HomeMy WebLinkAboutMINUTES - 04181989 - IO.1 TO:i Board of Supervisors I.O. 1 - -°
FROM: INTERNAL OPERATIONS COMMITTEE - s
jos, = ••�
DATE: April 10, 1989 --------
SUBJECT:
------
SUBJECT: STATUS REPORT ON VARIOUS CHILD CARE ISSUES
Specific Request(s) or Recommendations(s) & Background & Justification
RECOMMENDATION
1. Adopt a position in SUPPORT of AB 446 (Hansen), AB 1428 (Hannigan), AB 1518 (Wright) & AB 1645
(Polanco&Maxine Waters).
2. Request Assemblywoman Speier to accept two amendments to AB 1853 proposed by Supervisor McPeak plus
an amendment to insure that deductions made by private corporations pursuant to AB 1853 are tax deductible
under the provisions of SB 722 (Chapter 1239, Statutes of 1988).
3. Request the Contra Costa Child Care Council to send letters to each city in the County urging the City Council
to take a position in support of AB 1853 (Speier).
4. Instruct the Social Services Director and Executive Director, Private Industry Council not to authorize the
expenditure of any funds,and request the Auditor-Controller not to issue any funds,whose expenditure is under
the control of the Board of Supervisors(regardless of the source of the funds),for a child care provider who under
state law is required to be licensed if the provider is not, in fact, licensed as required by state law.
5. Direct the Social Services Director,Executive Director,Private Industry Council and County Counsel to include
in any contracts approved by the Board of Supervisors on or after April 19, 1989 which'provide for the
expenditure of funds under the control of the Board of Supervisors for child care expenses provided by what
is commonly referred to as "exempt" child care providers a provision which requires that all such providers
register with the Department of Justice pursuant to the provisions of the Phillips/Reeves In-Home Child
Protection Act of 1987 as amended by AB 3961 (Chapter 1540, Statutes of 1988).
CONTINUED ON ATTACHMENT: xxx YES SIGNATURE:
Recom enda i of County A ' istrator Recommendation of Board Committee
pp
ve Other:
Signature(s) OM ERS SUNNE WRIGHT Meµ AK "
Action of Bo rd on: April 18. 1989 Approved as Recommended X Other
i
i
Vote of Supervisors
1 HEREBY CERTIFY THAT THIS IS A TRUE AND
X Unanimous(Absent I ) CORRECT COPY OF AN ACTION TAKEN AND
Ayes:_ Noes:_ ENTERED ON HE MINUTES OF THE BOARD
Absent: Abstain: OF SUPERVISORS ON DATE SHOWN.
cc: County Administrator ATTESTED "f r /f rq
Social Services Director PHIL BATcTiELOR,CLERK OF THE BOARD
County Counsel SUPERVISORS AND COUNTY ADMINISTRATOR
Executive Director,Private Industry Council
Auditor-Controller y�
Executive Director,Contra Costa Child Care Council BY: Deputy Clerk
clvm:eh( .bo) ff
6. Request the Social Services Director to review with other urban counties in California the issue of paying GAIN
child care providers directly versus paying the parent directly,to determine what decisions they have made on
this issue and on what legal advice they have relied and report to our Committee by May 8, if at all possible,
on the results of their survey.
7. Request the Social Services Director to request an opinion of County Counsel on whether County Counsel's
opinion regarding the potential employee status of child care providers,would be altered if the County were to
enter into a contract with an organization like the Contra Costa Child Care Council where the County would
certify certain individuals to the Child Care Council by means of a voucher and the Council would,in turn, be
responsible for insuring the provision of child care for those individuals certified by the Social Services
Department.
8. Request the Contra Costa Child Care Council to request a written opinion from the Child Care Law Center
regarding ways in which a County can provide GAIN child care payments directly to the provider without having
the County run the risk of being held to be the employerof the child care provider underexisting state and federal
law and report the results of their discussions to our Committee on May 8, 1989.
9. Request the Social Services Director to review the matter of contracting with the Community Services
Department for GAIN childcare and ask him to report to our Committee on May 8, 1989 regarding the possibility
of either contracting for the 1989-90 fiscal year directly with another organization or requiring the Community
Services Department to subcontract with another organization like the Contra Costa Child Care Council.
BACKGROUND:
On March 21, 1989 the Board of Supervisors approved a report from our Committee on the subject of Child Care
which requested several actions by several department. The Board of Supervisors also referred to our Committee
a policy position recommended by the Social Services Director, on the advice of County Counsel, regarding
providing child care payments to child care providers as opposed to providing the payments directly to the parent,
who in turn would be responsible for paying for the child care.
On April 10, 1989 our Committee met with staff from the Social Services Department,the Contra Costa Child Care.
Council and several child care providers to discuss these issues. The following reports are attached to and made a
part of this report by reference:
1. A memorandum from the County Administrator's Office dated April 5, 1989 regarding legislation pending
in the State Legislature dealing with income tax credits for.child care expenses.
2. A memorandum from the County Administrator's Office dated April 7, 1989 regarding whether donations
made pursuant to AB 1853 are deductible under the provision of existing law,SB'722'(Chapter 1239,Statutes
of 1988).
3. A memorandum from the County Administrator's Office summarizing the meeting held between the Child
Care Council and city representatives on April 6, 1989.
The above recommendations are made as a result of these discussions. We are recommending the endorsement of
four pieces of legislation, three of which are covered in the County Administrator's memorandum dated April S,
1989. The fourth piece of legislation,AB 1428,provides ongoing funding for child care coordination programs in
counties and provides additional funding for child care resource and referral agencies. We are hopeful that this bill
could be used to provide funding for the County's Child Care Broker program with the Contra Costa Child Care
Council.
