Vol. XIV, No. 10 
March 12, 2001

SENATE PANEL APPROVES REIT CONFORMITY

Hopes for quick passage of a somewhat comprehensive conformity bill were dashed last week. When AB 10 (Corbett) reached the Senate Revenue and Taxation Committee last Wednesday, all conformity provisions, save one, were stripped from the bill. As approved unanimously by the committee, AB 10 now just conforms California tax law to federal provisions expanding permitted operations of Real Estate Investment Trusts (REIT).

This action turns the bill, originally scored as a slight tax decrease, into an $8 million tax increase over three years. This could cause problems when the bill returns to the Assembly for concurrence in Senate amendments. It is assumed that, because it now raises revenue, the Senate Democratic leadership will allow the bill to move through the Senate expeditiously.

Proponents told the Senate committee that conformity to REIT provisions in federal law is needed because any REIT that seeks to reorganize to take advantage of federal provisions will be disqualified by the state.

As amended, AB 10 conforms to the new REIT qualification rules, except no excise tax will be imposed. It also adopts federal transition rules.

Earlier last week, the Assembly, by a 56-14 vote, approved AB 10 with a number of provisions from recent federal tax legislation. In addition to the REIT provisions, it included conformity items on transportation fringe benefits, deductibility of meals, cash options for qualified prizes, elimination of certain tax credits from the tentative minimum tax and a number of other provisions. It also conformed to a recent U.S. Supreme Court decision requiring states to allow non-residents to deduct their proportionate share of alimony payments.

A more detailed description of AB 10, as it passed the Assembly, follows:

• Transportation Fringe Benefits. The bill conforms to the Surface Transportation Revenue Act of 1998, excluding from income employer-provided fringe benefits.
   
• Waiver of Estimated Tax Penalty. The bill waives the estimated tax penalty for any underpayment of tax for 2000 to the extent the underpayment was created by provisions in AB 10.
   
• Deductibility of Meals. The bill conforms to the IRS Reform Act creating a “safe harbor” for the deductibility of meals provided for the convenience of the employer. Employers are eligible for a 100 percent deduction if more than half the meals furnished are for the employers’ convenience.
   
• Farm Production Flexibility Contract Payments. The bill conforms to federal law disregarding options in determining when a farm production flexibility contract payment is included as income.
   
• Cash Options for Qualified Prizes. The bill conforms to federal law relating to winners of qualified prizes who can choose cash or an annuity. Such taxpayers who choose the annuity option are not required to include the total amount of the prize immediately in income. In California, lottery winnings are exempt so this provision applies to other prizes.
   
• Ricky Ray Hemophilia Relief Act. The bill excludes from income payments to specified persons with blood-clotting disorders who have contracted the HIV virus due to contaminated blood, in conformity with federal law.
   
• Tentative Minimum Tax: Tax Credits. The bill, starting in 2000, eliminates the tentative minimum tax limitations on the joint custody head-of-household credit, the dependent parent credit, the senior head-of-household credit and the child adoption credit.
   
• Income and Losses from Derivatives. The bill conforms to federal law on the taxation of income and losses for derivatives.
   
• Cancellation of Indebtedness Income. The bill conforms to the expansion of entities from which the IRS copy of discharge of indebtedness information could be obtained by the FTB.
   
• Excess Pension Assets Used for Retiree Health Benefits. The bill conforms to federal law permitting qualified transfers of excess defined benefit pension plan assets to provide retiree health benefits.
   
• Charitable Contributions: Denial of Deduction Regarding Split Dollar Insurance Arrangement. The bill conforms to the charitable deduction denial provisions in the Ticket to Work Act of 1999.
   
• Partnership Distributions: Stock in Another Corporation. The bill conforms to federal treatment of partnership distributions of corporation stock in the Ticket to Work Act of 1999.
   
• REIT Provisions. The bill conforms to the new federal qualification rules, except no excise tax will be imposed. It also adopts federal transition rules. In addition, it adopts the new federal provision that accelerates recognition of year-end dividends for estimated tax purposes.
   
• Non-resident Alimony. The bill allows non-residents and part-year residents to deduct a prorated share of their alimony deductions. This conforms to a recent U.S. Supreme Court decision.
   
• Technical Amendments. The bill conforms to many so-called “technical” changes, including clarifications of the deduction for student loan interest, qualified state tuition programs, education IRA, the enhanced deduction for corporate contributions of computer technology, limits for active participation in an IRA, the election to use alternative minimum tax depreciation for regular tax purposes, disclosure of return information, etc.

