT
RECIPIENTS OF THE I. T. C.
CURRENTLY UNEMPLOYED. THERE'S
THE WHOLE LIST OF REQUIREMENTS
AND THOSE WOULD STILL BE SUBJECT
TO THIS THAT WE'RE NOT CHANGING
THAT RIGHT BUT I'M SAYING IN
TERMS OF REACHING OUR POLICY
GOALS. THAT THOSE. EMPLOYEES
WOULD NOT BE HIRED OTHERWISE
THAT'S THE PROMISE YEAH HI OKAY
. OKAY THANK YOU. VERY GOOD ANY
OTHER- QUESTIONS COMMENTS ON THE
SPEAKER. THANK YOU VERY MUCH FOR
BEING HERE TODAY WE APPRECIATE
IT THANK YOU. WE'RE GONNA MOVE
ON TO OUR THIRD PANELS AND WE
HAVE FOUR WITNESSES- STEVE
ABBOTT WHO'S THE HEAD OF PUBLIC
POLICY AND GOVERNMENT AFFAIRS
FROM COASTAL. ADAM KANE MANAGING
DIRECTOR ALLEGIANCE MAXIM MAXIM
COMPANIES TERRY BRENNAN. ABOUT
HIS YEAH YOU CALIFORNIA AND
CHRIS RICKY LEE A PRAYER A
PRAYER IN MCKINNEY. WELCOME WHY
DON'T WE WHY DON'T WE START WITH
MS ABIT. HELLO YES HEAR ME WE
CAN. WELCOME REGULAR HAVING. ME-
THANK YOU MADAM CHAIRWOMAN AND
OF THE CAN FOR A LOT ME TO TEST
TODAY MY NAME IS ABBOTT I AM THE
HEAD HOPE. AND GOVERNMENT
AFFAIRS A GUSTO BUT PEOPLE
PLATFORM THAT EMPOWERS SMALL TO
MEDIUM SIZE BUSINESSES WE
PROVIDE INFORMATION TO OUR
PLATFORM TO EDUCATE BUSINESS
OWNERS ABOUT TAX RATE ANOTHER
RESOURCE TO BUILD TO THEM. THIS
IS AN IMPORTANT HEARING AND I
APPLAUD THE COMMITTEE FOR
UNDERTAKING THE ESSENTIAL WORK
OF TRYING TO DETERMINE THE
EFFICACY OF TAX CREDITS DESIGNED
TO INCENTIVIZE BUSINESSES TO
HIRE PEOPLE FROM UNDERSERVED
POPULATIONS. BUT THE FOCUS OF
TODAY'S HEARING IS ON THE NEW
EMPLOYMENT CREDITS I WANT TO
SHARE GUSSETS PERSPECTIVE ON
BEHALF OF OUR CUSTOMERS IN THE
BARRIERS BUSINESSES FACE WHEN
TRYING TO DECIPHER THE
REQUIREMENTS OF DIFFERENT
GOVERNMENT PROGRAMS AVAILABLE TO
THEM. AUGUSTA WE ENABLE SMALL
AND MEDIUM SIZE BUSINESSES TO
PAY AND TAKE CARE OF THEIR TEAMS
BY HELPING THEM STAY COMPLIANT
WITH APPLE LAWS AND REGULATIONS
OFFERING A FULL SUITE OF
BENEFITS SUCH AS HEALTH CARE
RETIREMENT. AND ALL THE TOOLS
THEY NEED TO OPERATE A BUSINESS.
TENS OF THOUSANDS OF CUSTOMERS
IN CALIFORNIA WITH FEWER THAN
TWENTY FIVE EMPLOYEES WHICH
GIVES US A UNIQUE INSIGHT INTO
THE CHALLENGES THEY FACE IN THE
RESOURCES THEY NEED. ASIAN FOR
THIS HEARING I CONSULTED WITH
HER INTO TEAMS WHO SEE IF HE HAD
ANY SENSE OF THE YOU DON'T. OF
THE ANY BUYER BASE. WITHOUT A
MORE. SURVEY OUR CUSTOMERS WE
WERE UNABLE TO MAKE A
DETERMINATION. THIS IS PRIMARILY
DUE THE NEC BEING CLAIMED
OUTSIDE OF PAYROLL TAX
WITHHOLDINGS AND DATA
LIMITATIONS FOR EXAMPLE WE DO
NOT COLLECT IT ON WHETHER OR NOT
A NEW EMPLOYEES FROM A SPECIAL
POPULATIONS. ALTHOUGH WE DO NOT
CURRENTLY SUPPORT THE NEC WITHIN
OUR PRODUCT LINEUP WE DO EXPAND
RESOURCES ON INTERNAL KNOWLEDGE
BASE. OUR BIG EXPEND RESOURCES
ON INTERNAL KNOWLEDGE BASE THAT
DETAILS HOW EMPLOYERS CAN
QUALIFY FOR MARY OUT OF
RESOURCES AVAILABLE TO THEM. AS
WELL AS AN EXTERNALLY FACING
BLOG THAT HELPS BUSINESS OWNERS
MAKE SENSE OF POLICIES SUCH AS
PAID LEAVE CREDITS MINIMUM WAGE
LAWS IN THE STATE SMALL
BUSINESS- CREDIT INITIATIVE. WE
PROVIDE THIS INFORMATION BASED
ON CUSTOMER QUESTIONS ABOUT
SPECIFIC ISSUES AND ALSO
PROACTIVELY PUBLISH MATERIALS
ON. THE FEDERAL AND STATE POLICY
IMPLICATIONS. TO THAT POINT
WE'VE HEARD. VERY LITTLE ABOUT
THE NEC. ALTHOUGH WE EXPAND WE-
TRYING TO EDUCATE OUR CUSTOMERS
ON PROGRAMS THAT CAN BENEFIT
THEM. WE HAVE TO PRIORITIZE
COMPLIANCE WITH EXISTING LAWS
AND REGULATIONS OUR CUSTOMERS
CAN AVOID PUNITIVE ACTIONS. TO
THE POINT SO BUSINESSES THAT
TYPICALLY DON'T HAVE A
DEDICATED. HR IN GENERAL
COMPLIANCE SIMPLY ARE DILUTES
WITH INFORMATION AND THERE'S AN
OPPORTUNITY COST TO THE OWNER
EXPENDING TIME AND EFFORT ON A
TAX CREDIT. THAT IS CUMBERSOME
TO FILE WITH THE MARGINAL
MONETARY BENEFIT. SO HOW CAN WE
DESIRE A BETTER CREDIT THAT WILL
MAKE A MEANINGFUL DIFFERENCE IN
ACHIEVING THE GOAL OF GETTING
MORE PEOPLE FROM SPECIAL
POPULATION EMPLOYED. IN SHORT
THINK ABOUT THE END USER OF THE
CREDIT WHICH IS A SMALL BUSINESS
OWNER. NO GOING TO ONE EXAMPLE
THAT ISN'T PERFECT. BUT WORKS
VERY WELL AND THAT IS THE
RESEARCH AND DEVELOPMENT TAX
CREDIT. I GUESS THAT WE DO HAVE
PRODUCT SUPPORT FOR THE R. D.
