Amended  IN  Senate  September 06, 2019
Amended  IN  Senate  March 25, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Bill
No. 378

Introduced by Senator Wiener
(Coauthors: Assembly Members Bonta and Wicks)

February 20, 2019

An act to add Part 8.1 (commencing with Section 15001) to Division 2 of, and to repeal Section 13301 of, the Revenue and Taxation Code, relating to taxation, and calling an election, to take effect immediately. amend Section 707 of, and to add Sections 592, 748, 911.3, and 2111.5 to, the Public Utilities Code, relating to electricity.


LEGISLATIVE COUNSEL'S DIGEST


SB 378, as amended, Wiener. Taxation: estate, gift, and generation-skipping transfer taxes. Electrical corporations: deenergization events: procedures: allocation of costs: reports.
Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations. Every public utility is required by existing law to furnish such reports as the commission may require.
This bill would require an electrical corporation to annually report to the commission, the Office of Emergency Services, the Department of Forestry and Fire Protection, the Independent System Operator, and county governments within its service territory on the age, useful life, and condition of the electrical corporation’s equipment, including the date of most recent inspection and maintenance records, with an assessment of the current and future fire and safety risk posed by the equipment, as well as of the economic, environmental, and public safety impacts of deenergization events, as defined.
Existing law requires the commission to institute a rulemaking proceeding by March 1, 2012, for the purpose of considering and adopting a code of conduct, associated rules, and enforcement procedures, as specified, to govern the conduct of an electrical corporation relative to the consideration, formation, and implementation of community choice aggregation programs and to implement the code of conduct, associated rules, and enforcement procedures by January 1, 2013.
This bill would require the commission to institute a rulemaking for the purpose of considering and adopting a code of conduct and enforcement procedures, as specified, to govern the conduct of an electrical corporation relative to the consideration, formation, and implementation of community choice aggregation programs, new or expanded local publicly owned electric utilities, microgrid or distributed resource programs and policies, or other efforts to expand electrical service options available to consumers.
Existing law requires each electrical corporation to annually prepare and submit a wildfire mitigation plan to the commission for review and approval, as specified. Existing law requires a wildfire mitigation plan of an electrical corporation to include, among other things, protocols for deenergizing portions of the electrical distribution system that consider the associated impacts on public safety, as well as protocols related to mitigating the public safety impacts of those protocols, including impacts on critical first responders and on health and communications infrastructure.
This bill would, on or before June 1, 2020, require the commission, in consultation with the Department of Consumer Affairs, to establish a procedure for customers, local governments, and others affected by a deenergization event to recover costs accrued during the deenergization event from an electrical corporation within 2 weeks of the end of the event. The bill would require an electrical corporation to create a fund, of an amount to be determined by the commission, for the recovery of costs accrued by customers, local governments, and others during a deenergization event. The bill would require that money be paid into the fund exclusively by the electrical corporation’s shareholders, would prohibit expenses paid by the fund from being recovered either directly or indirectly in rates, and would require those expenses be borne exclusively by the shareholders of the electrical corporation. The bill would prohibit an electrical corporation from billing customers for any nonfixed costs during a deenergization event or from charging customers increased amounts after a deenergization event, in order to offset losses accrued during a deenergization event. The bill would require that any profit accrued by an electrical corporation due to a deenergization event be remitted or credited to ratepayers, while any loss be borne by the electrical corporation’s shareholders.
Existing law establishes an independent Public Advocate’s Office within the commission with the goal to obtain the lowest possible rate for service consistent with reliable and safe service levels. Existing law requires the director of the office to annually appear before the appropriate policy committees of the Assembly and the Senate to report on the activities of the office.
This bill would require the office to produce an annual report on the economic, environmental, and public safety impacts of deenergization events, using information provided by electrical corporations as well as independent analysis.
Existing law provides for the imposition of fines and civil penalties for the violation of the California Constitution, statutes, or an order, decision, or requirement of the commission by a public utility.
This bill would provide that an electrical corporation is subject to an unspecified civil penalty for every hour that a deenergization event is in place.
Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime, when a penalty has not otherwise been provided.
Because the provisions of this bill would be a part of the act and would require action to be taken by the commission to implement its requirements, and because penalties are not provided for certain of the bill’s requirements, the bill would impose a state-mandated local program by creating a new crime.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law, as added by an initiative measure that was approved by voters as Proposition 6 at the June 8, 1982, statewide primary election, prohibits the Legislature or a political subdivision of the state from imposing any tax on or by reason of any transfer occurring by reason of death. Existing law imposes a California estate tax, commonly referred to as the “pick up tax,” equal to a certain portion of the maximum allowable amount of credit for state death taxes allowable under applicable federal estate tax law. The Economic Growth and Tax Relief Reconciliation Act of 2001 phased out the allowance of this credit, and, as of 2005, no longer allows a person to claim a credit of this nature under federal law. Therefore, the “pick up tax” is no longer imposed in California.