We have also recommended that the County Administrator prepare a letter to Assemblywoman Speier requesting
that she accept three amendments to AB 1853,which is co-sponsored by the Board of Supervisors and CSAC. These
amendments help to clarify the intent of the bill as introduced in terms of allowing private sector donations for child
care expenses and other related matters.
We discussed at some length the fact that some County departments may be inadvertently allowing payments to child
care providers who, under existing state law, are required to be licensed, but are not so licensed. We do not wish
to have the Board of Supervisors put in the position of appearing to condone what are, in fact, illegal child care
arrangements and have, therefore, recommended that no funds controlled by the Board be spent in this manner.
- 2 -
We also received a briefing from Mary Beth Phillips regarding the current amended version of the Phillips/Reeves
In-Home Child Protection Act of 1987, AB 3961 (Chapter 1540,Statutes of 1988). It is clear that the amended
version of this program provides a simple and inexpensive way for a child care provider, who is otherwise exempt
from licensing regulations, to register with the Department of Justice, indicating that they have nothing in their
criminal history which would keep them from being licensed for child care purposes. We believe that every"exempt"
child care provider for whom the County provides funding should avail himself or herself of this procedure and have,
therefore, suggested that every such contract for "exempt" child care include a requirement that the child care
provider register with the Department of Justice pursuant to Chapter 1540, Statutes of 1988.
It is our understanding that"exempt"child care includes situations where the provider cares for the child in the child's
own home(a baby-sitter),where the child care provider is a relative of the child,where the child care provider cares
for only one child from a family and certain other similar situations which under current state law are not required
to be licensed.
We are still concerned with the fact that this County is alleged to be the only urban county in California which refuses
to make GAIN child care payments to the provider of care instead of the parent. We have,therefore,requested that
several additional actions be taken to clarify what other counties are doing in this regard,how they have been able
to get around the legal complication which have been pointed out by County Counsel and to determine whether there
is any way in which the County can make payments directly to child care providers without running the risk of being
considered the employer of the child care provider.
We are also still concerned about the contract with the Community Services Department and in light of the change
in administration which has taken place there recently are asking that this issue be studied again to determine whether
there is an alternative manner of providing GAIN child care which will not cause as much controversy as has the
present arrangement.
cllvm:eh
iolbo
- 3 -
OFFICE OF THE COUNTY ADMINISTRATOR
CONTRA COSTA COUNTY
Administration Building
651 Pine Street, I Ith Floor
Martinez, California
DATE: April 5, 1989
TO: Supervisor Tom Powers
Supervisor Sunne W. McPeak
INTERNAL OPERATIONS COMMITTEE
FROM: Claude L. Van Marte, i1stant Administrator
SUBJECT: Income Tax Credits fo yChildCare Expenses
On March 21, 1989 the Board of Supervisors directed that this office report to your Committee on
April 10, 1989 on all legislation pending in the California Legislature which addresses the issue of
income tax credits for child care expenses, whether for employers or employees.
We have identified three bills which address this subject, copies of which are attached for your
information:
AB 446 (Assemblywoman Bev Hansen)
AB 1645
5 (Assemblyman Richard Polanco& Assemblywoman Maxine Waters)
AB 1518 (Assemblywoman Cathie Wright)
An analysis of each of these three bills follows:
AB 446 - as amended March 27, 1989
Under the current Personal Income Tax and Bank and Corporation Tax laws a tax credit is allowed
in an amount equal to 50%of the cost,up to$600 for each contribution to a full-time qualified care
plan and$300 for each contribution to a part-time qualified care plan. "Qualified care plan",under
current law,includes,but is notlimited to,onsite service,center-based service,in-homecare orhome-
provider care, providing the facility is located in California and is licensed if licensing is required
by state law.
AB 446 adds to this definition of a"qualified care plan" a dependent care center under the Federal
Internal Revenue Code, which is a specialized facility with respect to short-term illnesses of an
employee's dependents.
AB 4.16 Is currently on referral to the Assembly Revenue&Taxation Committee. No date has been
set for a hearing.
Income Tax Credits for Child Care Expenses
April 5, 1989
Page -2-
AB 1645 - as introduced
Under current law the State of California allows a tax credit of 30% of the allowable federal child
care tax credit. There is no income ceiling on the availability of this tax credit.
AB 1645 would reduce the percentage of the federal child care tax credit which was available as a
credit for state taxes from 30% at incomes of$40,000 to 6% on incomes of$56,000 or more on a
sliding scale as follows:
Adiusted Gross Income Percentage of Federal Credit
which can be Deducted
$40,000 3010
$42,000 27%
$44,000 24%
$46,000 21%
$48,000 1810
$50,000 1510
$52,000 12%
$54,000
$56,000 and above 6%
Inaddition,AB 1645 would require the Franchise Tax Board to calculate the dollar value of the credits
which are disallowed as a result of the above provision and would transfer that amount from the
General Fund to the State Department of Education to use in connection with existing child care
programs for the repair and renovation of existing buildings,including unused schools and recreation
facilities.
AB 1645 is on referral to the Assembly Revenue&Taxation Committee. No date has been set for
a heat-1112.
Income Tax Credits for Child Care Expenses
April 5, 1989
Page -3-
AB 1518 - as introduced
Under current law the State of California allows a tax credit of 30% of the allowable federal child
care tax credit. There is no income ceiling on the availability of this tax credit. This credit is generally
not available unless at least one parent is working.