FEDERAL TAX CREDIT AND THIS IS
DUE TO THE FACT THAT THE
MAJORITY THE QUALIFIED EXPENSES
COME IN THE FORM OF EMPLOYEE
SALARIES AND CONTRACTOR
PAYMENTS. DATA WE HAVE BEING A
PALE PROVIDER. CALIFORNIANS ARE
THE STATE CREDIT IS
SUBSTANTIALLY SIMILAR TO THE
FEDERAL CREDIT MAKING IT EASIER
FOR US TO MAKE A DETERMINATION
ON WHETHER BUSINESS QUALIFIES.
LAST SESSION WE WERE PROUD. TO
LEND OUR SUPPORT FOR SB THIRTEEN
FORTY NINE A BILL THAT WOULD
CREATE A WORK OPPORTUNITY TAX
CREDIT FOR CALIFORNIA. WHICH
MIRRORS THE FEDERAL WORK
OPPORTUNITY TAX CREDITS. THIS
EFFECTIVELY MAKES IT EASIER FOR
AN EMPLOYER TO DETERMINE
ELIGIBILITY AND INCREASE THE
INCENTIVE FOR THEM TO FILE. THE
UPSHOT OF THE STANDARDIZATION IS
A HIGHER PROBABILITY OF G- THE
CHEATING THE STATED GOAL OF THE
NEC EMPLOYING. MORE
DISADVANTAGED PEOPLE. DESPITE
THE PRECARIOUSNESS OF THE MAC
CORRECT OF THE MAC ECONOMY GOT
SO DATA SHOW THAT SMALL. ARE
FACE TIGHTLY MARKET UPWARD
PRESSURE ON WAGE. WITH A STORY
ONE EMPLOYEE NOW. THE CAN. THE
IN. IF YOUTH DOLLARS IN TAXES
WHAT HAPPENED BUSINESS OWNERS
ABILITY HIRE NEW EMPLOYEES.
INCREASE WEIGHTINGS OR EXPAND
BENEFITS. CALIBRATING THE SIZE
SCOPE AND COMPLEXITY TAX CREDITS
IS ESSENTIAL ESPECIALLY DURING
DOT DURING TIMES OF FISCAL
STRAIN ON STATE BUDGETS. SO THAT
THEY ARE TARGETED IN ACHIEVING
THE PURPORTED CALLED
INCENTIVIZING CERTAIN BEHAVIORS
SUCH AS INCREASING EMPLOYMENT
AMONG SPECIAL POPULATIONS. THANK
YOU PROVIDING US A TESTIFIED
TODAY AND FOR YOUR COMMITMENT TO
HELPING SMALL BUSINESSES AND
THEIR EMPLOYEES WITHIN THE STATE
OF CALIFORNIA. THANK YOU AND I'M
HAPPY TO ANSWER ANY QUESTIONS.
VERY GOOD THANK YOU MISTER
ABBOTT- WE'RE GONNA GO TO THE
PANEL AND THEN WE'LL- WE'LL TAKE
QUESTIONS. BUT I APPRECIATE
YOUR- YOUR COMMENTS- POURTANT
NEXT WE'RE GONNA MOVE ON TO ADD
CAME MANAGE DIRECTOR OF THE JUST
MAXIMUM. COMPANIES THANK YOU.
MEMBERS OF. THE STATE THE
OPPORTUNITY MY NAME'S ADAM KANE-
WITH THE NEED TO SPEND WITH
MAXIM COMPANIES- WE ARE A LARGE
BUSINESS WE HAVE ABOUT SIXTY
THOUSAND BELIEVES IN CALIFORNIA.
RIGHT YOU DIFFERENT TYPES OF
COMPANIES. INCLUDING STAFFING
SUPPORT TECHNOLOGY SUPPORT.
MANUFACTURING DISTRIBUTION
SUPPORT HOME CARE SENIOR LIVING
DEALERSHIPS. OUT BRING MILLION
OTHER AGRICULTURAL PRODUCTS- SO
A VERY BROAD BASED EMPLOYEE BASE
ALLEN BOB PROUD TO HAVE THAT
LOOKED DESTINED CALIFORNIA. EVEN
FOR A LARGE BUSINESS US IN SEES
CREDIT WITH. AND THAT DON'T WORK
. IN THIS FIGHT TARGETING A LOT
OF THE TYPES OF EMPLOYEES THAT-
BELIEVE WORD TO BE. BECAUSE OF
IT. IT'S REALLY NOT. NOT
FEASIBLE TO PARTICIPATE. AND I
REALLY THINK IT COMES TO- WHAT
THE PURPOSE OF THE NEC. UP THE
NEC SPOKESPERSON BE HELPING.
