For such a big state, California has few incentive programs at the state level. Nevertheless, the ones it does have are expensive and wasteful. A big one is the infamous Film Tax Credit, which got expanded yet again in 2021 by $330 million. Even the redevelopment agencies that were dissolved in 2012 are still paying back their bond debts. At the local level, cities can “share” sales taxes with retail companies. Major recipients of this secretive and controversial subsidy scheme include Apple, Gap and Ulta.
California’s incentives are governed by a mixture of agencies including the Governor’s Office of Economic Development, the California Film Commission, and the State Treasurer’s Office. At the local level, Enhanced Infrastructure Financing Districts and Community Revitalization Investment Authorities have replaced the now-defunct tax increment financing districts.
The Golden State stands to improve its disclosures of company-specific information. The list of recipients is provided for Employment Training Panel (ETP), the Sales and Use Tax Exclusion (STE) programs, California Competes Tax Credit, among others.
California’s tax expenditure budget has minimal information. California is one of the few states that do not report tax abatements pursuant to Statement No. 77, claiming that none meet the criteria. Some cities and counties do, but school districts generally don’t as they do not levy taxes independently. California’s tax expenditure budget also has little detailed information.
Incentives are evaluated on an ad hoc basis with neither an established body nor an established schedule. As the state has few programs, it should not be onerous to do frequent audits. In fact, it was because of an audit that the expensive and ineffectual Enterprise Zone program (known as redevelopment) was terminated.