Bill Text: CA AB176 | 2019-2020 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: California Alternative Energy and Advanced Transportation Financing Authority: sales and use taxes: exclusions.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2019-10-09 - Chaptered by Secretary of State - Chapter 672, Statutes of 2019. [AB176 Detail]

Download: California-2019-AB176-Amended.html

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Amended  IN  Senate  June 12, 2019

Amended  IN  Assembly  April 12, 2019

Amended  IN  Assembly  February 25, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill

No. 176

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Introduced by Assembly Member Cervantes

January 09, 2019

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An act to add and repeal Section 26011.9 amend Section 26011.8 of the Public Resources Code, relating to alternative energy. energy, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL'S DIGEST

AB 176, as amended, Cervantes. California Alternative Energy and Advanced Transportation Financing Authority: sales and use taxes: exclusions: report. exclusions.

The Sales and Use Tax Law imposes taxes on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state. The Sales and Use Tax Law provides various exemptions from those taxes, including a partial exemption from those taxes, on and after July 1, 2014, and before July 1, 2030, for the gross receipts from the sale of, and the storage, use, or other consumption of, qualified tangible personal property purchased by a qualified person for purchases not exceeding $200,000,000, for use primarily in manufacturing, processing, refining, fabricating, or recycling of tangible personal property, as specified; qualified tangible personal property purchased for use by a qualified person to be used primarily in research and development, as provided; qualified tangible personal property purchased for use by a qualified person to be used primarily to maintain, repair, measure, or test any qualified tangible personal property, as provided; and qualified tangible personal property purchased by a contractor purchasing that property for use in the performance of a construction contract for the qualified person, that will use that property as an integral part of specified processes. Existing law, on and after January 1, 2018, and before July 1, 2030, additionally exempts from those taxes the sale of, and the storage, use, or other consumption of, qualified tangible personal property purchased for use by a qualified person to be used primarily in the generation or production, as defined, or storage and distribution, as defined, of electric power.

The California Alternative Energy and Advanced Transportation Financing Authority Act establishes the California Alternative Energy and Advanced Transportation Financing Authority. The act authorizes, until January 1, 2021, the authority to provide financial assistance in the form of a sales and use tax exclusion for projects, as defined, including those that promote California-based manufacturing, California-based jobs, advanced manufacturing, the reduction of greenhouse gases, or the reduction in air and water pollution or energy consumption. The act prohibits the sales and use tax exclusions from exceeding $100,000,000 for each calendar year. The Sales and Use Tax Law, for the purposes of the taxes imposed pursuant to that law, until January 1, 2021, excludes the lease or transfer of title of tangible personal property constituting a project to any contractor for use in the performance of a construction contract for a participating party that will use that property as an integral part of the approved project. Existing law requires the Legislative Analyst’s Office, by January 1, 2019, to report to the Joint Legislative Budget Committee on the effectiveness of the sales and use tax exclusion program. The act requires the authority to evaluate a project application based on specified criteria, including, among others, the extent to which the project will create new, permanent jobs in the state.

This bill would require the authority, before July 1, 2020, to submit to the Legislature a report responding to the report of the Legislative Analyst’s Office regarding the sales and use tax exclusion program and would require the report to, among other things, address potential program overlap between the sales and use tax exclusion administered by the authority and the sale and use tax exemption administered by the California Department of Tax and Fee Administration.

This bill instead would require the authority to evaluate a project application for the extent to which the project will create new, or result in the loss of, permanent, full-time jobs in the state, as specified.

This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIII A of the California Constitution, and thus would require for passage the approval of ²/₃ of the membership of each house of the Legislature.

This bill would take effect immediately as a tax levy.

Digest Key

Vote: MAJORITY2/3   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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Bill Text

The people of the State of California do enact as follows:

SECTION 1.

 Section 26011.8 of the Public Resources Code is amended to read:

26011.8.

 (a) The purpose of this section is to promote the creation of California-based manufacturing, California-based jobs, advanced manufacturing, the reduction of greenhouse gases, or reductions in air and water pollution or energy consumption. In furtherance of this purpose, the authority may approve a project for financial assistance in the form of the sales and use tax exclusion established in Section 6010.8 of the Revenue and Taxation Code.

(b) For purposes of this section, the following terms have the following meanings:

(1) “Project” means tangible personal property if at least 50 percent of its use is either to process recycled feedstock that is intended to be reused in the production of another product or using recycled feedstock in the production of another product or soil amendment, or tangible personal property that is used in the state for the design, manufacture, production, or assembly of advanced manufacturing, advanced transportation technologies, or alternative source products, components, or systems, as defined in Section 26003. “Project” does not include tangible personal property that processes or uses recycled feedstock in a manner that would constitute disposal as defined in subdivision (b) of Section 40192.

