AB 2393

Bill Subjects

Abstract

(1) Existing law establishes the California Work Opportunity and Responsibility to Kids (CalWORKs) program, under which each county provides cash assistance and other benefits to qualified low-income families using federal, state, and county funds. Existing law creates the CalWORKs Educational Opportunity and Attainment Program to provide CalWORKs recipients with a one-time $500 education incentive award for the completion of a high school diploma or its equivalent and a one-time $1,000 education stipend for enrollment in an education or training program leading to a career technical education program certificate, an associate's degree, or a bachelor's degree. Existing law requires a county to comply with the provisions of the CalWORKs Educational Opportunity and Attainment Program only to the extent funding for this purpose is appropriated in the annual Budget Act and available to the county. Under this bill, the issuance of an education incentive award or education stipend would be treated in the same manner as the federal earned income refund for the purpose of determining eligibility to receive benefits for public social services, as specified, and would not be taken into account as income or resources for purposes of determining eligibility for benefits under any other state or local program to the extent that the exemption would not conflict with federal law, as specified. The bill would, subject to an appropriation, authorize the State Department of Social Services to establish a mechanism for the issuance of the awards or stipends in the form of a tax refund payment, without modifying or otherwise affecting the county process. The bill would set forth certain terms if the department elects to establish this mechanism, including requiring the Franchise Tax Board to determine the form and manner of the tax refund designation. The bill would also exempt the awards or stipends from a garnishment order, to the extent not in conflict with federal law. (2) The Personal Income Tax Law imposes a tax on individual taxpayers measured by the taxpayer's taxable income for the taxable year, but, in modified conformity with federal income tax laws, allows various exclusions from gross income. Existing law allows the California Earned Income Tax Credit against personal income tax, as specified. Existing law requires any bill authorizing a new tax expenditure, as defined to include a credit or exclusion, to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements, as specified. This bill, for taxable years beginning on or after January 1, 2023, and until January 1, 2028, would exclude the education incentive awards or education stipends from the gross income of recipients for personal income tax purposes and would specify that the amount received would not be considered earned income for purposes of eligibility for the California Earned Income Tax Credit. The bill would include legislative findings relating to the purpose of the tax expenditure and would require the State Department of Social Services to submit a report to the Legislature, containing specified information, in each fiscal year during which an appropriation is made for the CalWORKs Educational Opportunity and Attainment Program. (3) Existing law authorizes the Franchise Tax Board, as part of its administrative duties with respect to the collection of taxes, to seize assets of a delinquent taxpayer. Existing law authorizes the board to issue an order to specified financial institutions, persons, and entities, including an officer or department of the state, to withhold and remit liquid assets of a delinquent taxpayer in order to satisfy the tax obligations of that taxpayer. Under this bill, until January 1, 2028, the education incentive awards or education stipends would not be subject to withholding or levy for liabilities due, as specified. (4) Existing law requires the Controller to state an account with persons that receive funds or property belonging to the state and fail to properly render account thereof to the state, and persons that fail to pay to the State Treasury any money belonging to the state. Existing law requires the Controller to offset delinquent accounts against personal income tax refunds. Existing law authorizes the Controller to offset any amount due a state agency from a person or entity against any amount owing that person or entity by any state agency. This bill would, until, January 1, 2028, prohibit the Controller from offsetting delinquent accounts against the payment of an education incentive award or education stipend. (5) The California Constitution generally prohibits the total annual appropriations subject to limitation of the state from exceeding the appropriations limit for the prior fiscal year, adjusted for the change in the cost of living and the change in population, and defines "appropriations subject to limitation" to mean any authorization to expend during a fiscal year the proceeds of taxes levied by or for the state, except for, among other things, refunds of taxes. This bill would state the intent of the Legislature that the payment of an education incentive award or education stipend, if processed pursuant to the above-described tax refund mechanism, would constitute a refund of various taxes and would therefore be excluded from the appropriations subject to limitation.