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Gov Makes Sales Tax Increase Proposal Official

You can see the Governor’s press conference from this afternoon here where he officially proposes an increase in the sales tax.

Here is what the Sacramento Bee has to say about it.


I just received an email from the Governor (because I subscribed to receive their emails) with some more details of his budget proposal.  Here are some highlights of interest to this audience:


Proposes a revenue package that includes a temporary increase and permanent reduction to the state sales tax. The package includes:

  • A temporary 1-cent sales tax increase for three years (excluding diesel, gasoline and jet fuel) followed by a permanent 1¼-cent reduction beginning in year 4. The additional ¼-cent reduction would be a permanent base sales tax reduction beginning when the 1-cent increase is no longer in effect.
  • A two-year suspension of the Net Operating Loss (NOL) tax deduction: Suspends for two years the ability of corporations to reduce their tax liability based on prior losses and phases in conformity to federal law over three years starting in 2010 by allowing losses to offset profits in two prior years; also extends the period for carrying forward losses from 10 to 20 years.
  • Modified Tax Amnesty Proposal to generate revenues while avoiding negative impacts on economic activity.
  • Better align accrual of revenues and accrual of spending.


Proposes an economic stimulus package to stem job losses, facilitate creation of new jobs, and improve tax revenues:

  • Expedites the allocation and disbursement of existing transportation, housing and water bond funds to stimulate economic growth and job creation immediately.
  • Authorizes new lease revenue bonds to accelerate capital outlay projects for higher education and the Courts.
  • Provides statutory authority to develop public-private partnerships with design-build authority to add new, and accelerate existing, infrastructure projects (Caballero (AB 1261) and Niello (AB 2600) bills).
  • Provides flexibility in overtime laws to allow employers and employees to agree on mutually acceptable flexible work schedules:
  • Allows employees to voluntarily work four 10-hour shifts without requiring overtime. All hours worked above 10 hours per day or 40 hours per workweek pay time and a half. All hours worked above 12 hours per workday and in excess of 8 hours on a fifth, sixth or seventh day in a workweek pay double time. Flexible work schedule must be voluntary for employee. Exemptions for union and government employees.
    Creates a highly compensated employee exemption for California that conforms overtime rules to federal law ($100,000 or more).
    Exempts high-paid software engineers in the competitive technology industry from overtime rules; applies only to employees whose primary duty includes non-manual work.
    Provides clarification to on-duty personnel such as armored car drivers, security guards, etc., regarding meal periods.
  • Targeted tax credits to retain jobs and encourage job expansion in California.
    Runaway Hollywood production tax credit.

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