UNDER OR BEFORE. FINANCIAL
PLEASE STATE CAN WORK ARE
DIFFICULT TO PEOPLE. OR IS IT
RELEASED TO BE HELD. US SUB
SPECIFIC IN. AND I THINK THE WAY
IT STRUCK AS WELL THE GOVERNOR
SPECIFIC GOALS ALTHOUGH I
UNDERSTAND THE STRESS BEHIND IT
IS REALLY OF THOUGHT. FOCUSED ON
HELPING SPECIFIC ENGLISH
INDUSTRIES AS TO REALLY ON ARE
WE LOOKING TO UNDER. THE TENSION
PLEASE. EXAM OF WHERE THIS
CREDIT SUBMERGED HELPING ONE
CERTAIN. SOME OF THE REQUIRE
LIKE THE GEOGRAPHIC. ALL WE CAN
BE FIRST. UNDERSTOOD WHAT TYPE
OF UNDER PERSON ATTENTION FOR A
SYSTEM IS TO HELP OPPOSED WOMEN
JOB. I THINK THE SIX INDUSTRY
ALL AS A PROBLEM A LOT OF-
ENTERING THE WORK FOR AT LOW LOW
. INTO THE FORCE MINISTER
INDUSTRIES OF THE NOSE IN. BOB
DEFINITION STUDENTS AFTER FROM
OF THE LOWER EAST WORK FOR. THEN
EVEN EVEN THIS CASE WHERE THE
SENATE INDUSTRIES ARGUMENT IF
THERE'S BILLS. WHICH I EIGHT THE
DESIRED SMALL BUT IF WE'RE
FOCUSED ON THE CAN. AND
POTENTIAL. PERHAPS THE IT'S BEST
FOR THAT PARTICULAR AND A LARGER
THAT HAS LOTS OF THE OPTIONS A
CAREER LADDERS SO I REALLY THINK
IT FROM. IDENTITY ALSO
PERSPECTIVE WE HAVE TO THROUGH
HOW WE FOCUSED ON THE EMPTY. AND
ESSENTIAL EMPLOYEE ALWAYS FOR
SIR ARE WE ON THE ACT INDUSTRY.
ALL WE KNOW THE WORK WHICH IS
RATE ARE HIS IS VERY HIGH- SOME
. COMMUNITIES SO FOR EXAMPLE IF
YOU'RE A SAY. WE KNOW THAT YOUR
EIGHT LESS MONTH AND BE THE WORK
. IF YOU'RE SAYS NOW NOT FOR ONE
PER LESS THAN TO BE IN THE WORK
FORCE AND THAT'S REALLY WHAT IT
DOES POPULATE OF WHAT. WE REALLY
SEE AS THE- ALL OTHER.
THESE ARE EXCLUDED FROM A POLICY
PERSPECTIVE I'M NOT SURE THAT
WOULD BE IN THE TENT WE HAVE
TECHNOLOGY PROGRAMS TO THE
SENATORS EARLIER POINT THAT
FOCUS ON TECH JOBS FOR
UNDERSERVED COMMUNITIES ALL
WOMEN AND MINORITIES- THAT.
IDENTIFY NONTRADITIONAL PLEASE
NOTE UP THE REST. NEAR
BACKGROUND. IT'S TRAINING IN
PLACE AND THEN CREATED FOR YOUR
PASSWORD AT LEAST THAT WOULD BE
AT SOME OF THESE. WE HAVE-
EFFORTS THAT WORK WITH THE
UNEMPLOYED AGENTS APART LONG
TERM UNEMPLOYED AND GET THE
STILL IT DIDN'T WORK FOR SOME
MEANT WE HAD EVEN EMPLOYEES THAT
ARE IN. WORKING WITH A COMPANY
AND A TEMPORARY BASE WITH THE
GOAL OF AND PROCESS TO BECOME
FOR AT GET TRAIN AND BACK HOME
TO THE WAR FORCE. BUT WE HAVE
HOW WORKERS THAT A BIGGER BIG IS
FOR VERY GOOD POINT SPECIAL FOR
WOMEN IS TO CARE AND- REALLY
WORK FULL TIME BUT TO BE
ENTERING THE WORK FOR IN A-
TIME. AND GETTING SOME UP TO
WORK TO GET THIS TO HAVE TIME OF
. WILL ALSO BE SEATED AGAIN. ON
BUT FOR SOME OF THIS COMPLY.
CRITERIA AS UP AS MENTIONED IN A
WEEK TO THANK CHAIR FOR HER-
IDEAS ON THE WORKFORCE
OPPORTUNITY. WHICH IS A FEDERAL
THAT TAILORED NARAL G. TYPE OF
EMPLOYEE. THAT WE WORK DISCUSS.
IN THEIR IN HOUSE. THERE WERE
OVER TWO HUNDRED THOUSAND WORDS
WORKFORCE OPPORTUNITY CREDIT
SERVICE. DONE BY THE CAL.
DEPARTMENT THAT IS FORWARD STYLE
WRESTLING THAT THERE ARE TWO.
BUSINESSES IN. UNDER PLEASE
PURCHASE THIS TYPE OF ROOM. IT'S
JUST THEY'RE NOT REALLY PRETTY
IN C. D. THE COMPLEXITIES. THANK
YOU VERY MUCH IN ARE HAPPY TO
ANSWER QUESTIONS. THANK YOU FOR
THANK YOU VERY MUCH I WAS A GOOD
RESEARCH OF A NUMBER OF ISSUES-
AIR FROM REASON IN THE ORIGINAL
. BILL X. AND- HEY CREATE CREATE
HARD. FOUR EIGHT. IN THIS THAT
THAT- TRUE HIGHER- NEW EMPLOYEES
AT AT THE AT THE ENTRY AND
THAT'S THINK WHAT WE WANT TO DO
IS AS ES US DAHLE SAID VERY- TO
BRING IN. EMPLOYEES THAT. NO
TREE OR NO BACK IN THE END AND
HIM TO WORK- PART TIME AND IN
SOME AT ENTRY POSITIONS ARE ARE
REALLY IMPORTANT TO DO THAT SO
THANK YOU FOR THAT- WE'RE GONNA
MOVE ON NOW TO TERRY BRENNAN
FROM SEIU CALIFORNIA. WELCOME
GOOD AFTERNOON MADAM CHAIR
MEMBERS TERRY BRENNAN WITH- AS
HERE YOU CALIFORNIA REPRESENTING
OVER SEVEN HUNDRED THOUSAND HARD
WORKING MEN AND WOMEN IN
CALIFORNIA- I GUESS I WANT TO
START WITH JUST. ACKNOWLEDGING
THAT- ONE OF THE FIRST QUESTIONS
IN YOUR ANALYSIS PIECE HERE IS.