Other legislative developments:

• Earthquake Loss Reimbursement. Legislation supported by a public employee union to require the state to reimburse Napa County for lost property tax revenue due to the September 2000 earthquake (SB 12, Chesbro) cleared the Senate Revenue and Taxation Committee last Wednesday. It is estimated to cost the state $50,000.
   
• Energy Facilities. The Senate Energy Committee on Tuesday passed a siting bill for electricity generating facilities that contains a property tax allocation provision that apparently does nothing. It provides that revenue from locally assessed generating facilities shall be allocated to the jurisdictions in which the facility is located, according to the jurisdictions’ current proportional share. This is current law.

LOCAL ELECTIONS ROUNDUP: VOTERS REJECT SALES TAX HIKE IN KINGS COUNTY; MOST LOCAL BOND OR TAX MEASURES WIN AT THE POLLS

Kings County voters last Tuesday rejected a one-half cent increase in the sales tax to build a new jail. Meanwhile, voters approved most other tax or bond measures on local ballots around the state.

Measure B needed a simple majority to pass because it was designed as a general tax – with the revenue not officially earmarked for the jail. It was opposed by 51.88 percent of the vote. Measure A, which advised county supervisors to finance construction of a $45 million jail, was approved by 61 percent of the vote.

Two of the more controversial local elections were held in Fresno County, where voters went to the polls in adjacent Fresno and Clovis school districts to act on bond measures that were among the first in the state under rules of Proposition 39. This was last November’s statewide ballot initiative that reduced the threshold of voter approval from 66.7 percent to 55 percent in regularly scheduled elections.

The outcome is clear for Fresno Unified’s $199 million Measure K, which squeaked by with 67.05 percent of the vote, just over the two-thirds threshold. Clovis Unified’s $79 million Measure A received 64.38 percent of the vote. With less than two-thirds approval, there may be a legal cloud over the Clovis measure.

Backers of both measures said they needed only 55 percent voter approval because the election was held at the same time as Clovis’ regularly scheduled municipal election. A few blocks of the Fresno district are within the city limits of Clovis. An opinion of the California Legislative Counsel is that neither Fresno nor Clovis qualified under the regularly scheduled election criteria. In this case, the counsel opined, a district must be totally within the boundaries of the city holding a regular election. As special elections, each would require 66.7 percent voter approval.

Whether the Clovis measure will be challenged in court remains to be seen. Legal questions could affect the district’s ability to market the bond.

In other election results:

Los Angeles County.  In Gardena, 59.7 percent of voters approved an increase in the business license fees from $35 to $75 for certain businesses, such as auto wreckers, barber shops, bowling alleys, restaurants, hospitals and hotels. A sliding scale of fees involves cabarets and junk dealers. In Palos Verdes Estates, measure A-01 received 87 percent of the vote, imposing a parcel tax to provide $2.5 million a year for fire and paramedic services. In Azusa, 69.4 percent of voters approved Measure A, repealing the business tax exemption for small businesses and requiring out-of-town businesses to pay business license taxes based on a formula designed to count all gross receipts during a calendar year. Measure B, approved by 66.7 percent, amends Azusa’s business license tax on rental properties (four units or more) to charge a flat $125 tax per unit, indexed to inflation, instead of the current formula based on gross receipts. Voters in Commerce approved a business tax increase that will amount to about $33,000 in its first year, according to the city’s finance director, Tom Bachman. Measure A, approved by 58.4 percent of the vote, increases the tax from $5.50 per employee and .0063 cents per square foot to $6 per employee and .007 cents per square foot. There also is a Consumer Price Index escalator that is not to exceed 3 percent per year. In Hawaiian Gardens, Measure A, a 9 percent transient occupancy tax, was supported by a vote of 441-384, with about 140 absentee and provisional ballots to be counted.

Kern County. Voters defeated Measure A in California City, an $11 million school bond that would have increased taxes $112 a year on a $75,000 home, and Measure B, a district wide 10-year parcel tax of $25.50 to renovate schools in Mojave and other parts of the district.

Santa Clara County. Sixty-eight percent of voters approved Measure A, a $63 parcel tax for the five-campus Cambrian School District near Campbell and Willow Glen.

Santa Barbara County. A $125 tax on single-family homes in what would have been the Orcutt Community Services District near Santa Maria was opposed by 77 percent of the voters. Measure G2001 was to pay for a library, a swimming center and other facilities.

