Hotly contested legislation to raise a billion dollars annually for college scholarships by altering the tax formula for out-of-state corporations narrowly passed the Assembly on Monday.
Needing a supermajority to pass, Assembly Bill 1500 received the bare-minimum number of votes in the 80-member chamber. The final tally was 54-24.
The bill's fate remains uncertain in the Senate, where a similar proposal targeting out-of-state corporations for additional taxes died last year after passing the lower house.
Assembly Speaker John A. Pérez, who proposed AB 1500, received support Monday from every Democrat and from Republican Brian Nestande of Palm Desert and independent Nathan Fletcher of San Diego.
The outcome was uncertain, however, for nearly an hour. AB 1500 fell one vote short in the first roll call. Democrat Tony Mendoza of Artesia ultimately agreed to cast a "courtesy vote" to pass it.
But Mendoza said he wants to see AB 1500 amended in the Senate to give the billion dollars to campuses, rather than to students, so they can hire more teachers and offer more classes.
"What good is it in your pocket if kids can't get into classes?" Mendoza said.
Pérez, after Monday's vote, was noncommittal about Mendoza's push.
"It's a scholarship," he said of AB 1500, to generate revenue, and a companion bill to award it to college students. "I'm open to all discussions, but this is a scholarship."
AB 1500 targets a provision of California tax law that was part of the state's 2009 budget deal.
Current law allows companies to choose the more beneficial of two tax formulas one based solely on sales in California in proportion to sales elsewhere, the other accounting for sales, payroll and property in California.
AB 1500 would eliminate the option and base taxes on sales in California, imposing what is known as the "single sales factor."
The measure would provide an incentive to locate corporations in California.
It also would help level the playing field for large firms in the state, such as Qualcomm and Genentech, to compete against corporations based elsewhere, Pérez said.
The billion dollars raised would provide scholarships totaling about $8,200 per year for UC students and $4,000 per year for CSU students whose families earn less than $150,000 a year. About $150 million would be given to community colleges, Pérez said.
Republicans blasted AB 1500 as a "billion-dollar tax hike" that would stifle job creation when California's economy badly needs a boost.
Assemblyman Tim Donnelly, R-Twin Peaks, said that AB 1500 ultimately would hurt the very students whose education it supports.
"There aren't going to be any jobs for these kids," he said.