OUR TAX CREDITS AND- WAY OF
PROVIDING INCENTIVES TO DO
BUSINESS AND ARE EXPERIENCING
CALIFORNIA. IS A DEFINITE NO IN
THAT IT'S SLOPPY. IT'S
COMPLICATED IT REQUIRES A LOT OF
OVERSIGHT AND BUREAUCRACY TO
ADMINISTER- WE FAR PREFER IN THE
KOBE IS APPROACH WHERE WE'RE
LOOKING AT. HOW DO WE
INCENTIVIZE BUSINESSES TO STAY
IN CALIFORNIA TO COME TO
CALIFORNIA ON A COMPETITIVE
PROCESS. RATHER THAN TRYING TO
SHOT GUN A TAX CREDIT- ACROSS
THE WIDE SWATH OF. BUSINESSES.
IN CALIFORNIA HAVING SAID THAT.
YOU KNOW I DON'T KNOW IF THIS
PENDULUM HAS SWUNG FROM THE-
SLOPPINESS OF THE ENTERPRISE
ZONE TOO TIGHTLY TO. THE
RESTRICTIONS ON THAT THIS
PROPOSAL THERE ARE THINGS YOU
CAN CONSIDER TO TIGHTEN IT UP
BUT THE ONE THING TO REMEMBER
ABOUT PEOPLE- I SHOULD TAKE
BUSINESS IS GETTING INVOLVED IN
THIS- REDDIT IS. THIS IS THE
HARDEST TO SERVE POPULATION OF
EMPLOYEES IN THE STATE. THE LIST
OF DISADVANTAGES HERE- COULD
LIKELY POINT TO SOME OF THE
HARDEST WHEN PLOY PEOPLE IN THE
ENTIRE STATE. SO IF I WOULD
EXPECT THAT THE TAKE UP NUMBERS
ARE LOWER THAN ANY OTHER TAX
CREDIT WE'VE TALKED ABOUT THIS
COMMITTEE AND OTHERS. IT'D
DIFFICULT PLACE TO START. HAVING
SAID THAT ARE THE INCENTIVES
STRUCTURED IN HERE CORRECT THE
RIGHT BALANCE TO SENATOR DOLLIES
POINT ABOUT TAKING RISK. PERHAPS
WE SHOULD INCREASE THE
PERCENTAGE ON LOW. THE LOWER END
OF THE SPECTRUM RATHER THAN
LOWERING THE BASE AMOUNT TO
SOMETHING CLOSE TO MINIMUM WAGE
WHERE YOU'RE ONLY REQUIRED TO DO
THAT WHY WOULD BE INCENTIVIZE
PEOPLE OF DOING WHAT IS EXISTING
LAW. BY INCENTIVIZING SOMEONE TO
PAY TWENTY THREE DOLLARS AN HOUR
AND REDUCING THE COST OF THAT
THE EMPLOYER CLOSER TO MINIMUM
WAGE MAY MAKE SOME SENSE IT'S
GOING TO INCREASE ACROSS THE
PROGRAM. BUT MAY INCREASE THE
ABILITY- FOR EMPLOYERS TO
PARTICIPATE. THE BUREAUCRACY
INVOLVED IN THIS IT'S ABOUT THIS
COMPLICATION US I CAN IMAGINE
BUT I THINK THAT'S ALL THE
REACTION TO PRIOR ATTEMPTS TO
DEAL WITH THIS ON A BROAD BASIS-
THERE ARE SOME TINKERING HERE
SUGGESTED BY THE L. A. O. THAT I
THINK. YOU GUYS SHOULD
SCRUTINIZE AND LOOK AT- BUT JUST
REMEMBER THIS IS A TOUGH
POPULATION. AND IN ORDER TO
INCENTIVIZE THE RISK YOU MAY
HAVE TO CHANGE THE WAY THE
SENATE OF THE STRUCTURED AND I
WOULD ASK THAT YOU NOT CONSIDER
LOWERING THE STARTING POINT BUT
PERHAPS RAISING THE PERCENTAGE
SO IT'S LESS OF A RISK. AND MORE
OF AN INCENTIVE FOR. PEOPLE TO
PARTICIPATE BUT- IT IS CLEARLY
FROM THE COMMENTS HERE RIFE WITH
PROBLEMS THAT WE NEED TO ADDRESS
GOING FORWARD- AND- PUT THAT
I'LL JUST. LEAVE IT FOR ANY
QUESTIONS YOU MAY HAVE THANK YOU
. VERY GOOD THANK YOU VERY MUCH
I APPRECIATE YOUR YOUR COMMENTS
AND- AND YOU'RE YOU'RE RIGHT
IT'S THE CUMBERSOME PROCESS THAT
TO SAY THE LEAST- AND FINALLY
CHRIS MCKINLEY. WELCOME THANK
YOU MADAM CHAIR MEMBERS- I HAVE
THE- I WAS GONNA SAY PRIVILEGE
BUT I GUESS REALLY OPPORTUNITY
SINCE IT WASN'T A PRIVILEGE TO.
WORK ON ASSEMBLY BILL NINETY
THREE A BUDGET TRAILER BILL IN
TWENTY THIRTEEN HI LONG
REPRESENTED- THE BOTH LOCAL
JURISDICTIONS AND BUSINESSES
CLAIMING THE ENTERPRISE ZONE.
