Capitol Alert: John A. Pérez launches fight to alter tax formula for scholarships

Assembly Speaker John A. Pérez is drumming up public support for legislation touted as a billion-dollar relief plan for college students that is sure to be a Democratic centerpiece this year.

"This addresses the challenge of the middle class getting squeezed out," Pérez said today of his push to alter corporate tax law and divert money generated to students at colleges and universities.

While saving students money, Pérez's plan would raise taxes on out-of-state companies like Detroit automakers and cigarette-maker Altria by requiring that multistate companies calculate tax liability based on the portion of sales in California.

Pérez pitched his "middle-class scholarship" plan to The Bee's editorial board today, accompanied by three students who described the toll that soaring college fees are taking on their education, prospects and pocketbook.

The Assembly leader said his billion-dollar plan would cut fees by two-thirds for families earning under $150,000 per year - from $5,970 to $1,970 at California State Universities, and from $12,192 to $4,023 a the University of California.

Community colleges would receive $150 million statewide. Districts would decide how to spend it, in ways that could range from expanding the use of fee waivers to providing grants for buying books or other educational materials.

Pérez's package is designed to ease costs to students, primarily through scholarships, but it would not force colleges and universities to lower their fees or prevent them from increasing in the future.

To spread the word about his legislation statewide, Pérez and other members of his Assembly Democratic caucus have printed promotional fliers and are urging supporters to read more at middleclassscholarship.com.

Speaking to a large crowd of students and higher education supporters at a Capitol rally March 5, Pérez urged participants to sign petitions, send Twitter messages, and to recruit friends and families members for the fight.

Pérez, in his speech to demonstrators, pointed to Republicans as a potential stumbling block to his two-bill package, Assembly Bills 1500 and 1501.

Alteration of the tax formula would not impact all California businesses, but most GOP lawmakers philosophically oppose generating additional taxes from any segment of the corporate community.

Passage of the two-bill package requires a supermajority vote, thus at least two votes in the Assembly and Senate

"As you know, there are some folks in this building who think not only are corporations people, but that they're the only people worth fighting for," Pérez said at the time. "So we need to create a groundswell of support across the state."

The Assembly passed separate legislation last year to tighten the corporate tax formula targeted by Pérez. The measure, which did not divert funds to higher education, died in the Senate in the final days of the legislative year.

Pérez said that Gov. Jerry Brown has said he will sign the middle-class scholarship plan if it passes the Legislature.

The tax portion of Pérez's package would eliminate a component of the 2009 budget deal that allowed firms to pick the more generous of two formulas for calculating tax liability. They would have to use a formula known as "single sales factor," focusing on in-state sales.

Senate Republican leader Robert Huff contends that Democrats should enact Gov. Jerry Brown's pension overhaul and balance the state budget before tackling changes in tax policy.

Democrats helped drive up the cost of college fees by cutting state funds for higher education, so Pérez's plan is like "an arsonist that sets fires and then joins the volunteer fire department," Huff said of the two-bill package.

"It's always the middle class that gets squeezed as legislative Democrats continue to prioritize welfare programs and public employee salaries and pensions," Huff said.

Public hearings have not yet been held on AB 1500 and 1501.