This bill would propose to the voters a repeal of the above initiative measure prohibiting the imposition of a tax on or by reason of any transfer occurring by reason of death and would propose the imposition of estate, gift, and generation-skipping transfer taxes, in modified conformity with federal law, on and after January 1, 2021. This bill would propose the creation of the Children’s Wealth and Opportunity Building Fund as a special fund in the State Treasury, the requirement that all taxes, interest, penalties, and other amounts collected and paid to the Franchise Tax Board, less payments of refunds, be deposited in the fund, and the continuous appropriation of all moneys deposited in the fund to programs and services that directly address and alleviate socio-economic inequality and build assets among people that have historically lacked them.

Proposition 6 prohibits amendment of the initiative measure by the Legislature unless the amendment is approved by the voters.

This bill would call a special election to be consolidated with the next statewide general election. It would condition the amendment of the initiative upon voter approval and would require the Secretary of State to submit the provisions of the bill that amend the initiative statute to the voters for their approval at the next consolidated statewide election. The bill would permit its provisions to be amended by a bill passed by a majority vote of the membership of both houses of the Legislature unless otherwise required by the California Constitution.

This bill would declare that it is to take effect immediately as an act calling an election.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NOYES  

The people of the State of California do enact as follows:


SECTION 1.

 Section 592 is added to the Public Utilities Code, to read:

592.
 The commission shall direct an electrical corporation to submit an annual report to the commission, the Office of Emergency Services, the Department of Forestry and Fire Protection, the Independent System Operator, and county governments within its service territory on the age, useful life, and condition of the electrical corporation’s equipment, including the date of most recent inspection and maintenance records, with an assessment of the current and future fire and safety risk posed by the equipment, as well as of the economic, environmental, and public safety impacts of deenergization events. For purposes of this section, “deenergization event” has the same meaning as defined in Section 748.

SEC. 2.

 Section 707 of the Public Utilities Code is amended to read:

707.
 (a) Not later than March 1, 2012, the The commission shall institute a rulemaking proceeding for the purpose of considering and adopting a code of conduct, associated rules, and enforcement procedures, procedures to govern the conduct of the electrical corporations relative to the consideration, formation, and implementation of community choice aggregation programs authorized in Section 366.2. programs, new or expanded local publicly owned electric utilities, microgrid or distributed resource programs and policies, and other efforts to expand electrical service options available to consumers. The code of conduct, associated rules, and enforcement procedures, shall do all of the following:
(1) Ensure that an electrical corporation does not market against a community choice aggregation program, a new or expanded local publicly owned electric utility, microgrid or distributed resource program or policies, or other efforts to expand electrical service options available to consumers, except through an independent marketing division that is funded exclusively by the electrical corporation’s shareholders and that is functionally and physically separate from the electrical corporation’s ratepayer-funded divisions.
(2) Limit the electrical corporation’s independent marketing division’s use of support services from the electrical corporation’s ratepayer-funded divisions, and ensure that the electrical corporation’s independent marketing division is allocated costs of any permissible support services from the electrical corporation’s ratepayer-funded divisions on a fully allocated embedded cost basis, providing detailed public reports of such use.
(3) Ensure that the electrical corporation’s independent marketing division does not have access to competitively sensitive information.
(4) (A) Incorporate rules that the commission finds to be necessary or convenient in order to facilitate the development of community choice aggregation programs, a new or expanded local publicly owned electric utility, microgrid or distributed resource programs or policies, or other efforts to expand electrical service options available to consumers, to foster fair competition, and to protect against cross-subsidization paid by ratepayers.
(B) It is the intent of the Legislature that the rules include, in whole or in part, the rules approved by the commission in Decision 97-12-088 and Decision 08-06-016.
(C) This paragraph does not limit the authority of the commission to adopt rules that it determines are necessary or convenient in addition to those adopted in Decision 97-12-088 and Decision 08-06-016 or to modify any rule adopted in those decisions.
(5) Provide for any other matter that the commission determines to be necessary or advisable to protect a ratepayer’s right to be free from forced speech or to implement that portion of the federal Public Utility Regulatory Policies Act of 1978 that establishes the federal standard that no electric utility may recover from any person other than the shareholders or other owners of the utility, any direct or indirect expenditure by the electric utility for promotional or political advertising (16 U.S.C. Sec. 2623(b)(5)).
(b) The commission shall ensure that the code of conduct, associated rules, and enforcement procedures to govern the conduct of an electrical corporation relative to new or expanded local publicly owned electric utilities, microgrids, distributed resource programs and policies, and other efforts to expand electrical service options available to consumers are implemented by no later than January 1, 2013. ____.
(c) This section does not limit the authority of the commission to require that any marketing against a community choice aggregation plan plan, a new or expanded local publicly owned electric utility, microgrid or distributed resource programs or policies, or other efforts to expand electrical service options available to consumers, shall be conducted by an affiliate of the electrical corporation, or to require that marketing against a community choice aggregator not be conducted by a marketing division of the electrical corporation, subject to affiliate transaction rules to be developed by the commission.