PROGRAM BENEFITS FOR YEARS
GOVERNOR BROWN HAD TARGETED IT
AND RDAS FOR ELIMINATION AND HE
WAS SUCCESSFUL IN THE- FIRST
YEAR OF ELIMINATING THE PARTY A
PROGRAM IN THE SECOND YEAR NOT
UNSUCCESSFUL WITH THE EASY
PROGRAM BUT IN THE SAID SECOND
YEAR. DECIDED LET'S MAKE IT
REVENUE NEUTRAL THIS WAS PRETTY
PROP TWENTY SIX WHEN A REVENUE
NEUTRAL TAX PACKAGE WOULD BE
SUBJECT TO ONLY A MAJORITY VOTE.
OF THAT OBVIOUSLY CHANGE WITH
PROP TWENTY SIX IS ADOPTION SO
THE IDEA WAS LET'S ELIMINATE THE
ENTERPRISE ZONE PROGRAM. THAT
HAD FIVE DIFFERENT INCENTIVES
THE MAIN ONE THAT'S BEEN
REFERENCES THE HIRING CREDIT
UNDOUBTEDLY. THE MOST LUCRATIVE
OF THOSE FIVE. AND THE WHOLE.
WAS WORTH THE BETWEEN EIGHT
HUNDRED MILLION IN A BILLION
DOLLARS A YEAR GIVE OR TAKE. SO
WHAT THEY DID WAS IS TO
ELIMINATE THAT PROGRAM IN TOTO
OF COURSE IT HAD SOME CARRYOVER
PROVISIONS FOR SOME OF THE
CREDIT. BUT REALLY REPLACE IT
WITH A PARTIAL SALES TAX
EXEMPTION FOR MANUFACTURING AND
R&D EQUIPMENT WORSE BETWEEN FIVE
AND SIX HUNDRED MILLION DOLLARS.
AND THE CAL COMPETES PROGRAM
WHICH ORIGINALLY HAD BEEN CAPPED
AT A HUNDRED MILLION DOLLAR
APPROPRIATION EACH YEAR. AND THE
REMAINING WAS FOR THE NEW
EMPLOYMENT CREDIT THE NEC AND I
GIVE YOU THAT BACKGROUND
BECAUSE- IF YOU LOOK FOR EXAMPLE
AT THE ORIGINAL ANALYSIS OF AB
NINETY THREE. YOU CAN SEE WHAT
THE- BENEFITS WERE OF THE-
PROPOSED NEC. STARTING THIRTY
FOUR MILLION DOLLARS SEVENTY A
HUNDRED AND TEN. ACCORDING TO
THE FRANCHISE TAX BOARD REPORT
OF TWO YEARS AGO. IN TWENTY
NINETEEN TAX YEAR IT SHOULD HAVE
BEEN WORTH. TWO HUNDRED AND
SIXTY NINE MILLION AND CREDITS
AND TWO HUNDRED AND NINETY
MILLION IN THE TWENTY TWENTY TAX
YEAR. TODAY WOULD BE WORTH OVER
THREE HUNDRED MILLION DOLLARS IS
WHAT THE ESTIMATE WAS. AND AS
YOU'VE ALL HEARD TODAY. THE
CLAIMS ARE ROUGHLY THREE TO FIVE
MILLION DOLLARS A YEAR. SIXTY
SEVEN BUSINESSES GIVE OR TAKE
CLAIMING IT. YOU KNOW A THOUSAND
EMPLOYEES MAYBE- I HATE TO USE
THE PHRASE I TOLD YOU SO AND
ESPECIALLY SINCE TWO THIRDS OF
THE LEGISLATURE TODAY WAS NOT
HERE IN TWENTY THIRTEEN SO THERE
ARE MANY PEOPLE TO SAY THAT TOO.
BUT NONE THE LESS I THINK THE
BUSINESS COMMUNITY AND LOCAL
JURISDICTIONS WHO WOULD FIGHT
FOR- THE PROTECTION OF THE
ENTERPRISE ZONE PROGRAM SAID
THIS IS NEVER GOING TO WORK.
WHAT HAPPENED WAS IS YOU TOOK
ALL OF THESE DIFFERENT
PROVISIONS THE PRIOR SPEAKERS
HAVE SPOKEN TO YOU ABOUT.
GEOGRAPHIC LIMITATION- 150% OF
MINIMUM WAGE ELIGIBILITY
CRITERIA THE RESERVATION SYSTEM
ONE ON TOP OF THE OTHER TO
PRETTY SOON YOU GET A VERY SMALL
GROUP OF PEOPLE WHO CAN ACTUALLY
QUALIFY. AND THAT WAS THE CLAIM
THAT WE MADE IN TWENTY THIRTEEN
THIS IS NOT REVENUE NEUTRAL THIS
IS NOT WORTH THREE HUNDRED
MILLION DOLLARS. AND WE GOT ONE
THING IN AB NINETY THREE I WOULD
SAY AND THAT WAS AN ANNUAL
REQUIREMENT FOR F. T. BEAT A
REPORT TO THE LEGISLATURE ON
ACTUAL UTILIZATION AND
RECOMMENDATIONS FOR GOING
FORWARD. UP UNTIL THIS PAST
YEAR- THEY USUALLY HAD EIGHT TO
TEN DIFFERENT PROPOSALS.
ATTACHED AND UNFORTUNATELY I
KNOW- THE CASHIER I THINK A
COLLEAGUE OF YOURS IN THE
ASSEMBLY HAD SOME BILLS IN THE
LAST TWO OR THREE YEARS. TO MAKE
SOME MODIFICATIONS TO THE
PROGRAM UNFORTUNATELY THOSE
HAVEN'T BEEN PURSUED. SO I GIVE
YOU THIS CONTEXT AT THIS POINT
THIS PROGRAM SHOULD HAVE CREATED
ROUGHLY A BILLION DOLLARS WORTH
OF TAX CREDITS. FOR BUSINESSES
IN THE STATE OF CALIFORNIA AND
WHAT IS IT ABOUT THREE TO FIVE
MILLION A YEAR SO MAYBE FIFTY
MILLION DOLLARS AT BEST. DON'T
FORGET THAT THE ELIMINATION OF
THE PRIOR PROGRAM IS PERMANENT.
