The Senate Governance and Finance Committee voted 5 to 2 to move the first-of-its-kind bill to the Senate Appropriations Committee for review.
The Youth Equality Act, sponsored by Sen. Ricardo Lara, D-Long Beach, would deny tax-exempt status to youth groups that discriminate on the basis of gender identity, race, sexual orientation, nationality, religion or religious affiliation.
That means those groups would have to pay corporate taxes on donations, membership dues, camp fees and other sources of income, as well as sales taxes on food, beverages and homemade items sold at fundraisers.
Former Boy Scouts of America president Rick Cronk appeared before the committee on Wednesday, telling members that Scouting has had a positive impact on the state and that being taxed on fundraising sales would hurt local troops.
The proposal was written with the Boy Scouts and its exclusion of gay members and troop leaders in mind, but its language also would require other youth groups to revisit membership policies for transgender and atheist members.
If the Appropriations Committee passes the bill, it would require two-thirds approval from the full Senate before it could be sent to the California Assembly for consideration.
Boy Scouts of America spokesman Deron Smith declined to comment on Wednesday's vote. Conservative legal aid groups have said they would sue if the bill gets enacted into law because it penalizes groups based on their beliefs.
The BSA is reviewing its membership policies. Later this month, Scouting's executive officers will present a resolution regarding the policy to be considered in May by the voting members of the National Council.