(From the Sacramento Bee) Legislation to prevent the state from taxing forgiven mortgage debt cleared the state Assembly early Monday, offering potential tax relief to thousands of Californians who lost their homes in 2009.

“The feds don’t do it and we’re not going to do it, either,” Assemblyman Charles Calderon, D-Montebello, said Monday before a 47-27 vote that sent the measure to Gov. Arnold Schwarzenegger.

Schwarzenegger’s office signaled later that he may veto the measure. The governor opposes an unrelated provision in SBX8 32 concerning tax refunds sought by corporations. “Our position hasn’t changed,” said Schwarzenegger spokesman Mike Naple.

Read more here: California legislators vote to extend tax relief for home short sales