Legislative Update: Unfortunately, the legislators are in the midst of chaos as they strive to finish their business prior to the close of the 2009 Regular Session midnight tonight. Therefore, we’ll issue a summary of what happened to the bills of interest agriculture next Friday.
Value-Added Glitch:
The USDA has announced the opening of the application process for the 2009 Value-Added Producer Grants program (VAPG) , which has be extremely beneficial to California cooperatives and commodity groups. Unfortunately, the USDA has included new disclosure requirements that may preclude cooperatives and other farmer-owned entities from applying. With respect to co-ops, their applications must include a list of their owners/members and the percentage of ownership, of the owners of each applicant. This is doable for most applicants, however, there’s an additional disclosure if any of the member/owners are organized as trusts, partnerships, LLC’s or S Corporations. In such instances the owners of these entities will have to be disclosed as well. This is private information that’s not released by most co-ops. Thus, many that have members organized under the
aforementioned ownership structures will not be able to meet the grant application requirements. Ag Council is working to prohibit this change from occuring and ensuring the rule is not finalized.
Proposed Tax Changes: Governor Schwarzenegger’s Commission on the Twenty First Century Economy has released draft language proposing major changes to California’s corporate and personal income tax provisions. At this point, it’s unclear whether or not the proposals impact state cooperative taxation. The Commission’s recommendations must be passed by the legislature and signed by the governor prior to taking affect. The major provisions include:
Personal Income Tax
The personal income tax (PIT) would significantly change in structure and the state’s reliance on this revenue source would diminish substantially. Under the proposal, the number of tax brackets would be reduced from six to two; credits would be eliminated (except for the other states’ tax credit); deductions would be dramatically curtailed. After a phase-in period based on reductions in the current law PIT, the new PIT structure beginning in year three of the plan would be as follows:
• Tax rate of 2.75% for income up to $56,000 for joint filers ($28,000 single filers) and 6.50% for incomes above that amount.
• Standard deduction of $45,000 for joint filers ($22,500 single filers).
• Itemized deductions limited to mortgage interest, property taxes and charitable contributions.
Corporation Tax
The corporation tax on businesses would be eliminated in 2012, the first year of the tax plan.
Business Net Receipts Tax
A business net receipts tax (BNRT) would be imposed on all businesses deemed to be doing business in the state. Doing business would constitute not only physical presence in the state but also economic presence. The tax would be based on net receipts, calculated by subtracting purchases from the gross receipts of the firm. It would apply to all forms of business including C corporations, pass-through entities and sole proprietorships. The BNRT would apply all sectors of the economy. The tax would be phased-in over a five year period as other taxes were eliminated and phased-out.
Volatile Organic Compounds: The Department of Pesticide Regulation (DPR) and the Air Resources Board (ARB) will hold a public meeting to discuss California’s efforts to reduce ozone forming volatile organic compounds (VOCs) from pesticides in the San Joaquin Valley. The meeting will provide the public with an opportunity to learn about DPR’s recent actions to reduce pesticide VOC emissions from fumigant use and to explore future opportunities to reduce pesticide VOC emissions. ARB and DPR staff will make brief presentations. The Majority of the meeting is devoted to public comment and discussion. DPR Director Mary-Ann Warmerdam, ARB Member Dorene D’Adamo, and ARB Executive Officer James Goldstene will lead the discussion. Spanish interpretation will be available.
The meeting will be held September 28, 2009, 5:00 p.m. to 7:00 p.m. in the Harvest Hall, Stanislaus County Agricultural Commissioner’s Office 3800 Cornucopia Way, Modesto.
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