AB 1518 would permit,as an alternative to the above provision, a tax credit of$216 for one child
or$432 if there are two or more children. There would be no requirement that at least one parent
be working. This credit would be reduced by an unspecified percentage for each$2000 by which
the taxpayer's adjusted gross income exceeds$10,000. No credit would be allowed if the taxpayer's
adjusted gross income exceeded$40,000. If the tax credit exceeded net tax liability for the year the
credit could be carried over to a future year,but would not be paid as an actual rebate. A taxpayer
could not make use of this provision if he or she is eligible to a tax credit under the 30%of the federal
child care tax credit provision.Therefore,this provision would primarily be available to those parents
where neither is working but there are still eligible child care expenses,as,for instance,in the case
of a single parent household where the parent is going to school or is otherwise e i ngaged in a training
program.
AB 1518 is on referral to the Assembly Revenue&Taxation Committee. No date has been set for
a hearing.
If your Committee wishes we will keep you advised on a regular date of any changes or additions
to these pieces of legislation.
CLVM:eh
childcr
AMENDED IN ASSEMBLY MARCH 27, 1989
CALIFORNIA LEGISLATURE-1989-90 REGULAR SESSION
ASSEMBLY BILL No. 446
Introduced by Assembly Member Hansen
February 1, 1989
' An act to amend geet4an Sections 17052.18 and 23617.5 of
the Revenue and Taxation Code, relating to taxation, to take
effect immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
AB 446, as amended, Hansen. Income taxes: bank and
corporation taxes. credits: child care.
The existing Personal Income Tax Law and Bank and
Corporation Tax Law authorize until January 1, 1992, a tax
credit under both laws in an amount equal to 30% of the cost,
not exceeding $30,000, paid or incurred by the taxpayer for
the startup expenses, as specified, of establishing a child care
program or constructing a child care facility in California to
be used primarily by the children of the taxpayer's employees,
or for the cost paid or incurred by the taxpayer for
contributions to.California child care information and referral
_services. Those laws also authorize until January 1, 1992, a tax
credit in an amount equal to 50% of the cost, not exceeding
a specified amount, paid or incurred by the taxpayer for
contributions to a qualified care plan, as defined, made on
behalf of any dependent of the taxpayer's California
employee.
This bill would provide under the Personal Income Tax
Law and Bank and Corporation Tax Law that the term
"qualified care plan" also includes a dependent care center,
as specified, which is a specialized facility with respect to the
Bare e€ ti se-n- e+ step,aat g 4
98 40
AB 446 — 2 —
affd ft speeializ fly h respeet to short-term 1 located ii
illnesses of ia sem; , stepsen,, e- stepdetug of the 2 of a licer
effipleyee if the ewe e€ that eare in ghat faeility f-�dlfills 3 (2) "F
9pe an employee's dependents. 4 of eight i
The Governor has established an advisory committee 5 year in a
known as the Child Development Programs Advisory 6 (3) "F
Committee. ( , 7 of two to
This bill would require the Governor's Child Development 8 in a qua]
Programs Advisory Committee to make a report concerning 9 (4) "C
the child care credits to the Legislature by January 1, 1991. 10 reimbur.,
This bill would take effect immediately as a tax levy. 11 qualified
Vote: majority. Appropriation: no. Fiscal committee: yes. 12 care pro
State-mandated local program: no. 13 (5) T]
The people of the State of California do enact as follows. 14 individu:15 Section
1 SECTION 1. Section 1705'2.18 of the Revenue and 16 (relating
2 Taxation Code is amended to read. 17 (d) Ir
3 17052.18. (a) There shall be allowed as a credit 18 b
from i
19 from pay
4 against the net tax imposed by this part for the taxable 20 operate(
5 -year an amount equal to the amount determined in 21 . under tf
. 6 subdivision (b) . 22 by whit.
7 (b) (1) The amount of the credit allowed by this 23 'the total
8 section shall be 50 percent of the cost paid or incurred by 24 may re-
9 the taxpayer on or after the effective date of this section f . 25 parents
10 for contributions to a qualified care plan made on behalf 26 (e) Ii
11 of any dependent of the taxpayer's California employee 27 than 42
12 who is under the age of 15. 28 prorate(
13 (2) The amount of the credit allowed by this section in 29 (f) In
14 any taxable year shall not exceed six hundred dollars 30 section
15 ($600) for each contribution to a full-time qualified care 31 portion
16 plan and three hundred dollars ($300) for each 32 carried
17 contribution to a part-time qualified care plan. 33 taxable
18 (c) For purposes of this section:
34 earliest
19 (1) "Qualified care plan" includes, but is not limited 35 (g) T
20 to, onsite service, center-based service, in-home care or 36 the carE
21 home-provider care, and a dependent care center under 37 by an ir.
22 Section 21 (b) (2) of the Internal Revenue Code which is 38 (1) Q
23 a specialized facility with respect to short-term illnesses 39 employ(
24 of an employee's dependents, provided the facility is40 (d) of
98 80
- 3 — AB 446
I located in this state and is operated under the authority
2 of a license when required by state law.
3 (2) "Full-time qualified care plan" means an average
4 of eight or more hours per day for at least 42 weeks per
5 year in a qualified care plan.
6 (3) "Part-time qualified care plan" means an average
7 of two to eight hours per day for at least 42 weeks per year
8 in a qualified care plan.
9 (4) "Contributions" include employer
10 reimbursements to employees for the employee's
11 qualified care plan expenses, or direct payments to child
12 care programs or providers, or both.
13 (5) The term "employee" includes, for any year, an
14 individual who is an employee within the meaning of
15 Section 401 (c) (1) of the Internal Revenue Code
16 (relating to self-employed individuals).
