BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1422
                                                                  Page  1

          Date of Hearing:   May 8, 2013

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

              AB 1422 (Committee on JEDE) - As Amended:  April 15, 2013 

          Policy Committee:                              Committee on  
          Revenue and Taxation                          Vote: 8-0
                        Committee on JEDE                     9-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY  

          This bill revises the definition of participating party for  
          purposes of the sales and use tax (SUT) exemption to include  
          out-of-state and overseas entities.  Specifically, this bill:   

          1)Specifies that an entity located outside the state, including  
            an entity located overseas, that commits to and demonstrates  
            that it will be opening a manufacturing facility in the state,  
            may qualify for the SUT exemption as a participating party.

          2)Repeals the requirement for the Governor's Office of Business  
            and Economic Development to report to the Legislature by  
            January 1, 2017, regarding the most efficient and  
            cost-effective methods for the state to create jobs in  
            advanced manufacturing. 

           FISCAL EFFECT  

          Negligible fiscal impact.  The proposed change to the definition  
          of participating party will not result in an additional General  
          Fund revenue loss.  Existing law imposes an annual cap of $100  
          million on the amount of SUT exclusions that may be granted to  
          eligible projects. 

           COMMENTS  

           1)Purpose.   According to the staff of the Assembly Committee on  
            Jobs, Economic Development, and the Economy, AB 1422 is  
            intended to provide necessary clarification for efficient  
            administration of the California Alternative Energy and  








                                                                  AB 1422
                                                                  Page  2

            Advanced Transportation Financing Authority  (CAEATFA) the  
            purpose of which is to attract new manufacturing facilities to  
            be built in California.  

           2)Background  .  The California Alternative Energy Source  
            Financing Authority was established in 1980 with an  
            authorization of $200 million in revenue bonds to finance  
            projects utilizing alternative or renewable energy sources,  
            such as wind, solar, co-generation and geothermal.  Over time  
            its role expanded and the name changed to CAEATFA.  

            With the passage of SB 71 (Padilla), Chapter 10, Statutes of  
            2010, CAEATFA is authorized, until January 1, 2021, to grant a  
            SUT exemption for the purchase of equipment that is used for  
            the design, manufacture, production or assembly of advanced  
            transportation technologies.  Last year, the Legislature also  
            temporarily authorized CAEATFA, until July 1, 2016, to grant  
            financial assistance to eligible projects that promote the  
            utilization of advanced manufacturing.
                
            3)Previous Legislation  :

             a)   SB 1128 (Padilla), Chapter 677, Statutes of 2012,  
               authorizes CAEATFA to expand the sales and use tax  
               exclusion program to include advanced manufacturing  
               projects and caps the program benefit at $100 million per  
               year for all projects.  

             b)   SB 71 (Padilla), Chapter 10, Statutes of 2010,  
               authorizes CAEATFA to administer a state and local sales  
               tax exclusion program for tangible personal property that  
               is used advanced transportation technologies or alternative  
               source products, components or systems.  

           4)There is no registered opposition to this bill  .


           Analysis Prepared by  :    Roger Dunstan / APPR. / (916) 319-2081