SEC. 3.

 Section 748 is added to the Public Utilities Code, to read:

748.
 (a) For purposes of this section, “deenergization event” means an intentional, temporary termination of electrical service to an area for the purpose of reducing or eliminating the risk of wildfires resulting from the operation of the electrical grid or related facilities.
(b) On or before June 1, 2020, the commission, in consultation with the Department of Consumer Affairs, shall establish a procedure for customers, local governments, and others affected by a deenergization event to recover costs accrued during the deenergization event from an electrical corporation within two weeks of the end of the event.
(c) On or before June 1, 2020, the commission shall require an electrical corporation to create a fund, of an amount to be determined by the commission, to fund recovery of costs accrued by customers, local governments, and others during a deenergization event. Moneys shall be paid into the fund exclusively by the electrical corporation’s shareholders, and expenses paid by the fund shall not be recoverable either directly or indirectly in rates and shall be borne exclusively by the shareholders of the electrical corporation.
(d) An electrical corporation shall not bill customers for any nonfixed costs during a deenergization event, and shall not charge customers increased amounts after a deenergization event in order to offset losses accrued during a deenergization event.
(e) Beginning on or before June 1, 2020, the commission shall require any profit accrued by an electrical corporation due to a deenergization event to be remitted or credited to ratepayers and any loss to be borne by the electrical corporation’s shareholders.

SEC. 4.

 Section 911.3 is added to the Public Utilities Code, to read:

911.3.
 The Public Advocate’s Office shall produce an annual report on the economic, environmental, and public safety impacts of deenergization events, using information provided by electrical corporations as well as independent analysis. For purposes of this section, “deenergization event” has the same meaning as defined in Section 748.

SEC. 5.

 Section 2111.5 is added to the Public Utilities Code, to read:

2111.5.
 An electrical corporation is subject to a penalty of not less than ____ dollars ($____) for every hour that a deenergization event is in place, multiplied by the sum of the number of full sets of 50,000 customers affected plus one for any remainder. For purposes of this section, “deenergization event” has the same meaning as defined in Section 748.

SEC. 6.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.
SECTION 1.

The Legislature finds and declares the following:

(a)The most significant predictor of the future financial success of a child is the wealth level of the child’s parents with at least 20 percent, and up to 80 percent, of a person’s wealth being the result of an intergenerational transfer.

(b)Throughout history, federal and state governments have provided “wealth starter kits” for some Americans, giving gifts of land, education, government-backed mortgages and farm loans, a social safety net, and business subsidies sometimes exclusively and usually disproportionately, to White families.

(c)According to economist Darrick Hamilton, for communities of color, especially Blacks and Latinos, it has never been easy to build assets of any type because of low levels of intergenerational wealth transfers.

(d)The typical Black or Latino family essentially has no economic cushion. According to the California Family Economic Self-Sufficiency Standard, a measure that quantifies the minimum income necessary to cover all basic expenses, about one-half of Black and Latino households are barely scraping by and unable to meet their most basic financial needs without family or public support.

(e)Given the roles of intergenerational wealth transfer, and past and present barriers that have kept marginalized families from building wealth, private action and market forces alone cannot be expected to address wide-scale racial wealth inequality, and public sector intervention is needed.

SEC. 2.

It is the intent of the Legislature to address the racial wealth gap by enacting legislation that would create California Social Inheritance Accounts to counterbalance the uneven effects of intergenerational wealth transfer and reverse our state’s record level of inequality.

SEC. 3.Section 13301 of the Revenue and Taxation Code is repealed.
SEC. 4.Part 8.1 (commencing with Section 15001) is added to Division 2 of the Revenue and Taxation Code, to read:
8.1.Estate, Gift, and Generation-Skipping Transfer Tax
15001.

(a)For estates of decedents dying on and after January 1, 2021, a tax is hereby imposed on the transfer of the taxable estate of every decedent who was a citizen or resident of the United States and a resident of the State of California.