17 (d) In the case where an employer makes
18 contributions to a qualified care plan and also collects fees
19 from parents to support a child care facility owned and
20 operated by the employer, no credit shall be allowed
21 under this section for contributions in the amount, if any,
22 by which the sum of the contributions and fees exceed
23 the total cost of providing care. The Franchise Tax Board
24 may require information about fees collected from
25 parents of children.
26 (e) In the case where the child care received is of less
27 than 42-week duration, the employer shall claim a
28 prorated portion of the allowable credit. '
29 (f) In the case where the credit allowed under this
30 section exceeds the net tax for the taxable year, that
31 portion of the credit which exceeds the net tax may be
32 carried over to the net tax in the next five succeeding
33 taxable years. The credit shall be applied first to the
34 earliest taxable years possible.
35 (g) The credit shall not be available to an employer if
36 the care provided on behalf of an employee is provided
37 by an individual who:
38 (1) Qualifies as a dependent of that employee or that
39 employee's spouse under paragraph (1) of subdivision
40 (d) of Section 17054.
98 90
AB 446 — 4 -
1 (2) Is (within the meaning of Section 17056) a son, I the taxes
2 stepson, daughter, or -stepdaughter of that employee 2 franchise
3 under the age of 19 at the close of that taxable year. 3 imposed 1
4 (h) The contributions to a qualified care plan shall not 4 gains and
5 discriminate in favor of employees who are officers, 5 equal tit
6 owners, or highly compensated, or their dependents. 6 (b) (1)
7 (i) No deduction shall be allowed as otherwise 7 section sb
8 provided in this part for that portion of expenses paid or 8 the taxpa.
9 incurred for the taxable year which is equal to the 9 for contri
10 amount of the credit allowed under this section. io of any de
11 (j) In the case where the credit is taken by an ii who is ur
12 employer for contributions to a qualified care plan which 12 (2) Th
13 is used at a facility owned by the employer, the basis of 13 any incoi
14 that facility shall be reduced by the amount of the credit. 14 ($600) for
15 The basis adjustment shall be made for the taxable year 15 plan an(
16 for which the credit is allowed. 16 contribut
17 (k) With the exception of a husband and wife, if two 17 (c) Fo
18 or more taxpayers share in the costs eligible for the credit 18 (1) "Q
19 provided by this section, each taxpayer shall be eligible to 19 to, onsite
20 receive the tax credit in proportion to his or her 20 or home.
21 respective share of the costs paid or incurred. In the case 21 under Sf-
22 of a partnership, the tax credit may be divided between 22 which is
23 the partners pursuant to a written partnership 23 illnesses
24 agreement in accordance with Chapter 10 (commencing 24 facility is
25 with Section 17851), which includes Section 704 of the 25 authority
26 Internal Revenue Code, concerning substantial 26 !!�
27 economic effect, relating to a partner's distributive share. 27 !tdepe
28 In the case of a husband and wife who file a separate
29 return, the credit may be taken by either or equally 29
30 divided between them. .30 ft speed
31 (1 ) (1) This section shall not apply to taxable years 31 of ft sof
32 beginning on or after January 1, 1992. 32 efftpley-e
33 (2) This section shall remain in effect only until 33 be eens
34 December 1, 1992, and as of that date is repealed, unless 34 Seetieft 1
'15 a later enacted statute, which is enacted and becomes 35 et"
*pee
3
36 operative before December 1, 1992, deletes or extends 36 (2) "1
37 that date. 37 of eight
38 SEC. 2. Section 23617.5 of the Revenue and Taxation 38 year in
39 Code is amended to read: 39 (3) "
40 23617.5. (a) There shall be allowed as a credit against 40 of two to
98 130
- 5 — AB 446
1 the taxes imposed by this part (except the minimum
2 franchise tax, the alternative minimum tax, and the taxes
3 imposed by Sections 23809 and 23811 relating to built-in
4 gains and excess passive income_ respectively) an amount
5 equal to the amount determined in subdivision (b) .
6 (b) (1) The amount of the credit allowed by this
7 section shall be 50 percent of the cost paid or incurred by
8 the taxpayer on or after the effective date of this section
9 for contributions to a qualified care plan made on behalf
0 of any dependent of the taxpayer's California employee
1 who is under the age of 15.
2 (2) The amount of the credit allowed by this section in
.3 any income' year shall not exceed six hundred dollars
.4 ($600) for each contribution to a full-time qualified care
.5 plan and three hundred dollars ($300) for each
.6 contribution to a part-time qualified care plan.
.7 (c) For purposes of this section:
.8 (1) "Qualified care plan" includes, but is not limited
.9 to, onsite service, center-based service, and in-home care
A or home-provider care, and a dependent care center
;1 under Section 21 (b) (2) of the Internal Revenue Code
,2 which is a specialized facility with respect to short-term
!3 illnesses of an employee's dependents, provided the
* facility is located in this state and is operated under the
authority of a license when required by state law.
�6 « • • d eare " ineludes a fts .f
),7 e"Ele"t eare eeeter" ender Seetie" 21 (b) (2) of the
28 internal Revenue cede 3 respeet to the eare e€a se";
9 Jaligghter O-ep� ef the empleye-e-, ea-ad
e� � y ate shertlterrfr messes
30 s � �� respeet
31 e€ a sem , stepse"; of stepdattghter e€ the
32 if the expense of drat Bare in diet€ae11ity wettid
33 be eensider effipleyffientireletted empeeses under-
34
nder34 Seetiee e€ theteftia4 -ventie cede lrad the
35 a pe"se bee" by the
36 (2) "Full-time qualified care plan" means an average
37 of eight or more hours per day for at least 42 weeks per
38 year in a qualified care plan.
