MORAIN: Using state environmental act as bait to muscle a tax bill

  • Assembly Speaker John Perez, D-Los Angeles, right, confers with Assemblyman Roger Hernandez, D-West Covina, as the Assembly debated Perez's measure to close a corporate tax loophole and use the money for college scholarships Monday. The measure, AB1500, eliminates a $1 billion tax break for out-of-state corporations and uses the money for college scholarships for families earning between $80,000-$100,000, was approved 54-25 and sent to the Senate. (Rich Pedroncelli / Associated Press)

On Monday, Assemblyman Brian Nestande, a Palm Desert Republican, broke with the GOP and voted for Assembly Speaker John A. Pérez's $1 billion tax hike to fund “middle-class scholarships.” On Tuesday, Nestande ceased being Assembly Republican Caucus chairman.

“I would prefer to say I stepped down,” Nestande told me, though he had no choice.

The rest of us got a peek at how this town works, especially at the end of legislative sessions, when the insiders turn serious about doing their deals.

On the surface, Pérez won big on Monday, muscling his signature piece of legislation through the Assembly. As currently written, his Assembly Bill 1500 would raise taxes by $1 billion on out-of-state companies that sell heavily into California but have little payroll or property here. Think General Motors, Chrysler and, notably, Altria, also known as Philip Morris, the world's largest cigarette maker.

Republicans are all but irrelevant in the Legislature except when the talk turns to tax increases, which require two-thirds votes. To round up the few Republicans he needs, Pérez is offering sweeteners.

The biggest plum would be an overhaul of the California Environmental Quality Act, the 1970 law signed by then-Gov. Ronald Reagan that has been used and sometimes misused to restrict and block development.

In an email that is bouncing around the Capitol, a Pérez aide circulated language for one version of the overhaul. Proponents of the changes say the proposal would remove red tape from development. Environmentalists say the proposal would gut the law.

The truth is hard to come by. With the legislative session down to its final weeks, there won't be time for legislative hearings on the changes. The language has not appeared publicly in an actual bill.

Pérez is trying to distance himself from the tax-CEQA play. In a statement, he said Assembly members voted for the tax legislation on its own merits. His statement also said he supports “modernizing” the environmental quality act.

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