Bill Seeks to Give Cities Access to State Tax Rolls

Does Los Angeles have the right to look through California’s business tax rolls in search of local companies who aren’t filing city tax returns or paying local business license fees?

The city thinks so and has sponsored a bill, scheduled for vote Monday by the Assembly Appropriations Committee, that would allow it and other charter cities access under a pilot program.

AB 701, by Los Angeles Democrat Louis Caldera, has its origins in an experimental collaboration between city and state tax collectors in 1994, which turned up 66,000 Los Angeles firms--many of them home-based businesses--on state business rolls but missing from the city’s list. City officials estimated the tax loss at $66 million annually and, in 1995, worked with the state to create an amnesty program to collect outstanding local business license fees and other taxes.

Unsatisfied with the results, Los Angeles officials are backing AB 701, which would permit the state to regularly share tax information with Los Angeles and about 90 other large and medium-sized cities. Sharing tax information is allowed among some state agencies and the Legislature, but only under limited circumstances spelled out in state law.

The bill drew fierce opposition initially from some state officials and the formidable California Taxpayers’ Assn., a business advocate that feared local officials could misuse the information for political gain or to check out the returns of business competitors.

That opposition ended after the bill was amended to require the state to share only enough information with city officials to allow them to track down companies not paying local taxes. Entire tax returns would not be provided.

Donald DeBord, chief of Los Angeles’ tax and permit division, said the missing businesses include professional services such as gardening services and chiropractors as well as some retail outlets and attorneys and surgeons with their own practices.

HOT BILLS

* Pesticide Tax

Bottom line: Chemical companies and agricultural interests want to cut the surcharge placed on the wholesale price of pesticides and chemicals that helps pay for regulation of their use. The tax is used to fund the state Department of Pesticide Regulation, which has a budget surplus of more than $10 million.

Chances: Positive; both sides are working together to reach a compromise.

Next Step: Monday hearing, Senate Appropriations Committee

Contact: SB 1160 author Jim Costa (D-Fresno) can be reached at (916) 445-4641.

* Pornography Tax

Bottom line: Sen. Charles Calderon (D-Whittier) thinks he has found a popular way to raise state money: Put a 5% sales and use tax on “adult entertainment products and services.”

Chances: The cable industry opposes the bill, saying it may have to boost rates to pay for the tax. Opponents also say it is impractical if it requires state Board of Equalization tax experts to sift through endless quantities of magazines, books, films and videos to decide what is sexually explicit enough to warrant the tax.

Next step: May 21 hearing, Senate Revenue and Taxation Committee

Contact: SB 1013 author Calderon can be reached at (916) 327-8315.

* Employment Incentive

Bottom line: Employers might be more willing to hire welfare recipients if companies received an annual tax credit of up to $2,500 for each welfare recipient hired.

Chances: State tax collectors strongly oppose the bill, arguing that it will lead to job displacement, not creation. The bill, though, could win approval from Republican lawmakers including Gov. Pete Wilson.

Next step: May 12 hearing, Assembly Revenue and Taxation Committee.

Contact: AB 1232 author Brett Granlund (R-Yucaipa) can be reached at (916) 445-7552.

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