SACRAMENTO (AP) — State Assemblyman Brian Nestande resigned Tuesday from a Republican leadership post after providing the lone GOP vote on a bill that would close a tax loophole for out-of-state corporations.
The bill, AB1500, which would eliminate a $1 billion tax break and use the expected windfall to reduce college tuition, passed the Assembly on Monday without a vote to spare.
"I understood when I made the vote that I would have to step down," said Nestande, R-Palm Desert, referring to his previous position as chairman of the Assembly Republican Caucus.
He and Assemblyman Nathan Fletcher, who recently left the Republican Party to become an independent, were the only non-Democrats to vote for the bill, which closes a loophole the Legislature approved in 2009 as a way to get a handful of Republican lawmakers to vote for the state budget.
Tuesday's development is another illustration of the divide between the two major parties on budgeting and tax issues, as well as a reminder of the retribution faced by GOP lawmakers who compromise with Democrats on tax matters. Republican lawmakers in recent years have punished several of their legislative leaders for taking votes they deemed in violation of a no-tax pledge that most of them have signed.
The loophole Nestande voted to close allows corporations to choose the more advantageous of two tax formulas. The bill would force all corporations to use the same formula.
In a statement Tuesday, Nestande cited more than a dozen states with Republican governors — including Texas, Wisconsin and Indiana — that have embraced the uniform tax policy, known as the single sales factor.
Under the current law, corporations are allowed to base their California taxes on their sales, payroll and property within the state, giving a significant tax advantage to companies based outside California and with few, if any, employees here. Nestande said that isn't fair to California-based companies and said his vote had the support of the California Business Roundtable, which includes 21 of the state's largest companies.
"I'm Republican from the beginning to the end, always have been, always will be," Nestande said in a telephone interview. "This is not a partisan issue; it's a tax change to favor California companies as other states favor their home companies."
Before casting his vote Monday, Nestande said he hoped the two parties would be able to work together to promote economic growth. On Tuesday, he spoke about the inertia he sees among Republican lawmakers when it comes to matters of taxation.
"I wish there was more thoughtful discussion on the issue and not just a reflexive reaction," he said.
As caucus chairman, Nestande was second in command to Assembly Minority Leader Connie Conway, R-Tulare. Conway's office did not immediately respond to requests for comment.
Fletcher, who broke with the Republican party earlier this year over what he called the "petty games" of hyper-partisan politics, issued a statement on Facebook Tuesday afternoon condemning Assembly Republicans for forcing Nestande out "in retaliation."
"This is everything wrong with the Republican party and party politics," he wrote.
Republicans and a group of out-of-state corporations argue that the bill would make California less friendly to national corporations and threaten existing jobs. Supporters of the bill contend that the loophole is unfair and puts businesses based in California at a competitive disadvantage.
The bill awaits action in the Senate, where Republican lawmakers are promising to block Democrats from reaching the two-thirds majority vote they need to send the legislation to the governor, who has promised to sign it.
Assembly Speaker John Perez wrote the bill and has made it his top priority this year. The Los Angeles Democrat issued a statement after Nestande's resignation, commending him for his vote.
"... I believe this kind of leadership should be practiced by every member of every party," Perez said.