Capitol Alert

The latest on California politics and government

January 3, 2013
Realtors, underwater homeowners now seek state tax relief

Congress gave a one-year reprieve to underwater homeowners this week by waiving taxes on forgiven mortgage debt as part of its "fiscal cliff" deal.

Now real estate agents and homeowners are looking for California to follow suit.

Under long-standing tax law, forgiven mortgage debt is considered taxable income by state and federal tax collectors. As the housing market collapsed in the last several years, waves of underwater homeowners would have paid taxes on the amounts forgiven through short sales, loan modifications and foreclosures. But federal and state lawmakers waived that law from 2007 to 2012.

While Congress this week extended that waiver another year, the California exemption lapsed at the end of 2012, so forgiven mortgage debt is considered state taxable income for the time being. But Sen. Ron Calderon, D-Montebello, has introduced Senate Bill 30 to waive that tax bill in California for all of 2013.

Calderon's chief of staff, Rocky Rushing, said the senator hopes his bill will be fast-tracked and passed on an urgency basis, which requires supermajority approval by both houses. Wasting no time, the California Association of Realtors has already asked this week to be the bill's sponsor, to which Calderon agreed.

"It's important for the financially stressed mortgage holders, for those losing their home to short sales," Rushing said. "It's beyond insult added to injury for them to look at a large tax bill."

January 3, 2013
'Fiscal cliff' deal eliminates estate tax revenue for California

Because Congress permanently killed an estate tax transfer to states this week, California stands to lose $45 million in inheritance tax revenue that Gov. Jerry Brown and lawmakers anticipated in their June budget, according to the Department of Finance.

As part of the "fiscal cliff" agreement, Congress permanently eliminated the state estate tax credit, a device once used to return a share of federal inheritance taxes to states. The nonpartisan Legislative Analyst's Office says that likely means California won't receive estate tax revenues again without a vote of the people.

In 1982, voters passed Proposition 6, which eliminated the state estate tax but allowed California to recoup a share of inheritance taxes paid to the federal government. For taxpayers, that ensured California estates would not have to pay more than the federal tax.

In 2001, Congress and President George W. Bush phased out the state estate tax credit entirely by 2005, eliminating the transfers the federal government gave to states like California. Some states imposed new estate taxes thereafter, but Proposition 6 prevented California lawmakers from doing so.

When the Bush-era tax rules were scheduled to expire after 2010, state fiscal officials said California stood to gain as much as $2.7 billion in estate tax transfers from the federal government. But Congress then extended the Bush tax rules for two years up to the fiscal cliff deadline this week -- and now have permanently blocked the state tax credit. Estates are only taxed federally above $5 million.

California officials this time were counting on only $45 million in 2012-13 based on their interpretation of the situation, but that money will not arrive.

Finance spokesman H.D. Palmer said his department typically has to use existing federal law as a basis for its projections. When compiling Brown's new January budget before the fiscal cliff deal, the department actually assumed another $290 million in estate tax money in 2013-14. But Finance used a separate accounting mechanism to erase the estate tax proceeds, knowing that the funds were unlikely to show up, Palmer said.

Updated with additional information from Finance and revised terminology.

January 3, 2013
Defeated Democratic assemblyman gets six-figure appointment

jl0910_Allen_Michael.jpg.JPGDefeated Democratic Assemblyman Michael Allen has landed a six-figure job on a state board, courtesy of his former leader in the state Legislature.

Assembly Speaker John A. Pérez announced today that he has appointed Allen to the state Unemployment Insurance Appeals Board. The job, a popular post-office appointment among former legislators, pays an annual salary of $128,109.

The state Democratic Party spent heavily to try to re-elect Allen, but the attorney and former labor negotiator lost to fellow Democrat Marc Levine in a newly drawn district.

The appointment was one of four announced by the speaker today. Pérez also named sitting Assemblywoman Bonnie Lowenthal, D-Long Beach, to the Mental Health Services Oversight and Accountability Commission and freshman Assemblyman Ken Cooley, D-Rancho Cordova, to the Seismic Safety Commission. Those jobs are unpaid.

RELATED POSTS:
Incumbents Michael Allen, Betsy Butler narrowly trail in nailbiters

PHOTO CREDIT: Then-Santa Rosa city council candidate Michael Allen. September 10, 2008. The Press Democrat / Jeff Kan Lee.

January 3, 2013
Assembly Speaker Pérez announces committee lineups

Assembly Speaker John A. Pérez released today the lower house's committee assignments for the 2013-2014 legislative session.

The full list is posted after the jump:

January 3, 2013
Nine former CA legislators join 113th Congress freshman class

The 82-member freshman class taking seats in the U.S. House of Representatives today includes nine former members of the California Legislature.

Former Sens. Doug LaMalfa, R-Richvale, Gloria Negrete McLeod, D-Chino, and Juan Vargas, D-San Diego, and former Assembly members Julia Brownley, D-Santa Monica, Paul Cook, R-Yucca Valley, Tony Cardenas, D-Los Angeles, Jared Huffman, D-San Rafael, Alan Lowenthal, D-Long Beach, and David Valadao, R-Hanford, won election to the House in the November election. All but Cardenas served in the 2011-2012 legislative session.