THE NEC IS ONLY AVAILABLE
THROUGH THE END OF TWENTY TWENTY
FIVE AND THEN IT GOES AWAY
WITHOUT THE LEGISLATURE-
EXTENDING IT SO. WHAT DO WE DO
ABOUT IT BY THE WAY THAT SIXTY
SEVEN BUSINESSES ACCORDING TO ET
DE THERE'S ROUGHLY ONE POINT
EIGHT MILLION BUSINESSES IN THE
STATE OF CALIFORNIA GIVE OR
TAKE- YOU KNOW RESPECTFULLY- THE
NEC IS. BEING OPEN NOTHING WORTH
WHAT IT WAS EVER. PUT OUT TO BE.
A COUPLE POINTS MOST RECENTLY OF
COURSE FOR ALL BUSINESSES
REGARDLESS OF SIZE DUE TO THE
CPI- ISSUE THAT WAS ADDRESSED BY
THE US LAST SUMMER. ALL
EMPLOYERS FIFTEEN FIFTY AN HOUR
150% THAT'S TWENTY TWO FIFTY AN
HOUR. HERE'S AN IMPORTANT POINT.
YOU ONLY GET THE AMOUNT ABOVE
THAT WAGE. SO IF YOU PAY TWENTY
TO FIFTY YOUR CREDIT IS ZERO. IF
YOU PAY TWENTY FIVE DOLLARS AN
HOUR YOUR CREDIT IS ON TWO
DOLLARS AND FIFTY CENTS PER HOUR
. SO IT'S NOT THE FULL WAGE THAT
YOU PAY TO AN INDIVIDUAL. IT IS
ONLY THE AMOUNT ABOVE THE
HUNDRED AND FIFTY THRESHOLD. I'M
NOT SUGGESTING WE TO TINKER WITH
THE MINIMUM WAGE ITSELF. BUT
KEEP THAT IN MIND SO IF YOU WANT
TO INCENTIVIZE PAYING TWENTY
THREE OR TWENTY FIVE DOLLARS AN
HOUR- YOU'VE GOT TO DO MORE THAN
ONLY THE INCREMENTAL AMOUNT
ABOVE THE TWENTY TWO FIFTY. THE
HIGH WAGE AND CANDIDLY I THINK
AS- A SENATOR DALY POINTED OUT
EARLY IS MAYBE NOT LIKELY TO BE
PAID TO ALL THE INDIVIDUALS WHO
MEET SOME OF THOSE
QUALIFICATIONS. YOU'VE HEARD THE
ELIGIBILITY CRITERIA IS TOO
NARROW I MIGHT THROW OUT SOME
OTHER THINGS FOR EXAMPLE THOSE
LACKING A COLLEGE DEGREE-
BUSINESSES IT WAS INTENDED TO.
THAT RETAILERS AND RESTAURANTS
AND OTHERS NOT QUALIFY FOR THE
NEC UNFORTUNATELY. HE CLAIMED A
LOT OF ENTERPRISE ZONE CREDITS
MANY OF THEM ARE LOCATED IN
ECONOMICALLY DISTRESSED AREAS OF
THE STATE. MANY OF THEM HIGHER
HARD TO HIRE INDIVIDUALS THEY
WERE SPECIFICALLY EXCLUDED THEY
SHOULD BE PUT BACK AND IN LIGHT
OF THE PANDEMIC. WITH THE BEEN
ABSOLUTELY DECIMATED
PARTICULARLY THE RESTAURANT-
INDUSTRY AS WELL THEY SHOULD
CLEARLY BE ELIGIBLE FOR THE
CREDIT- I THINK IT WAS WE ARGUED
IT WAS SHORT SIGHTED A DECADE
AGO IT SEEMS PRETTY LUDICROUS
TODAY. THE NET JOB INCREASE
ESPECIALLY DURING THE PANDEMIC.
WE OUGHT TO RE LOOK AT THAT I
UNDERSTAND. WE WANT FOLKS TO ADD
JOBS BUT EVEN IF YOU LOST TEN
AND HIRED NEW RIGHT NEW
EMPLOYMENT CREDIT IF YOU HIRE
TEN STILL EVEN YOU GET ZERO.
COULD YOU DID HAVE A NET
INCREASE IN EMPLOYMENT. AT LEAST
WAVE IT DURING THE BAD ECONOMIC
TIMES. AND THIS LEGISLATURES
OFTEN TALKED ABOUT AFFORDABLE
HOUSING HOMELESSNESS AND OTHER
ISSUES WHY DON'T WE TARGET THOSE
FOLKS FOR EXAMPLE CONSTRUCTION
JOBS IN PARTICULAR. MAYBE FOLKS
WHO ARE WORKING ON AFFORDABLE
HOUSING PROJECTS. THE FULL TIME
EMPLOYMENT REQUIREMENTS I THINK
SOMEBODY MENTIONED EARLIER ABOUT
PART TIME INDIVIDUALS COMING
BACK INTO THE WORK FORCE. OR
PARENTS WHO NEED CHILD CARE AND
CAN'T DO FORTY HOURS A WEEK WHAT
ABOUT THE ACA DEFINITION OF
THIRTY HOURS PER WEEK FOR
EXAMPLE. SO YOU KNOW EVEN THOUGH
THE BILL THE EMPLOYER COMMUNITY
HAS LOST I WOULD ARGUE MORE THAN
NINE HUNDRED MILLION DOLLARS
THAT WAS PROMISED TO THEM A
DECADE AGO. NO ONE'S ASKING TO
MAKE ALL THAT BACK UP. BUT EVEN
IF YOU THE LEGISLATURE MAKE SOME
ADDITIONAL CHANGES FOR THE NEXT
TWO AND A HALF YEARS THAT THE
NEC CURRENTLY IS IN STATUTE. SO
WHAT IF ACOSTA ANOTHER FIFTY OR
A HUNDRED MILLION DOLLARS. ON
PAPER IT SHOULD BE COSTING THE
STATE THREE HUNDRED MILLION. AND
IT'S ONLY COSTING THREE TO FIVE
MILLION DOLLARS. THANK YOU.
