BILL ANALYSIS Appropriations Committee Fiscal Summary 73 (Dunn) Hearing Date: 5/31/01 Amended: 3/26/01 Consultant: Anne Maitland Policy Vote: Housing: 7-0 ____________________________________________________________ ___ BILL SUMMARY: SB 73 increases the annual allocation of the low-income housing credit from $50 million to $70 million in 2001 and adjusts that amount annually for inflation Fiscal Impact (in thousands) Provisions 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 Fund Credit Increase -0- <500 4,000 10,000 16,000 19,000 General STAFF COMMENTS: SUSPENSE FILE Currently, both federal and state laws provide for a credit for taxpayers who invest in low-income housing projects. Under federal law, the amount of credit varies: developments in high-cost areas qualify for more credits; developments which receive a partial federal subsidy qualify for fewer credits. The federal credit is claimed over a 10-year period. Under state law, a 30% credit may be claimed for projects which receive no federal subsidy; a 13% credit may be claimed for projects which receive a federal subsidy. These credits are claimed over a 4-year period. The Tax Credit Allocation Committee annually allocates both the federal and state credits to developers of low-income housing. The federal government allocates about $40 million annually. From 1987 through 1997, $35 million in state credits was allocated annually; currently the annual allocation is $50 million. The $40 million in federal credits represents only the first-year costs of the credit; the succeeding 9 years of credit are "off budget" and not counted against the $40 million annual allocation. The $35 or $50 million state allocation represents the full four-year cost of the credit. This bill would increase the allocation from $50 million to $70 million in 2001. Beginning in 2002, the $70 million would be adjusted for inflation increases using the federal Consumer Price Index.