They join more than a dozen other California Legislature alumni already serving in the House, including former Assembly Speaker Karen Bass.

"Officially sworn in as a member of the 113th Congress moments ago," the Los Angeles Democrat tweeted. "Hoping this Congress is a more bipartisan and productive one."

Fourteen of California's 53 seats are filled by freshman members this year. The state's congressional delegation saw more turnover than usual because of retirements, redistricting and the new "top-two" election rules.

Read more: Congress ushers in new members, with old divide

January 3, 2013
California gains conditional approval of health care marketplace

The Obama administration gave California's subsidized health care marketplace conditional approval today as the state prepares to sign up subscribers in October.

The marketplace, dubbed Covered California, plans to serve hundreds of thousands of uninsured residents who are eligible in 2014 for federal subsidies to obtain health coverage. Starting next year, all Americans are required to obtain insurance or pay a penalty under the 2010 federal health care overhaul.

California has received $237 million in federal grants so far to build its marketplace, which pays for a new IT system that enrolls subscribers statewide, marketing efforts and staff to operate the program. Federal officials are watching California with particular interest, given that it is the most populous state and has unique language and cultural barriers among its uninsured population.

To date, the federal government has approved so-called "health exchanges" in 19 states and Washington, D.C.

January 3, 2013
Dan Walters Daily: California facts book is required reading

Dan has a "modest suggestion" for the reading lists of new legislators.

Have a question you'd like Dan to answer? Post it on our Facebook page.

See other Dan Walters Daily clips here.

January 3, 2013
AM Alert: Occupy Sacramento rallies behind homeless rights

VIDEO: Dan Walters says that the Legislative Analyst's Office's new book of facts about California should be required reading for the state's new legislators -- and maybe for people commenting online about political stories, too.

RALLY FOR HOMELESS: Occupy Sacramento and other advocates for the homeless and others are gathering today on the Capitol's north steps to support a legislative proposal to expand civil rights and anti-discrimination laws to include homeless and low-income people as well as those with mental illness or physical disability.

The all-day rally begins at 10:30 a.m. and will include a potluck to feed the homeless as well as music and speakers, according to the Occupy Sacramento website.

Assemblyman Tom Ammiano, D-San Francisco, introduced his Assembly Bill 5 early last month. Local laws governing urban camping, sleeping, loitering and the like often are attacks on homeless people, Ammiano aide Carlos Alcalá argues in this piece published last month in the San Francisco Bay View.

The measure, which is a long read, would establish several rights, including these and others:

• "The right to engage in life sustaining activities that must be carried out in public spaces because of homelessness, including, but not limited to, eating, congregating, possessing and storing personal property, urinating, or collecting and possessing goods for recycling, even if those goods contain alcoholic residue, without being subject to criminal or civil sanctions, harassment, or arrest by law enforcement, public or private security personnel, or BID (business improvement district) agents."

• "The right to 24 hours a day, seven days a week access to clean and safe public restrooms."

• "The right to make his or her own decisions regarding whether or not to enter into a public or private shelter or any other accommodation, including social services programs, for any reason he or she sees fit, without facing criminal or civil sanctions, harassment, or arrest from law enforcement, public or private security personnel, or BID agents."

JUST THE FACTS: What country has the ninth-largest economy in the world? According to the Legislative Analyst's Office, it's not a country at all. It's where California would fall in the global lineup if it were a country and not a state.

The LAO's latest Cal Facts 2013 booklet -- which Dan Walters believes is a must-read -- is chock-full of numbers, graphics and maps depicting the state's economy, the effect of ballot propositions on state and local fiscal health, school spending and other trends. A map on page 59, for instance, charts how Northern California and much of the Sierra are net exporters of water to the Bay Area, the Central Coast and Southern California.

You'll find the HTML version of Cal Facts 2013 at this link. If you prefer to read the PDF version, click here. Want to read more? Check out the LAO's main website for more publications.

NEW BEE CARTOONIST: Jack Ohman draws his first cartoon in today's edition as The Bee's new cartoonist. It's online at the opinion page. Learn more about Jack in this announcement.



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Capitol Alert Staff


Jeremy White Jeremy B. White covers California politics and edits Capitol Alert's mobile Insider Edition. jwhite@sacbee.com. Twitter: @capitolalert

Amy Chance Amy Chance is political editor for The Sacramento Bee. achance@sacbee.com. Twitter: @Amy_Chance

Dan Smith Dan Smith is Capitol bureau chief for The Sacramento Bee. smith@sacbee.com

Christopher Cadelago Christopher Cadelago covers California politics and health care. ccadelago@sacbee.com. Twitter: @ccadelago

Micaela Massimino Micaela Massimino edits Capitol Alert. mmassimino@sacbee.com

Laurel Rosenhall Laurel Rosenhall covers the Legislature, the lobbying community and higher education. lrosenhall@sacbee.com. Twitter: @LaurelRosenhall

David Siders David Siders covers the Brown administration. dsiders@sacbee.com. Twitter: @davidsiders

Dan Walters Dan Walters is a columnist for The Sacramento Bee. dwalters@sacbee.com. Twitter: @WaltersBee

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