THANK YOU VERY MUCH I APPRECIATE
THOSE SUGGESTIONS COMMENTS
QUESTIONS. CENTER PLACER. THANK
YOU THANK YOU TO THE PANEL THOSE
ARE EXCELLENT SUGGESTIONS AT THE
END AND I'LL JUST- VOICE MY
SUPPORT FOR MANY OF THE THINGS
THAT YOU SAID I MEAN. THE HAVING
TO HAVE A RISING NUMBER OF
EMPLOYEES THE IDEA OF WAVING IT
DURING LOW ECONOMIC TIMES.
PEOPLE WORKING ON AFFORDABLE
HOUSING PROJECTS OR WHO HAVE
BEEN HOMELESS- PART TIME WORK I
MEAN ALL THESE ARE GREAT
SUGGESTIONS AND HOPEFULLY WE
HAVE REALLY GOOD STAFF IS TAKING
NOTES ON THE- BECAUSE- THAT WE
NEED TO DO. YES SO I JUST WANTED
TO SUPPORT THAT I MEAN IT'S
CLEARLY NOT WORKING AND YOU
REALLY HIGHLIGHTED SOME OF THESE
THINGS THAT SIXTY EIGHT
EMPLOYEES THAT DIFFERENCE
BETWEEN TWENTY THREE TWENTY TWO
FIFTY AND TWO DOLLARS I MEAN.
THESE ARE OBVIOUSLY HUGE
STRUCTURAL PROBLEMS IF WE WANT
THIS TO BE SUCCESSFUL AND WE
NEED TO SUPPORT OUR BUSINESS
COMMUNITY AND TO M. EMPLOY MORE
PEOPLE WHO ARE HARD TO EMPLOYEES
SO HAVING BOTH OF THOSE. BE BIG
POLICY GOALS I MEAN THE THESE
ARE GREAT SUGGESTIONS SO JUST
WANTED TO VOICE SUPPORT FOR THAT
. SENATOR DOLLY. ONE OF YOU FOR
CONFIRMING SOME OF THE-
CHALLENGES WE FACE IN THE-
ACTUALLY OPERATE BUSINESSES BUT
I WANTED. I WANT TO ADD
SOMETHING TO- MAYBE FOR THE
LEGISLATURE YOU KNOW THE- THE
CHAIRMAN TALKED ABOUT. YOU KNOW
POLICIES AND WHAT HAPPENED I WAS
HERE TWO THOUSAND THIRTEEN. WE
LOST ENTERPRISE ZONES WE LOST
RTA WE LOST A LOT. OF THINGS
THAT ACTUALLY PRODUCED. BETTER
COMMUNITIES BLIGHTED AREAS GOT
CHANGE AND THAT'S THE PAST.
RIGHT BUT WE ARE HERE TODAY. AND
WE DO HAVE THE ABILITY AS
LEGISLATORS TO AUTHOR
LEGISLATION AND ACTUALLY. MAKE A
DIFFERENCE FOR CALIFORNIA
CALIFORNIA'S BLEEDING JOBS TO
OTHER STATES AND THAT'S EXACTLY
WHY THE GOVERNOR. PUT THIS
PROPOSAL TOGETHER TO ATTRACT NOT
ONLY THE FEDERAL DOLLARS.
PROTRACTED JOBS. AND BUT TO THE
FACT THAT WE- ARE LOOKING AT
THOSE HARD EMPLOYEE PEOPLE THESE
ARE THESE ARE DIFFICULT TO
EMPLOY PEOPLE I WILL GO I WILL
GRANT YOU THAT SAYS SOMEBODY
WAS. TRYING TO DO THAT. SO WE
NEED TO NARROW IT DOWN. AND I
BACK TO THE POINT OF THE
GOVERNOR'S BE ABLE TO NOT HAVE.
IT IN GEOGRAPHIC AREAS WHERE WE
HAVE DISADVANTAGED PEOPLE IS. TO
BE ABSURD I THINK WE NEED TO
PLACE THIS IN A PLACE WHERE WE
ACTUALLY ARE TRYING TO GET THOSE
JOBS AND EMPLOY THOSE PEOPLE SO
THAT'S NUMBER ONE NUMBER TWO- HE
WE NEED TO TAKE INTO ACCOUNT
THAT. FOR EVERY JOB THAT WE
PRODUCED FOR ONE OF THOSE HARD
EMPLOYEE PEOPLE'S. IS SOMEBODY
WHO IS IN THE GAP THEN HAS THE
ABILITY TO. GET OFFICE SOME THE
SUBSISTENCE SO THERE'S A HUGE
AMOUNT OF COST THAT WE PAY. AS
TAXPAYERS. IN TO. ALLOW THE- TO
KEEP THEM EGGS. IN WHERE THEY'RE
AT. SO IF YOU CAN GET THEM A JOB
A PART TIME JOB IF YOU CAN HELP
THEM WITH. WITH CHILD CARE THOSE
ARE ALL THINGS THAT RELIEVE YOU
TO TAX BURDEN THAT WE PAY FOR
THOSE WHO ARE DISADVANTAGED SO
THERE IS A TRADE OFF. THAT WE
NEVER TALK ABOUT HERE WHEN THE
L. A- COMES IN OR- THE ICON THE
BEAN COUNTERS THE ONLY COUNT ONE
SIDE OF THE BEANS THE BEANS THAT
COME IN. THEY NEVER TALK ABOUT
THE- DIVERTED BEINGS THAT ARE
GOING OUT THE BACK DOOR. AND SO
WE NEED TO HAVE A HOLISTIC TALK
ABOUT THAT WE NEED TO GET TO.
EMPLOYERS AT THE TABLE AND SAY
WHAT WILL WORK FOR YOU TO EMPLOY
THOSE HARD TO EMPLOY PEOPLE.