(b)The tax imposed by this section shall be an amount equal to the tax imposed by Chapter 11 of Subtitle B of the Internal Revenue Code of 1986, as amended, with the following modifications:

(1)The basic exclusion amount shall be three million five hundred thousand dollars ($3,500,000), which shall not be adjusted for inflation.

(2)The taxpayer shall be granted a credit for all taxes paid to the United States under Chapter 11 of Subtitle B of the Internal Revenue Code.

(c)The tax imposed by this section shall be paid by the executor, and shall be due nine months after the date of death of the decedent.

15002.

(a)For transfers of property by gifts made on and after January 1, 2021, a tax is hereby imposed for each calendar year on the transfer of property by gift during the calendar year by any citizen or resident of the United States who is also a resident of the State of California.

(b)The tax imposed by this section shall be an amount equal to the tax imposed by Chapter 12 of Subtitle B of the Internal Revenue Code of 1986, as amended, with the following modifications:

(1)The lifetime exclusion amount shall be three million five hundred thousand dollars ($3,500,000), which shall not be adjusted for inflation.

(2)The taxpayer shall be granted a credit for all taxes paid to the United States under Chapter 12 of Subtitle B of the Internal Revenue Code.

(c)The tax imposed by this section shall be paid by the donor, and shall be due by the deadline to submit state income tax returns for the year in which the transfer of property by gift was made.

15003.

(a)For generation-skipping transfers occurring on and after January 1, 2021, a tax is hereby imposed on every generation-skipping transfer within the meaning of Chapter 13 of Subtitle B of the Internal Revenue Code of 1986, as amended.

(b)The tax imposed by this section shall be an amount equal to the tax imposed by Chapter 13 of Subtitle B of the Internal Revenue Code of 1986, as amended, with the following modifications:

(1)The basic exclusion amount shall be three million five hundred thousand dollars ($3,500,000), which shall not be adjusted for inflation.

(2)The taxpayer shall be granted a credit for all taxes paid to the United States under Chapter 13 of Subtitle B of the Internal Revenue Code.

(c)The tax imposed by this section shall be paid in accordance with Section 15002 for a transfer of property by gift and in accordance with Section 15001 for a transfer of the taxable estate of a decedent.

15004.

(a)A taxpayer may elect to extend the time to pay the tax imposed by this part for any reason and in the same manner permitted to a similarly situated United States taxpayer under the Internal Revenue Code of 1986, as amended, but in no case shall the time extended to pay the tax exceed 14 years from the date the tax is due.

(b)On or before July 1, 2021, the Franchise Tax Board shall develop returns for payment of the taxes imposed under this part.

(c)Notwithstanding any other provision of law, the penalties set forth in Part 10 (commencing with Section 17001), including any amendments thereto, apply to this part as follows:

(1)Penalties for failing to file a timely return also apply for failing to file a timely return for the taxes imposed under this part.

(2)Penalties for failing to timely pay the tax also apply for failing to timely pay the taxes imposed under this part.

(3)Penalties for filing a false or misleading return apply to filing a false or misleading return for taxes imposed under this part.

(d)The Franchise Tax Board may promulgate regulations to implement this part.

15005.

(a)The Children’s Wealth and Opportunity Building Fund is hereby created as a special fund in the State Treasury. All taxes, interest, penalties, and other amounts collected and paid to the Franchise Tax Board pursuant to this part, less payments of refunds, shall be deposited in the fund.

(b)Notwithstanding Section 13340 of the Government Code, moneys deposited in the Children’s Wealth and Opportunity Building Fund are hereby continuously appropriated, without regard to fiscal years, to programs and services that directly address and alleviate socio-economic inequality and that build assets among people that have historically lacked them.

15006.

This part shall become operative on January 1, 2021.

SEC. 5.

This act may be amended by a bill passed by a majority vote of the membership of both houses of the Legislature, unless otherwise required by the California Constitution.

SEC. 6.

(a)As an amendment of an initiative statute, Sections 3 to 5, inclusive, of this act shall become effective only upon approval by the voters at a statewide election.

(b)A special election is hereby called, to be held throughout the state on the date of the next statewide election, for approval by the voters of Sections 3 to 5, inclusive, of this act. The special election shall be consolidated with the statewide election to be held. The consolidated elections shall be held and conducted in all aspects as if there were only one election, and only one form of ballot shall be used.

(c)Notwithstanding Section 9040 of the Elections Code, or any other law, the Secretary of State shall, pursuant to subdivision (c) of Section 10 of Article II of the California Constitution, submit Sections 3 to 6, inclusive, of this act to the voters for their approval at the consolidated statewide election.

SEC. 7.

This act calls an election within the meaning of Article IV of the California Constitution and shall go into immediate effect.