39 (3) "Part-time qualified care plan" means an average
40 of two to eight hours per day for at least 42 weeks per year
,B 446 — 6 —
I
6 -1 in a qualified care plan.
1 (d) of Sectio
2 (4) "Contributions" include employer 2 (2) Is (wi-
3 reimbursements to employees for the employee's 3 stepson, dau
4 qualified care plan_ expenses, or direct payments to child 4 under the ag
5 care programs or providers, or both. 5 (h) The cc
6 (5) The term "employee" includes, for any year, an 6 discriminate
7 individual who is an employee within the meaning of 7 owners, or h:
8 Section 401 (c) (1) of the Internal Revenue Code 8 (i) No dE
9 (relating to self-employed individuals). 9 provided in t
.0 (d) In the case where an employer makes 10 incurred for
.1 contributions to a qualified care plan and also collects fees 11 amount of tf
.2 from parents to support a child care facility owned and 12 0) In the
.3 operated by the employer, no credit shall be allowed 13 employer for
.4 under this section for contributions in the amount, if any, 14 is used ata f
.5 by which the sum of the contributions and fees exceed 15 that facility s
adj
.6 the total cost of providing care. The Franchise Tax Board 16 The basis 17 for which th
.7 may require information about fees . collected from
.8 parents of children served in the facility from taxpayers 18 ( If two
t
9 claiming credits under this section. 19 for the credit
20 be eligible tt
10 (e) In the case where the child care received is of less ® ®
21 respective sI:
;1 than 42-week duration, the employer shall claim a 22 of a.partners
2prorated portion of the allowable credit. i 23 the partner
)3 (f) In the case where the credit allowed under this 24 agreement v
34 section exceeds the taxes imposed by this part (except • • 25 with Section
)J5 the minimum franchise tax, the alternative minimum tax, 26 Internal R
36 and the taxes imposed by Sections 23809 and 2381.1 27 economic eff
)7 relating to built-in gains and excess passive income, 28 (l) (1) Ti
)J8 respectively), that portion of the credit which exceeds 29 beginning or
39 those taxes may be carried over to the taxes imposed by 30 (2) This
30 this part (except the minimum franchise tax, the 31 December 1.
31 alternative minimum tax, and the taxes imposed by 32 a later enact
32 Sections 23809 and 29811 relating to built-in gains and 33 operative be
33 excess passive income, respectively) in the next fivelee 34 that date.
34 succeeding income years. The credit shall be applied first 35 SEG -2
35 to the earliest income years possible. 36 SEC. 3,
36 (g) The credit shall not be available to an employer if 37 Programs Ac
37 the care provided on behalf of an employee is provided 38 the impact i
38 by an individual who: 39 23617.5, as a
39 (1) Qualifies as a dependent of that employee or that 40 Taxation Cc
10 employee's spouse under paragraph (1) of subdivision
- 7 — AB 446
;d) of Section 17054.
(2) Is (within the meaning of Section 17056) a son,
;tepson, daughter, or stepdaughter of that employee
ander the age of 19 at the close of that taxable year.
(h) The contributions to a qualified care plan shall not
iiscriminate in favor of employees who are officers,
)wners, or highly compensated, or their dependents.
(i) No deduction shall be allowed as otherwise
provided in this part for that portion of expenses paid or
ncurred for the income year which is equal to the
amount of the credit allowed under this section.
(j) In the case where the credit .is taken by an
-Imployer for contributions to a qualified care plan which
s used at a facility owned by the,employer, the basis of
.hat facility shall be reduced by the amount of the credit.
rhe basis adjustment shall be made for the income year
:or which the credit is allowed.
(k) If two or more taxpayers share in the costs eligible
.or the credit provided by this section, each taxpayer shall
:)e eligible to receive the tax credit in proportion to its
respective share of the costs paid or incurred. In the case
:)f a partnership, the tay credit may be divided between
the partners pursuant to a written partnership
agreement in accordance with Chapter 10 (commencing
with Section 17851), which includes Section 704 of the
Internal Revenue Code, concerning substantial
3conomic effect, relating to a partner's distributive share.
(l) (1)- This section shall not apply to income years
beginning on or after January 1, 1992.
(2) This section shall remain in effect only until
December 1, 1992, and as of that date is repealed, unless
3L later enacted statute, which is enacted and becomes
operative before December 1, 1992, deletes or extends
that date.
SEG. 2
SEC. 3. The Governor's Child Development
Programs Advisory Committee shall assess and analyze
the impact that Sections 17052.17, 17052.18, 23617, and
2.3617.5, as amended by this act, of the Revenue and
Taxation Code have on increasing employer-assisted
4B 446 — 8 —
.1
8 -1 child care in California. The committee shall report its
2 findings, along with its recommendations, to the
3 Legislature by January 1, 1991.
4 SEG. 3.
5 SEC. 4. This act provides for" a tax levy within the
6 meaning of Article IV of the Constitution and shall go into
7 immediate effect.
4
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--I.-I 1 1.1-- - . is addM W We Rawn"We and Tamatio'',
Cpde, to rovdz
17052. 7. (a) in thn c3sn of �n ! Woidwol �K� Mointwins
Mn As 1511-..'