Sonoma County. A $48 parcel tax easily passed with 78 percent of the vote in the Kenwood School District. In Sebastopol’s Gravenstein Union School District, a $36 parcel tax barely passed with 67.8 percent of the vote (it needed 66.7).

Contra Costa County. Two tax measures were defeated in Hercules – Measure E, a 10 percent hotel tax, had 56 percent approval, and Measure F, a surcharge on sporting and entertainment events, had 59 percent approval. Both needed 66.7 percent. The city has no hotels or arenas where sporting or entertainment events could be held, but city officials say they want to be prepared for the future. There are negotiations to build a hotel at Highway 4 and Interstate 80. Meanwhile, in Walnut Creek, Measure C, a $41 parcel tax for the school district barely passed with 66.9 percent support. An $85 parcel tax in the Acalanes Union High School District (Measure B) won with 74 percent approval, nearly a year after a $111 parcel tax was rejected. Liberty Union High School District’s $40 million bond measure (Measure A) was approved by 72.1 percent of the vote. Measure D, an increase in the annual parcel tax from $150 to $330 for added sheriff’s patrols in Alamo’s Roundhill area, was overwhelmingly approved, getting 80.3 percent of the vote.

San Mateo County. A resounding 78 percent vote of approval for Measure C will result in the sale of $8.65 million in bonds to build a new library in Belmont. Voters in Woodside approved Measure A, providing annual increases up to 4 percent in the current $196 parcel tax for the 480-student, one-school district. Property owners 65 and older can apply for an exemption. In Burlingame, Measure B needed two-thirds approval but got 58 percent, so the proposed $365 parcel tax was rejected. It would have tripled the annual taxes paid by property owners to support the Burlingame School District.

Orange County. Voters in Buena Park rejected Measure P, a 30-year parcel tax to fund construction of a $15 million police headquarters. The measure, which would have raised taxes up to $30 a year on single-family residences, received 55.8 percent of the vote. It needed 66.7.

Marin County. A $121 million bond to improve Tamalpais Union High School District facilities was approved. The largest bond issue ever proposed in Marin County, Measure A garnered 67.8 percent of the vote. It will raise property taxes $32.80 per $100,000 of assessed value each year for 29 years.

San Joaquin County. A $1.4 million bond for the Banta Elementary School District fell five votes shy of the needed two-thirds margin. The vote was 135 to 74, or 64.6 percent in favor. If they put the measure on the March 2002 ballot, part of a regularly scheduled statewide primary election, the approval threshold will be 55 percent.

DAVIS ADMINISTRATION KILLS FTB PROTEST REGULATIONS

Governor Gray Davis’ State and Consumer Services Agency has rejected the Franchise Tax Board’s proposed protest regulations.

In a letter last week notifying FTB Executive Officer Gerald Goldberg of the decision, Larry W. Kreig, deputy secretary and general counsel of the agency, wrote that the agency found that the proposed regulations “could adversely impact state revenues and increase state costs.”

Further, Mr. Kreig invited the board to adopt new protest regulations that codify the FTB’s administrative policies that were invalidated as underground regulations by the Office of Administrative Law. Taxpayers have voiced strong objections to those procedures and would be expected to continue to oppose their adoption.

The key provisions in the rejected protest regulations would have shortened the time for FTB action on a protest from 33 months, which is an average time now taken, to 24 months. They also would have prohibited a re-audit of a taxpayer as part of the protest process unless the taxpayer had opened up new issues or failed to provide information during the audit.

The legal authority for the agency secretary to kill proposed regulations has been bootstrapped from Government Code Section 11349.1, requiring fiscal estimates to accompany regulations and a State Administrative Manual provision that the agency secretary (Aileen Adams in this case) has to sign the fiscal estimate form. Government Code Section 12804 places the FTB in the State and Consumer Services Agency.

Cal-Tax President Larry McCarthy said the demise of the protest regulations is regrettable, especially since California tax administration has been rated as one of the most unfriendly toward taxpayers in a national survey by CFO Magazine.

Senate President Pro Tem John Burton urged the agency secretary to reject the regulations in a press release issued on February 27 – one day after the agency’s letter of notification to Mr. Goldberg was dated.

At the urging of Board of Equalization Member Dean Andal, who was a member of the FTB last year, and state Controller Kathleen Connell,  the three-member FTB adopted the protest regulations last fall. When the Davis administration objected to an FTB request for additional staff, holding up the regulations, the FTB directed staff to delete the request for additional staff from the 2001-02 budget and resubmit the regulations. In his February 26 memorandum, Mr. Kreig told Mr. Goldberg that the FTB’s “latest conclusion that these regulations will have neither budgetary impact on the FTB nor fiscal impact on the state of California is not credible.”

