BILL ANALYSIS �
AB 886
Page 1
Date of Hearing: May 24, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 886 (Allen) - As Amended: April 16, 2013
Policy Committee: Revenue and
Taxation Vote: 7-0
JEDE 8-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill authorizes the California Transportation Financing
Authority to award $500 million in tax credit certificates to
exporters and importers who meet specified criteria.
Specifically, this bill:
1)Authorizes the authority to award a tax credit certificate or
certificates to an exporter or importer that demonstrates to
the satisfaction of the authority that, in a taxable year
beginning on or after January 1, 2013, and before January 1,
2018, it met any of the following requirements:
a) An increase in exports or imports, as specified.
b) Specified export and import levels for ports or
airports.
c) A net increase, as specified, in the number of qualified
full-time employees hired in California during the taxable
year.
d) Incurred capital costs for a cargo facility constructed
in California during the taxable year.
2)Requires the authority to develop procedures for awarding
credits, administering the program and charging fees to cover
administrative costs.
3)Limits the total amount of tax credit certificates to be
awarded in each of the five calendar years to $100 million,
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for a total of $500 million. Specifies that any portion of
the authorized amount not awarded in a calendar year may be
awarded in a future calendar year ending before January 1,
2019.
4)Provides a formula for determining the allowable tax credit,
based on either tons of exports or imports through a port,
value of exports and imports through an airport, or a number
of new employees.
FISCAL EFFECT
The FTB estimates revenue loss of $25 million in fiscal year
(FY) 2013-14, $85 million in FY 2014-15, and $100 million in FY
2015-16.
COMMENTS
1)Purpose . According to the author, California has the
potential to lower its high unemployment rate through a plan
that promotes and fosters business in California and invests
in infrastructure to support goods movement.
2)Support . Proponents of AB 886, including the Bay Area Council
and the Los Angeles County Economic Development Corporation,
state California's international trade sector is a powerful
engine driving the state's economy and is critically important
to economic recovery. According to supporters, AB 886 helps
to protect and grow the important international trade sector
and creates jobs for Californians by providing tax incentives
for boosting exports and imports through California seaports
and airports and, most importantly, by creating new
cargo-moving jobs.
Proponents contend California cannot afford to take its
competitive edge in international trade for granted, as
California continues to compete with Canadian and Mexican
ports, as well as American ports. Supporters declare
competition will intensify as Gulf and east coast ports
aggressively pursue California's market share once the widened
Panama Canal becomes operational in 2015.
3)Background. California is a major trade gateway on the
Pacific Rim and is home to three of the world's 50 largest
ports. There is concern about the future of the ports because
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of growing competition around the world. On the West Coast,
Canada is aggressively marketing its mega port in Vancouver
and new port facilities in Prince Rupert, specifically
highlighting the economic and time advantages over Southern
California ports. Mexico is also beginning to compete. The
biggest competition, however, may come from improvements to
the Panama Canal. In 2014, a $5.25 billion expansion of the
Panama Canal will be completed. The new expansion will allow
larger ships to move through the canal, allowing a bigger
share of Asian container freight to move directly through to
the eastern U.S.
4)Previous Legislation.
a) AB 2656 (C. Calderon) of 2012 was similar to AB 886.
This bill was held on this committee's Suspense File.
b) SB 830 (Wright and Bradford), 2011, created a trade
infrastructure tax credit for taxpayers that invest in
and use public port facilities in California. SB 830
failed to pass out of the Senate Committee on Governance
and Finance.
c) AB 2687 (Bradford), 2010, created a trade
infrastructure investment tax credit and an import-export
cargo tax credit for taxpayers that invest in and use
public port facilities in California. AB 2687 was held
on this committee's Suspense File.
1)There is no registered opposition to this bill.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081