Central Valley Business Times
October 7, 2010 9:00pm
• Assembly passes most of necessary bills
• Senate works into the night Thursday
There is progress in the 99-day-old struggle to come up with a budget for the state of California.
The state Assembly Thursday afternoon gave its approval to the main $87.5 billion budget bill on a 54-1 vote, the bare two-thirds super majority that is needed to pass a budget in California. There are 80 members in the Assembly.
The measure was sent to the state Senate, where members were working into the night Thursday on it.
But there is not likely to be a final package of budget items to submit to the governor before Friday at the earliest, since votes still had not been taken on some of the bills in the Assembly.
There are no new taxes or tax increases, since Republicans have stonewalled those efforts and a few Republican votes are needed in both houses of the Legislature to gain a two-thirds super majority.
According to the nonpartisan California Budget Project, the budget attempts to address an estimated $17.9 billion gap between expected revenues and planned spending.
It does that by $7.5 billion in spending reductions; $5.3 billion in assumed new federal funds; $5.2 billion from additional revenues and fund shifts, including revenues related to the sale of state buildings authorized by the 2009-10 budget agreement; and $0.5 billion in “alternative funding,” the CBP says in an lengthy analysis.
The budget agreement includes several changes affecting businesses’ tax liability. The plan suspends corporations’ ability to claim Net Operating Loss (NOL) deductions in 2010 and 2011 and delays implementation of NOL “carrybacks” from 2011 to 2013, resulting in a $1.2 billion revenue increase in 2010-11, the analysis says.
The budget plan also includes one temporary and two permanent changes reducing corporate tax liability, including a tax break that appears designed to apply to only one company – Humboldt Redwood Company. These new tax reductions are in addition to the three major corporate tax cuts that were included in the September 2008 and February 2009 budget agreements.
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