Mr. Andal has said that the new protest regulations would result in more timely resolutions of FTB-taxpayer disputes, bringing the state more than $1 billion in general fund revenue.

HIGH COURT REJECTS LOCALS’ REVENUE SHIFT CASE

Shut out by the state’s highest court, counties are shifting their sights to the ballot for a possible initiative effort to stop the state’s shift of $4 billion a year in property taxes away from local governments.

The California Supreme Court on February 28 refused to hear local government’s argument that the state should reimburse cities and counties for property tax revenues that the state shifted to schools starting in 1992.

A Sonoma County Superior Court judge had ordered a $15 billion reimbursement, which was overruled last November by the state appellate court in San Francisco. The Supreme Court decided it would not review the case in which locals cited a constitutional mandate for state reimbursement of new local programs and services. The appellate court, however, ruled that reimbursement would be allowed only for new state-mandated spending, not for costs of current programs.

After losing in court, a proposed ballot initiative to prevent further tax transfers moves to the forefront. The California State Association of Counties has already committed $100,000 to explore such a campaign and will discuss initiative strategy at a meeting in April, according to a March 3 Copley News Service report.

The Santa Rosa Press Democrat quoted Sonoma County Administrator Mike Chrystal: “This ruling closes the door on our legal options but the focus now will be on getting the state law changed.”

The transfer of property tax revenue from cities and counties to education began when the state, facing a deficit in 1992, diverted $3.4 billion to education in lieu of general fund spending. Cities and counties have made reimbursement and an end to the shift a top priority in their lobbying of the Legislature and governor. However, Governor Gray Davis vetoed a bill last year that would have limited future revenue shifts.

Last summer’s state budget action provided $212 million in additional funding to locals. The governor’s budget proposal for 2001-02 contains an additional $250 million for cities and counties.

Proponents of the property tax shift have said that locals’ property tax losses have been mitigated by a state takeover of trial court costs and the dedication of some sales tax revenue to local criminal justice programs.

COUNTIES: GOV. DAVIS’ ENERGY PLAN MIGHT CAUSE PROPERTY TAX SHORTFALL

Counties are expressing concern that Governor Gray Davis’ plan to purchase transmission lines from PG&E and Southern California Edison could reduce property taxes by a significant amount.

Butte County CAO John Blacklock said the impact in his county alone would be close to $4 million of lost property tax revenue. According to the Chico Enterprise, he also noted that, because the state will backfill the schools’ property tax loss, the total cost to state taxpayers for acquiring the transmission lines will be more than the purchase price.

The Enterprise reported that Wesley Lujan of the Regional Council of Rural Counties, in a letter to the governor, attacked the plan. He argued that the state lacked “a comprehensive land-use policy that provides a common vision.”

San Luis Obispo County, site of PG&e’s Diablo Canyon Nuclear Power Plant, will lose between $5 million and $6 million, said Auditor-Controller Gene Sibbach. According to the San Luis Obispo Tribune, local officials met with Senator Jack O’Connell and a representative of the governor’s office to discuss the issue. Mr. Sibbach said one solution would be to have the state reimburse local governments for the reduction in property tax revenues.

NEW LEGISLATION OF INTEREST

Tax Credit: Energy-Efficient Heating and Cooling Systems. AB 102X (Wayne) establishes a 25 percent tax credit for the cost of purchasing an energy-efficient heating and cooling system.

Sales Tax: Fresno Zoo. SB 1187 (Costa) authorizes the Fresno Zoological Authority, which the bill authorizes county supervisors to create, to impost a 0.1 percent sales tax for zoo purposes, with two-thirds voter approval.

NEW WINE IN OLD BOTTLES

Sales Tax Exemption: Diesel Fuel. AB 19X (Briggs) was amended on March 7 to limit a proposed diesel fuel sales tax exemption to diesel fuels used in farming this summer only.

Tax Incentives for Power Generation. AB 27X (Koretz), a bill establishing tax credits and a sales tax exemption for power generation equipment, was amended to provide for a six-year carryforward for unused credits and a refund of the amount of the unused credit from sales taxes.

Energy Conservation. AB 29X (Kehoe) was amended on March 5 to delete a proposed tax credit for installation of energy-efficient refrigeration.