Marp sholl ha nl : w"nz os a nywcit sgninso LKS "not 10� "
!as Awfirad LW %L-Kicn 175791 "n smanKI &quw! n2 too hu"dred sintow-,
dollaro (2711) if Mara is 0"2 waslilvinn Pwividon! or 43,w hwndret-!
thirti-two do! loco 0452) i! QhAR wyl quali4ying
(51 Fur pu"pQsea Qf subdivision W , Ohs amount of credit shM W�
rcent ion mash WS th2asand dollars K2,000) Wr
4rantion thersof ) hy which the taxpayer ' s adjusted gIcss income T=
the tanably year aweeds tan thousand dcylors ?W0.002) . and no Zradit
shall he allawad if the ta"Payer 's vdjusWd grwns inooms for the
tamable year Enceads forty thousand Milano WOO.-CM -
cc) "Qualtijing individual " mnaM5 a wape2dent of the taNpayer WK�
is und2r- the ago of live and with r-SOPOCT to Man the tampayer i--
SnIMOM to an enemption Lradit Undov (01 of Scctiw;
in Mc, �nwo of a hasVOMA or "if& "Kw Mus a soparatz return!
M2 crodit Moy he takon Lo either or eqnsili Aividad hatowen thvm
to) in the case "here 1ho NMI v112=2d santion exnaol---,
the qat tan for tho tanatle year , that
M-1 -14 M& ct-mwit "KiN.,
ancends tho n2t too may to carried over to ohn =4 tS4 i " sozzeedi ,
tayable years U"tii us-,W. Tile wedil shall K� applied firs! W thr-.:
sarlinst tomablo years POSSMO.
ellit avail Ina 0110"M nnzar Ahis section "ith respent tc
qualifying individ"al if a krujil in sl ! �"Vw or vIlDwasiva with r2sper'.
hQ that qnslifying individnal nAder SonLion 17052, 5-
SEC. 2. This act proAdas fur a tov 3Qny oithin t5w neaning &F
Article ly of the Constitution and shall go i"Is j =W!wtC offacK
CALIFORNIA LEGISLATURF-1989-90 REGULAR SESSION
ASSEMBLY BILL No. 1645
Introduced by Assembly Members Polanco and Maxine
Waters
March 8, 1989
An act to amend Section 17052.6 of the Revenue and
Taxation Code, relating to taxation, and making an
appropriation therefor.
LEGISLATIVE COUNSELS DIGEST
AB 1645, as introduced, Polanco. Income taxes: credits:
dependents.
The existing Personal Income Tax Law allows a tax credit
against the taxes imposed by that law in an amount equal to
30% of the allowable federal income tax credit for certain
employment-related expenses of children and other
dependents.
This bill would reduce the specified "30%" by 3 percentage
points for each $2,000 by which the taxpayer's adjusted gross
income for the taxable year exceeds $40,000, and the credit
would be 6% of the allowable federal credit if the taxpayer's
adjusted gross income exceeds $56,000. This bill would require
the Franchise Tax Board to determine and report to the
Controller the amount of credits that would be disallowed by
the bill, and would appropriate that amount to the State
Department of Education to be used in connection with child
care programs, as provided.
Vote: %. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: no.
AB 1645 — 2 —
The people of the State of California do enact as follows.
I SECTION 1. Section 17052.6 of the Revenue and
2 Taxation Code is amended to read:
3 17052.6. (a) There shall be allowed as a credit against
4 the "net tax" an amount determined in accordance with
5 Section 21 of the Internal Revenue Code, except that the
6 amount of the credit shall be 30 percent of the allowable
7 federal credit regardless of whether there is a federal tax
8 liability.
9 (b) For purposes of subdivision (a), the specified "30
10 percent"shall be reduced by three percentage points for
11 each two thousand dollars ($2,000) (or fraction thereof)
12 by which the. taxpayer's adjusted gross income for the
13 taxable year exceeds forty thousand dollars ($40,000), and
14 the credit shall be 6 percent of the allowable federal
15 credit if the taxpayer's adjusted gross income exceeds
16 fifty-six thousand dollars ($56,000).
17 (c) (1) The Franchise Tax Board shall determine for
18 each taxable year the total amount of the credits which
19 are disallowed by operation of subdivision (b).
20 (2) The Franchise Tax Board shall notify the
21 Controller of its determination made pursuant to
22 paragraph (1) on or before November 1 of the year
23 succeeding the taxable year for which the determination
24 is made.
25 (d) This section shall remain in effect only until
26 January 1, 1993, and as of that date is repealed, unless a
27 later enacted statute, which is enacted before January 1,
28 1993, deletes or extends that date.
29 SEC. 2. Notwithstanding Section 13340 of the
30 Government Code, the amount determined for each
31 taxable year pursuant to subdivision (c) of Section
32 17052.6 of the Revenue and Taxation Code is hereby
33 continuously appropriated from the General Fund to the
34 State Department of Education for use in connection
35 with existing child care programs for the repair and
36 renovation of existing buildings, including unused schools
37 and recreation facilities.
0
4 OFFICE OF THE COUNTY ADMINISTRATOR
CONTRA COSTA COUNTY
Administration Building
651 Pine Street, 11th Floor
Martinez,California
DATE: April 7, 1989
TO: Supervisor Tom Powers
Supervisor Sunne W. McPeak
INTERNAL OPERA -IONS COMMITTEE
FROM: Claude L. Van Marted taut Administrator -
SUBJECT: CHILD CARE MEET NG WITH CITY REPRESENTATIVES
The Board of Supervisors,in response to a recommendation from your Committee,asked the Child
Care Council to convene a meeting of specified city representatives to discuss alternatives available
to cities to fund the Child Care Affordability Fund.
This meeting took place on April 6, 1989 at the offices of the Child Care Council. Councilwoman
Gwen Regalia (Walnut Creek) was present, along with Linda Harris, representing the City of
Richmond, Supervisor McPeak,representing the Board of Supervisors and various staff.