PEOPLE WHO HAVE BEEN. WE WE'VE
HAD YOU KNOW HUNDREDS OF
THOUSANDS OF PEOPLE- OUR AND OUR
OUR PRISON SYSTEM AND THEY'RE
OUT THERE AND THERE ARE HARD
EMPLOYEE. THEY HAVEN'T BEEN IN
THE WORKFORCE. ALLEN MENTALLY
TRAINED FOR THE WORK FORCE THEY
DON'T KNOW HOW IT WORKS. BUT
EMPLOYERS WILL TAKE THOSE RISK
BECAUSE IT'S THE RISK THAT IS
REALLY WHAT WE NEED TO TALK
ABOUT. THEY WILL TAKE THAT RISK
IF WE GIVE THEM THE ABILITY TO
OFFSET THAT RISK SOME. AND WHEN
WE DO THAT. WE WILL ACTUALLY.
REACH WE WILL ACTUALLY. SAVE
MONEY ON THE ON THE SOCIAL
SERVICES SIDE OF THE EQUATION
AND THAT'S WHERE I THINK THE
LEGISLATURE NEED TO REALLY DIG
IN. AND WHETHER THIS PROGRAM IS
OBVIOUSLY DOESN'T MATTER WHAT
GOES FOR NOT NOBODY'S USING IT.
STOPPED WORKING. WHAT WE NEED TO
LOOK AT A PROGRAM THAT WILL
PEOPLE WILL USE. AND WE WILL
HELP THOSE DISADVANTAGED FOLKS.
GET INTO THE WORK FORCE AND
CHANGE THEIR LIVES. I AGREE. ANY
OTHER COMMENTS FROM A COMMITTEE
MEMBERS IF NOT- I APPRECIATE THE
TESTIMONY AND THE SPECIFICITY OF
THE TESTIMONY- THE REASON FOR
THE HEARING IS TO TRY TO FIGURE
OUT WHAT WE WOULD DO WE WANT TO
DO WITH THIS TAX CREDIT MOVING
FORWARD. AND AND I LIKE SOME OF
THE SUGGESTIONS AS WELL AS-
CENTER BREAKS PAYER SAID- THE
ABILITY. TO ACTUALLY MAKE IT
WORK. IN DISTRESSED COMMUNITIES
IF YOU HAVE A LOT OF PEOPLE THAT
ARE UNEMPLOYED THEN YOU'RE
YOU'RE COMMUNITIES TO STRESS I
JUST THE WAY IT IS AND- TO BE
ABLE TO. HAVE IT WORK WOULD BE
TREMENDOUSLY. IMPORTANT TO ME-
WHICH IS WHY WE HAD THIS THIS
HEARING. HERE TODAY- I DON'T
HAVE ANY QUESTIONS FOR YOU I
JUST APPRECIATE AND TOOK NOTES
ON ON- ON WHAT YOU HAD TO SAY
AND I THINK WE'RE GONNA BE
LOOKING AT THIS- IN THE FUTURE
AS AS WE MOVE THROUGH THE BUDGET
THE GOVERNOR'S GOT A PROPOSAL.
WE MAY HAVE- A SOMETHING TO ADD
TO THAT AS WELL BUT WE NEED TO
MOVE ON TO PUBLIC COMMENT RIGHT
NOW SO MANY THANK YOU VERY MUCH
FOR YOUR TESTIMONY HERE TODAY-
AND I WANT TO INVITE MEMBERS OF
THE PUBLIC THAT WOULD LIKE TO
MAKE A- COMMENT ON THIS- TO
PLEASE. COME FORWARD HERE IN THE
ROOM- AND I ALSO IF THERE ARE
ANY INDIVIDUALS IT ON THE
TELECONFERENCING THAT WOULD LIKE
TO BE ABLE TO MAKE PUBLIC
COMMENT. THE TOLL FREE NUMBER IS
. EIGHT SEVEN SEVEN TWO TWO SIX
EIGHT ONE SIX THREE. AND WHEN
YOU'RE PROMPTED PLEASE USE THE
ACCESS CODE. FOUR THREE NINE
EIGHT THREE ONE EIGHT. SO WILL
WILL CHECK AND SEE IF THERE'S
ANYBODY IN ROOM TWELVE HUNDRED
THAT WOULD LIKE TO MAKE A PUBLIC
COMING HERE. SEEING NO MOVEMENT
WILL MOVE ON TO THE
TELECONFERENCE LINE AND-
MODERATOR IF YOU COULD CHECK THE
LINE TO SEE IF WE HAVE ANYONE
WHO WOULD LIKE TO MAKE PUBLIC
COMMENT. THANK YOU IF YOU WOULD
LIKE TO TESTIFY AND THIRTIES.
BOB HERTZBERG PLEASE PRESS ONE
FOLLOWED BY ZERO ONE VOEPEL ZERO
FOR PUBLIC COMMENT. MADAM CHAIR
NOBODY IS QUEUING UP AT THIS
TIME. THANK YOU. MR MODERATOR
APPRECIATED VERY MUCH- IF THERE
ARE NO MORE COMMENTS OF THAT
COMMITTEE MEMBERS- WE ARE
CONCLUDED WHERE WE HAVE
CONCLUDED OUR HEARING FOR TODAY
AND I WANT TO THANK EVERYBODY
THAT THAT PARTICIPATED TO PUT.
THAT THANK YOU VERY MUCH FOR
BEING HERE IN PERSON WE REALLY
APPRECIATE IT. FOR THOSE WHO
TEST WHO TESTIFIED VIA THE
TELECONFERENCING THANK YOU VERY
MUCH FOR YOUR TESTIMONY- THE
VERY INSTRUCTIVE AND WE HAVE A
LOT OF WORK TO DO NOW SO. THANK
YOU VERY MUCH. THAT CONCLUDES
OUR- AGENDA. FOR TODAY FOR THE
SENATE GOVERNANCE AND FINANCE
COMMITTEE WE STAND ADJOURNED.
THANK YOU.