Energy Conservation. SB 19 (Escutia) was amended on March 1 to delete provisions that would have earmarked the sales tax from sales of carbonated beverages.

Sales Tax Exemption: Electricity Generating Property. SB 1X (Soto) was amended on March 1 to expand the types of electricity generating property that would qualify for a proposed sales tax exemption. Added to the bill are solar thermal water heating systems and generators operated by renewable biomass fuel.

Property Tax Allocation: Generating Property. SB 28X (Sher) was amended on March 5 to add to a power plant siting bill a provision allocating the property tax revenue from new electric generating property assessed by county assessors to the jurisdictions in the rate area in which the plant is located in the same percentage as other locally assessed property.

POTPOURRI: SYMPOSIA, SIGHTINGS, SALUTES & SNAFUS

UUT UPDATE. More grist for the utility user tax (UUT) mill: From the Daily Review  (March 4) is a report that skyrocketing electricity and natural gas costs may be generating an unexpected windfall for San Leandro through the city’s UUT. Mike Betts, owner of Betts Springs Company, says his company’s monthly gas bills have jumped from $15,000 to $45,000. However, city Finance Director Tim Hansen said it was too early to tell whether the city’s 6 percent tax will produce enough to overcome possible declines in sales tax revenues if people are buying less because they’ve had to cut back due to higher utility bills. “In a community like this, when people spend money on energy, they’re not spending it on cars or at stores, and the city loses sales taxes.” Also, Mr. Hansen said there would be a cost involved in setting up a bureaucracy to screen those who would qualify for UUT rebates. Should there be rebates, especially to seniors? Everything is on the table, said Council Member Garry Loeffler. Meanwhile, the Press Democrat in Sonoma County reported March 3 that Santa Rosa city officials don’t believe the hundreds of thousands of dollars in additional revenue from its 5 percent UUT is windfall revenue. They think it is likely to cover just the city’s higher energy costs. In Modesto, the City Council last week ordered staff to prepare alternatives for UUT relief, the Modesto Bee reported. One option is an outright reduction of the 6 percent rate, but officials noted that restoration of the rate later on would require a vote of the people. City Finance Director Rob Stout suggested that the $780,000 city windfall, the amount of revenues above what the city expects to pay in higher energy bills, be used to fix roads. The council decided it needed more information before bringing the issue to a vote, perhaps this Tuesday night. Fairfield (Solano County) City Council members last week decided the city cannot afford to provide residents relief from the rising UUT because the city’s own energy bills are going up and the money is needed to continue paying for more police officers. “Doing away with this (UUT) is like doing away with the heart of the city,” Mayor George Pettygrove said. “We need those police officers.” The city’s 2 percent UUT was imposed four years ago so the city could hire 20 police officers, according to the Daily Republic. The council had asked staff to examine the effects of a temporary rollback of the UUT to help out residents, especially senior citizens. Members of the Pacific Grove City Council last week decided not to lower its utility tax, The Herald of Monterey County reported. The 5 percent tax brings in $1 million in annual revenue. City Manager Ross Hubbard said that altering the ordinance could open the city to a taxpayer challenge to try to eliminate the tax altogether. “There’s a significant concern that we may lose the ability to have a utility tax at all,” he said. 

PROPERTY TAX UP SUBSTANTIALLY. Property assessed value increased by 7.8 percent in 2000, according to State Board of Equalization Chair Claude Parrish. Total assessed value in the state is $2.355 trillion. The increases by county ranged from a low of 0.5 percent in Colusa County to 12.6 percent in prosperous Placer County. Santa Clara County came in with a 9.8 percent increase, while Alameda and Orange Counties registered a 9.6 percent gain. Los Angeles County, with a $590.5 billion assessment roll, posted a 6.5 percent growth in value. The full report is online at www.boe.ca.gov.

ECONOMIC WARNING. Los Angeles Controller Rick Tuttle, echoing what state Legislative Analyst Elizabeth Hill has said, told the mayor and City Council on March 1 that the city is facing “one of the most uncertain projections for the next year that I have ever seen.” He has been the controller for nearly 16 years. He urged Mayor Richard Riordan and the council to exercise prudence as they deal with the 2001-02 budget, which is expected to exceed $3 billion, The Los Angeles Times reported. While growth has been strong, he said revenues will be down next year. “ … we are experiencing a slowdown and may possibly be heading into a recession,” Mr. Tuttle said. The economic outlook is further clouded by the state’s energy crisis, he noted. The mayor’s budget proposal is due in April.

