The Joint Venture Program generates revenues and savings to the state. For example, up to 80 percent of an inmate's Joint Venture wages is subject to: (1) federal, state, and local taxes; (2) payment of restitution to crime victims; (3) withholding for support of the prisoner's family; and (4) reimbursement to the state for the inmate's cost of room and board. Many inmates working in Joint Venture businesses are also eligible to earn credits that reduce the length of time they serve in prison, thereby reducing incarceration costs.
In general, businesses that participate in the Joint Venture Program pay the same types of taxes as firms not involved in the program. Among these taxes are unemployment insurance taxes, which support the state Unemployment Insurance program. This program pays unemployment benefits to workers who lose their jobs through no fault of their own. The state tax rate paid by employers to support the Unemployment Insurance program is higher for businesses whose former employees are frequently paid unemployment benefits than for businesses which generate fewer benefit payments. Existing law provides that inmates are eligible to collect unemployment benefits after their release from state prison on the basis of their employment in the Joint Venture Program. As a result, some Joint Venture businesses may eventually pay higher Unemployment Insurance taxes.
Federal law permits all California businesses to receive a federal tax credit which lowers their federal unemployment tax payments. In order for California businesses to receive this tax credit, the state's Unemployment Insurance program must conform to federal standards.Proposal
Proposal
This measure prohibits an inmate who participates in the Joint Venture Program, and is then released from state prison, from collecting unemployment insurance benefits based upon his or her participation in a Joint Venture business.Fiscal Effect
Fiscal Effect
The measure prohibits unemployment benefit payments to former inmates based on their participation in the Joint Venture Program. Thus, this measure is likely to result in a reduction in expenditures for the state Unemployment Insurance program, as well as a reduction in the taxes paid by businesses to support the Unemployment Insurance program. To the extent that this measure encourages increased business participation and thereby increased inmate employment in the Joint Venture Program, it is likely to generate additional revenues and payments to the state to offset a portion of the cost of the program. The overall fiscal effect of the measure is likely to be minor.
Federal authorities have initially advised the state that denial of unemployment benefits to former inmates who worked for Joint Venture businesses may violate federal standards. If federal authorities ultimately make such a determination, California businesses would risk the loss of their federal tax credits.