Following a review of what various cities in the County are doing in regard to child care as well as
what the County itself is doing (see attached) those present discussed the best way to approach the
cities.
The decision was to proceed as follows:
The Child Care Council will contact the councilpersons from the cities of Richmond, Hercules,
Walnut Creek, Concord, San Ramon and Pittsburg who have been most active in the field of child
care. A series of four regional briefings will be scheduled to include the cities in each region. The
councilpersons serving as conveners will be asked to sign a letter to their colleagues in the cities in
each region inviting them to a briefing, at which each city will be asked to describe what they are
doing to promote child care in their city. These briefings will allow each city's representatives to
learn more about what other cities in their area and the County are doing to address the issues of the
availability, affordability and quality of child care and to explore what financing mechanism may
be available to each city to increase their profile in each of these areas. The regional meetings will
be organized as follows:
WEST COUNTY
Particigating Cities: Convener(s):
El Cerrito
Richmond John Ziesenhenne, Richmond
San Pablo Russ Perkins, Hercules
Hercules
Pinole
NORTH CENTRAL COUNTY
Particillating Cities: Convener(s): -
Concord
Martinez Colleen Coll, Concord
Pleasant Hill
Clayton
SOUTH CENTRAL COUNTY
ParticipatingCities: Convener(s):
Orinda
Moraga
Lafayette Gwen Regalia, Walnut Creek
Walnut Creek Diane Schinnerer, San Ramon
Danville
San Ramon
EAST COUNTY
ParticillatingCities: Convener(s):
Pittsburg Taylor Davis, Pittsburg
Antioch Mary Rocha, Antioch
Brentwood
The Child Care Council will convene another meeting including Supervisor McPeak and the city
councilpersons listed as conveners after all of the regional briefings has been held to compare notes
and determine what additional steps are necessary.
CLVM:eh
childrn2.
cc: Kate Ertz-Berger, Child Care Council
Councilwoman Gwen Regalia, Walnut Creek
Linda Harris, City of Richmond
Jean Mesick, County Community Development Department
- 2 -
SUMMARY OF CITY AND COUNTY EFFORTS RE CHILD CARE
Richmond -Linda Harris, staff to the Mayors' Committee on Child Care,reported that the City is
currently engaged in an assessment of the need for child care in the city versus the supply of child
care. This assessment will take into account the current supply,affordability and quality of care as
well as taking into account various demographic factors in projecting future needs. This study is also
looking at the wages and benefits paid to child care workers. It is hoped that the study will be
completed in May or June, 1989. _
Walnut Creek- Councilwoman Regalia noted that Walnut Creek's principal effort currently is in
helping the elementary schools within the city to establish permanent child care facilities which are
dedicated to child care. The City has indicated its willingness to assist in funding a center at each
elementary school. It costs approximately$110,000 to purchase a portable classroom and provide
plumbing which will meet licensing standards. These child care facilities are all operated by the local
PTA's or parents clubs. The city initially agreed to provide up to$25,000 per site,depending on the
number of children who were residents of the City of Walnut Creek who used the site. This was later
matched again by the city on the condition that the parents club was able to obtain outside funding
for the initial grant. Remaining funding is being obtained from the private community, including
businesses and private donations. In two cases(Buena Vista and Walnut Acres)the City is loaning
money to the centers to complete their facilities by September 1989 with the understanding that the
loan will be repaid with interest.
Pi r - Kate Ertz-Berger reported that Pittsburg is just starting in the child care area and is
perhaps six months behind the type of effort other cities are making.
Concord -Terri Dean reported that the City of Concord started a Concord Child Care Task Force
three or four years ago, consisting of developers and interested citizens. They are doing a needs
assessment. The City has imposed a developer fee of .5% of the construction cost for all non-
residential development in the city. This fund, which varies in size depending on the level of
development in the City from year to year, provides grants for a variety of child care efforts.
San Ramon-San Ramon has identified their greatest need as child care for school age children. The
city has received portable classrooms from the State Department of Education for $1 and has
renovated them to make them earthquake proof and otherwise able to be licensed. The City currently
has seven such sites. It has cost a considerable amount to get each site started. Several service clubs
have been most helpful in providing funding,as have Sunset Development,CIorox and Pac Bell. San
Ramon has established a developer fee of$300 per unit to assist in meeting child care needs.
Ani h-The City of Antioch is pursuing a very exciting proposal involving cooperation from the
County Social Services Department,Los Medanos College and the City of Antioch. The effort will
include establishing a child care centeron the grounds of the College with cooperation,joint funding
and use by County employees, welfare recipients,college faculty and students and city employees.
- 3 -
Contra Costa County-Supervisor McPeak noted that the County has adopted a child care element
for its General Plan and will incorporate this element in the revised General Plan which is currently
under review. The County has also adopted an ordinance which requires all developers to assess the
need for child care generated by their development and then take appropriate steps to mitigate this
additional demand,,either by building child care facilities or providing for additional child care
resources in some way which is acceptable to the County. The County has 17 separately identifiable
unincorporated communities where the child care needs and resources vary widely. A contract for
a Child Care Broker function will be before the Board of Supervisors on April 11. This contract,with
the Child Care Council,will provide the link between the developers and child care providers in an
effort to insure that the mitigation is the most appropriate for each development. The Board of
Supervisors has approved in concept dedicating the increased Transient Occupancy Tax(TOT)from
the Pleasant Hill/BART Station development for the Child Care Affordability Fund. Discussions
are underway to also dedicate increased sales tax revenue from the Pleasant Hill/BART Station
development and development at Buchanan Field Airport to the Child Care Affordability Fund. The
County has also established a special child care account into which the County's savings (from
reduced Social Security taxes)from the implementation of a Dependent Care Assistance Program
(DCAP) will be placed, along with any unused deductions from the DCAP which by federal law
cannot be returned to the employee,pending efforts to get the federal law changed.