TAX $$$ @ WORK: Lodi’s Bus Shelter. In September 1998, Lodi officials approved plans for a bus stop shelter with a projected cost of $55,000 from federal transit funds, reports Jeff Hood of the Stockton Record (February 25). It’s been built – for $145,133! Granted, it is lighted, has a five-person bench of concrete blocks, and a windscreen. It’s at Washington and Oak streets, one of the city’s busiest bus routes. The columnist checked the prices on homes for sale, finding a five-bedroom, 1,900-square-foot dwelling for $145,000. The shelter was built by Diede Construction, whose president, Steve Diede, said it cost so much because of needed sidewalk, street and gutter repairs. “It’s a decorative structure,” he said. “I don’t know what other bus shelters go for, but it’s a nice bus shelter, and it’s made a nice appearance for the city in that area.” Mr. Hood wrote that even if $40,000 is put aside for landscaping, there would be enough money to pay for 29 covered shelters with three walls that cost $3,600 in the Central Arkansas Transit Authority.

TAX $$$ @ WORK: Sanctioned Hookie? After stirring up controversy, the San Francisco Board of Education decided last Monday (March 5) not to send hundreds of high school students and their teachers to an affirmative action rally at UC-Berkeley. The field trip was canceled due to “unresolved safety and traffic issues,” according to the district statement. It was issued after the San Francisco Chronicle reported that the school board had voted to allow students to skip classes and be bused to Berkeley to participate in a March 15 “Day of Action” rally for racial preferences in University of California admissions. The district had planned to provide eight buses for an expected turnout of 500 students for the all-day trip. However, The Chronicle quoted a member of the state Board of Education, retired Principal Nancy Ichinanga, as saying, “I don’t think kids should be used to support the ideological stance of adults. There are very few reasons that kids should be taken out of school – and that’s not one of them.” San Francisco schools should stick to education, not activism, said UC Regent Ward Connerly, sponsor of Proposition 209, which bans racial preference in hiring and university admissions. Mark Sanchez, San Francisco school board member who drafted the resolution, said, “I don’t think it’s contrived to say that this is a history lesson for the kids. It’s more hands-on than they’ll get in the classroom. It’s certainly the sort of field trip I wished I had growing up.” The purpose of the demonstration is to lobby regents to reverse a decision against racial preferences, although Mr. Connerly said the issue has been settled by voter approval of Proposition 209. And what about the tax dollars that the district receives based on attendance? Mr. Sanchez said the money wasn’t  jeopardized because students would show up at their schools and be counted for attendance purposes before going to the rally. “This city is unified in its support of affirmative action and civil rights,” Mr. Sanchez told The Chronicle. “I don’t think anyone will have a problem with this.”

SHERMAN WARNS OF FATAL SUMMER. Congressman Brad Sherman, speaking March 6 to the House Energy and Commerce Committee, urged an extension of daylight-saving time an extra hour to help California and other states in the region during the energy crisis, reported The Sacramento Bee. The former member of the State Board of Equalization said: “People will die in California because of this crisis.” The Bee concluded that none of the ideas from the California congressional delegation seemed to catch fire at the House hearing.

WHERE ARE THEY NOW? Wesley Chesbro, last session’s Senate Revenue and Taxation Committee chair, has been appointed to the Senate Committee on Health and Human Services, where he is chair of the Aging and Long Term Care Subcommittee. He says Senate Leader John Burton told him he will be appointed chair of the Senate Budget Committee’s subcommittee dealing with spending on health and human services, labor and veterans affairs. Capitol Morning Report also noted that last session’s Senate Appropriations Committee chair, former Senator Pat Johnston, will lobby the executive branch for the California Applicants Attorneys Association.

FRESNO ARTS TO ZOO SALES TAX: POSTMORTEM ON DEFEAT. Supporters of Fresno’s “Arts to Zoo” sales tax proposal, which was defeated by voters last November, are planning to spend their last $5,000 on a study of why the measure didn’t pass. Consultant Sue Hutchinson told the Fresno Bee that, while she does not need more analysis, others might because they “grieve” over a lost election. She said she would analyze voting patterns by precincts. 

DESERT HOT SPRINGS PARCEL TAX REVENUES LAG. Crummy revenue estimating is not just a state government phenomenon. The city of Desert Hot Springs estimated it would receive $1.1 million in added revenues from the parcel tax approved last June. Council member Mary Stevens told the City Council last week that there is a $184,000 shortfall in anticipated revenues.

COMING UP