(2) “Recycled feedstock” means materials that would otherwise be destined for disposal, having completed their intended end use and product lifecycle.

(3) “Soil amendments” may include “compost,” as defined in Section 14525 of the Food and Agricultural Code, “fertilizing material,” as defined in Section 14533 of the Food and Agricultural Code, “gypsum” or “phosphatic sulfate gypsum,” as those terms are defined in Section 14537 of the Food and Agricultural Code, or a substance distributed for the purpose of promoting plant growth or improving the quality of crops by conditioning soils through physical means.

(c) The authority shall publish notice of the availability of project applications and deadlines for submission of project applications to the authority.

(d) The authority shall evaluate a project applications application based upon on all of the following criteria:

(1) The extent to which the project develops manufacturing facilities, or purchases equipment for manufacturing facilities, located in California.

(2) The extent to which the anticipated benefit to the state from the project equals or exceeds the projected benefit to the participating party from the sales and use tax exclusion.

(3) The extent to which the project will create new, permanent or result in the loss of, permanent, full-time jobs in California. California, including the average and minimum wage for each classification of full-time employees proposed to be hired or not retained.

(4) To the extent feasible, the extent to which the project, or the product produced by the project, results in a reduction of greenhouse gases, a reduction in air or water pollution, an increase in energy efficiency, or a reduction in energy consumption, beyond what is required by federal or state law or regulation.

(5) The extent of unemployment in the area in which the project is proposed to be located.

(6) Any other factors the authority deems appropriate in accordance with this section.

(e) At a duly noticed public hearing, the authority shall approve, by resolution, project applications for financial assistance.

(f) Notwithstanding subdivision (j), and without regard to the actual date of any transaction between a participating party and the authority, any project approved by the authority by resolution for the sales and use tax exclusion pursuant to Section 6010.8 of the Revenue and Taxation Code before March 24, 2010, shall not be subject to this section.

(g) The Legislative Analyst’s Office shall report to the Joint Legislative Budget Committee on the effectiveness of this program, on or before January 1, 2019, by evaluating factors, including, but not limited to, the following:

(1) The number of jobs created by the program in California.

(2) The number of businesses that have remained in California or relocated to California as a result of this program.

(3) The amount of state and local revenue and economic activity generated by the program.

(4) The types of advanced manufacturing, as defined in paragraph (1) of subdivision (a) of Section 26003, utilized.

(5) The amount of reduction in greenhouse gases, air pollution, water pollution, or energy consumption.

(h) The exclusions granted pursuant to Section 6010.8 of the Revenue and Taxation Code for projects approved by the authority pursuant to this section shall not exceed one hundred million dollars ($100,000,000) for each calendar year.

(i) (1) The authority shall study the efficacy and cost benefit of the sales and use tax exemption as it relates to advanced manufacturing projects. The study shall include the number of jobs created, the costs of each job, and the annual salary of each job. The study shall also consider a dynamic analysis of the economic output to the state that would occur without the sales and use tax exemption. Before January 1, 2017, the authority shall submit to the Legislature, consistent with Section 9795 of the Government Code, the result of the study.

(2) Before January 1, 2015, the authority shall, consistent with Section 9795 of the Government Code, submit to the Legislature an interim report on the efficacy of the program conducted pursuant to this section. The study shall include recommendations on program changes that would increase the program’s efficacy in creating permanent and temporary jobs, and whether eligibility for the program should be extended or narrowed to other manufacturing types. The authority may work with the Legislative Analyst’s Office in preparing the report and its recommendations.

(j) This section shall remain in effect only until January 1, 2021, and as of that date is repealed, unless a later enacted statute, that becomes operative on or before January 1, 2021, deletes or extends that date. The sale or purchase of tangible personal property of a project approved before January 1, 2021, shall continue to be excluded from sales and use taxes pursuant to Section 6010.8 of the Revenue and Taxation Code for the period of time set forth in the authority’s resolution approving the project pursuant to this section.

SEC. 2.

 This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.

SECTION 1.Section 26011.9 is added to the Public Resources Code, to read:

26011.9.

(a)Before July 1, 2020, the authority shall submit to the Legislature, consistent with Section 9795 of the Government Code, a report that responds to the report prepared by the Legislative Analyst’s Office pursuant to subdivision (g) of Section 26011.8. The report shall, among other items, do both of the following:

(1)Address potential program overlap between the sales and use tax exclusion pursuant to Section 26011.8 and the sales and use tax exemption pursuant to Section 6377.1 of the Revenue and Taxation Code.

(2)Make recommendations on program changes to the sales and use tax exclusion pursuant to Section 26011.8 that would streamline the application and approval process.

(b)Pursuant to Section 10231.5 of the Government Code, this section shall become inoperative on July 1, 2024, and, as of January 1, 2025, is repealed.