Recently, a California Senator has asked the Legislature’s Joint Legislative Audit Committee to authorize an audit of California corporate subsidies. Senator Ricardo Lara noted concern that the subsidies that target specific industries in California were not providing the economic returns expected.
Senator Lara noted that California tax subsidies exceed $5 Billion anually, and openly questioned the value they bring to the economy and the State’s treasury. Our Governor has been a champion of these subsidies, and even has the power to give some on his own without legislative approval.
Some question the political incentives tied to these subsidies, and no agency has yet studied their impact on California’s economy or increased California state tax revenue. The audit committee approved a review of the six largest subsidies, agreeing that this was long overdue. This could signal an important shift in corporate subsidies and taxation, and may be the first step in an overhaul of California’s tax system.