I
- 4 -
OFFICE OF THE COUNTY ADMINISTRATOR
CONTRA COSTA COUNTY
Administration Building
651 Pine Street, 11th Floor
Martinez, California
DATE: April 7, 1989
TO: Supervisor Tom Powers
Supervisor Sunne W. McPeak
INTERNAL OPERT ONS COMMITTEE
FROM: Claude L. Van Mart , ki��
t Administrator
SUBJECT: EMPLOYER TAX CRjEDITS FOR DONATIONS RE AB 1853 (Speier)
Supervisor McPeak asked this office to report to your Committee on April 10,1989on whetherdonations which
might be made by employers pursuant to AB 1853 (Speier)would be deductible under the provisions of SB
722(Chapter 1239, Statutes of 1988- Senator Hart). The following is our analysis of this subject.
AB 1853(Speier),introduced March 9,1989,provides that state matching funds may be provided to a County
(or city)to meet the child care needs of the County(or city)if the County(orcity or consortium of cities)develop
a comprehensive child care system by mobilizing public and private resources and complementing existing
resources. AB 1853 goes on to provide that state matching funds shall be provided on a dollar for dollar basis
for funds contributed to a community child care fund by contributors from the public and private sectors of the
local community.
SB 722,which was approved by the Governor on September 23,1988,provides that an employer may receive
a credit of 30%of`The cost paid or incurred by the taxpayer on or after the effective date of this section for
contributions to California child care information and referral services such as those which identify local child
care services,offer information describing these resources to employees, and make referrals of employees
to child care services where there are vacancies." SB 722 also provides for a 30%credit for"The cost paid
or incurred bythe taxpayeron or afterthe effective date of this section forthe start-up expenses of establishing
a child care program or constructing a child care facility in California,to be used primarily by the children of
the taxpayer's employees."
The language referring to deductions from the private sector in AB 1853 is fairly general and does not appear
to necessarily meet the criteria of SB 722. In order to insure that donations made pursuant to AB 1853 are
deductible pursuant to SB 722 your Committee may wish to recommend that the Board of Supervisor ask
Assemblywoman Speier to amend AB 1853 to include language along the lines of the following:
Amend Revenue & Taxation Code Sections 17052.17 and 23617 (as added by Chapter 1239, Statutes of
1988)to specify that any donations made pursuant to Health&Safety Code Sections 25968 and 25968.5(as
proposed by AB 1853 of the 1989 Session of the Legislature)are eligible for the 30%tax credit provided for
in these Sections.
Such a specific reference to subsequent legislation should insure that the Franchise Tax Board will properly
allow tax credits consistent with the Legislature's intentions.
CLVM:eh
tax
cc: Vic Westman, County Counsel
Les Spahnn, Jackson/Barish & Associates
" OFFICE OF THE COUNTY ADMINISTRATOR
CONTRA COSTA COUNTY
Administration Building
651 Pine Street, 11th Floor
Martinez, California
DATE: April 7, 1989
TO: Supervisor Tom Powers
Supervisor Sunne W. McPeak
INTERNAL OPER T ONS COMMITTEE
FROM: Claude L. Van Mart ant Administrator
SUBJECT: EMPLOYER TAX CREDITS FOR DONATIONS RE AB 1853 (Speier)
Supervisor McPeak asked this office to report to your Committee on April 10,1989 on whetherdonations which
might be made by employers pursuant to AB 1853(Speier)would be deductible under the provisions of SB
722(Chapter 1239, Statutes of 1988- Senator Hart). The following is our analysis of this subject.
AB 1853(Speier),introduced March 9,1989,provides that state matching funds may be provided to a County
(or city)to meet the child care needs of the County(or city)if the County(orcity or consortium of cities)develop
a comprehensive child care system by mobilizing public and private resources and complementing existing
resources. AB 1853 goes on to provide that state matching funds shall be provided on a dollar for dollar basis
for funds contributed to a community child care fund by contributors from the public and private sectors of the
local community.
SB 722,which was approved by the Governor on September 23,1988,provides that an employer may receive
a credit of 30%of'The cost paid or incurred by the taxpayer on or after the effective date of this section for
contributions to California child care information and referral services such as those which identify local child
care services,offer information describing these resources to employees, and make referrals of employees
to child care services where there are vacancies." SB 722 also provides for a 30%credit for`The cost paid
or incurred bythe taxpayer on or afterthe effective date of this section for the start-up expenses of establishing
a child care program or constructing a child care facility in California,to be used primarily by the children of
the taxpayer's employees." i
The language referring to deductions from the private sector in AB 1853 is fairly general and does not appear
to necessarily meet the criteria of SB 722. In order to insure that donations made pursuant to AB 1853 are
deductible pursuant to SB 722 your Committee may wish to recommend that the Board of Supervisor ask
Assemblywoman Speier to amend AB 1853 to include language along the lines of the following:
Amend Revenue & Taxation Code Sections 17052.17 and 23617 (as added by Chapter 1239, Statutes of
1988)to specify that any donations made pursuant to Health&Safety Code Sections 25968 and 25968.5(as
proposed by AB 1853 of the 1989 Session of the Legislature) are eligible for the 30%tax credit provided for
in these Sections.
Such a specific reference to subsequent legislation should insure that the Franchise Tax Board will properly
allow tax credits consistent with the Legislature's intentions.
CLVM:eh
tax
cc: Vic Westman, County Counsel
Les Spahnn, Jackson/garish & Associates