Dan Walters

Dan Walters

By Dan Walters
dwalters@sacbee.com
Published: Monday, Nov. 11, 2013 – 12:00 am

What happened – or, more accurately, what didn’t happen – to Senate Bill 30 this year is a perfect illustration of the Legislature’s endemic disconnection from real life.

Real life is that hundreds of thousands, if not millions, of California homeowners lost their homes to foreclosures and short sales when the housing bubble burst and a severe recession gripped the state.

Technically, mortgage debts that are forgiven are income to the ex-homeowners, but Congress recognized that taxing that phantom income would be wrong and created an exemption.

The Legislature followed suit vis-à-vis state income taxes, but the temporary state exemption expired at the end of 2012 and SB 30 would have reinstated it for an extra year.

(The bill was being carried, it should be noted, by Sen. Ron Calderon, who is now embroiled in a federal bribery investigation, but that doesn’t taint this particular bill.)

SB 30 had no opposition and sailed through the Senate 36-0, but only after the Senate’s leadership inserted a “poison pill” into the measure. It declared that SB 30 could take effect only if another measure, Senate Bill 391, was enacted.

SB 391 did have opposition, principally from the California Association of Realtors. It would impose fees on real estate transactions to raise money for low-income housing.

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