BILL ANALYSIS Ó
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THIRD READING
Bill No: AB 2434
Author: Gomez (D)
Amended: 5/19/14 in Assembly
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 6-0, 6/25/14
AYES: Wolk, Knight, Beall, DeSaulnier, Hernandez, Walters
NO VOTE RECORDED: Liu
SENATE APPROPRIATIONS COMMITTEE : 5-0, 8/14/14
AYES: De León, Hill, Lara, Padilla, Steinberg
NO VOTE RECORDED: Walters, Gaines
ASSEMBLY FLOOR : 77-0, 5/27/14 - See last page for vote
SUBJECT : Income taxes: exclusion
SOURCE : Author
DIGEST : This bill excludes from gross income, under both the
personal income tax and corporation tax laws, amounts received
as a rebate, voucher, or other financial incentive issued by a
local water agency for participation in a turf removal water
conservation program. The exclusion will be in effect for
taxable years 2014 through 2018.
ANALYSIS : Federal and state law allows taxpayers to exclude
from gross income any subsidy provided (directly or indirectly)
by a public utility to customers for the purchase or
installation of any energy conservation measure. An "energy
CONTINUED
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conservation measure" is any installation or modification
primarily designed to reduce consumption of electricity or
natural gas or improve the management of energy demand in a
dwelling unit as defined by federal law.
State law provides that amounts received as a rebate from a
local water or energy agency or supplier for expenses paid or
incurred by a taxpayer for the purchase or installation of a
water conservation water closet, water and energy efficient
clothes washer, or plumbing device necessary to serve the
recycled water uses are treated as a refund or price adjustment
of amounts payable to that agency or supplier.
State law also provides any amounts received as a rebate,
voucher, or other financial incentive issued by the California
Energy Commission, the Public Utility Commission, or a local
publicly owned electric utility for any expenses paid or
incurred by a taxpayer for the installation of thermal system,
solar system, wind energy system device, or fuel cell generating
system, are excluded from gross income.
Generally, to be excluded from gross income, a rebate must be
based on or related to the cost of the property; the rebate must
be received from someone having a reasonable connection to the
sale of the property such as the manufacturer, distributor, or
seller and installer; and the rebate must not represent payment
or compensation for services.
This bill excludes from gross income, under both the personal
income tax and corporation tax laws, amounts received as a
rebate, voucher, or other financial incentive issued by a local
water agency for participation in a turf removal water
conservation program.
As a tax levy, this bill goes into effect immediately, and
applies to taxable years beginning on or after January 1, 2014
and before January 1, 2019.
Comments
Local governments have recently established rebate programs to
encourage reduced water consumption. For example, the
Metropolitan Water District of Southern California offers a
rebate based on each square foot of water-intensive turf
removed. Likewise, the City of Sacramento recently launched a
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"cash for grass" program that will provide rebates to homeowners
who replace their lawns with drought-tolerant landscaping.
Increased offering and participation in such programs will
likely increase as the State's current drought continues.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee, the Franchise
Tax Board (FTB) indicates that the bill results in estimated
revenue losses (General Fund) of $100,000 in 2014-15, $80,000 in
2015-16, and $80,000 in 2016-17. The bill will not
significantly impact FTB's administrative costs.
SUPPORT : (Verified 8/14/14)
California Landscape Contractors Association
California Pool & Spa Association
California Special Districts Associations
City of Los Angeles
City of Pasadena
Coachella Valley Water District
Eastern Municipal Water District
Metropolitan Water District of Southern California
San Diego County Water Authority
Sonoma County Water Agency
ASSEMBLY FLOOR : 77-0, 5/27/14
AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,
Gorell, Gray, Grove, Hagman, Hall, Harkey, Roger Hernández,
Holden, Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal,
Maienschein, Mansoor, Medina, Melendez, Mullin, Muratsuchi,
Nazarian, Nestande, Olsen, Pan, Perea, John A. Pérez, V.
Manuel Pérez, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas,
Skinner, Stone, Ting, Wagner, Waldron, Weber, Wieckowski,
Wilk, Williams, Yamada, Atkins
NO VOTE RECORDED: Patterson, Quirk-Silva, Vacancy
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AB:nl 8/14/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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