In Depth

Proposition 39 would eliminate the ability of multistate businesse to choose a tax liability formula for determining taxable income. Begininning in 2013, multistate businesses would be required to use the single sales factor method. Proposition 39 also imposes a set of rules on how multistate businesses calculate the portion of sales in California. Certain cable companies would be required to work under a set of separate rules.

Proposition 39 would also establish a new state fund called the Clean Energy Job Creation Fund. The fund would be used to expand the use of alternative energy, and maximize energy efficiency. Specifically, the measure would support:

• Energy efficiency retrofits and alternative energy programs in state public schools, colleges, universities, and other public facilities.
• Funding and technical assistance for energy retrofitting projects.
• Workforce and job development and training programs as funded by the Legislature. The Legislature would determine which projects would be funded at which agencies.
• All projects must be coordinated with the California Public Utilities Commission and the California Energy Commission.
• The creation of an oversight board to annually review and evaluate spending from the Clean Energy Job Creation Fund.

Proposition 39 would raise approximately $1 billion annually in additional tax revenues from multistate businesses. The additional revenues would start in 2013-14. For five years from 2013-14, about half the additional revenues would be transferred to the Clean Energy Job Creation Fund.

Any revenue designated to Clean Energy Job Creation Fund would not fall under the state's annual Proposition 98 education funding guarantee. Revenues generated from Proposition 39 that do not go to the Clean Energy Job Creation Fund, would increase Proposition 98 minimum by approximately $200 million anually.