BILL ANALYSIS Ó
AB 1710
Page 1
Date of Hearing: April 11, 2016
ASSEMBLY COMMITTEE ON TRANSPORTATION
Jim Frazier, Chair
AB 1710
(Calderon) - As Amended April 5, 2016
SUBJECT: Vehicular air pollution: advanced-technology
light-duty vehicles
SUMMARY: Requires the California Air Resources Board (ARB), in
consultation with the State Energy Resources Conservation and
Development Commission (Commission), to establish a long-term,
comprehensive incentive program to help the state achieve its
zero emission vehicle (ZEV) deployment goals. Specifically,
this bill:
1)Requires ARB, on or before January 1, 2019, to develop and
implement a comprehensive program to promote ZEV and
near-zero-emission vehicle (NZEV) deployment that meets ZEV
goals established by the Governor and the Legislature, and
includes a portfolio of incentives including, but not
necessarily limited to, the following:
a) An employer incentive program, including but not limited
to, incentives targeting companies located outside of
population centers or companies whose employees commute
from a 50-mile radius;
AB 1710
Page 2
b) An incentive program targeted at low-income individuals
for the purchase or lease of ZEVs or NZEVs; and,
c) On-road incentives.
2)Provides that incentives may include grants, traditional
loans, revolving loans, or other appropriate measures.
3)Requires ARB, in implementing the incentive program, to
consult with the Commission to identify opportunities for
coordinated investments in ZEV and NZEV infrastructure.
4)Requires that the Greenhouse Gas Reduction Fund (GGRF), Air
Quality Improvement Fund (AQIP), or Alternative and Renewable
Fuel and Vehicle Technology Fund (ARFVTP) monies be made
available, upon appropriation by the Legislature, for the
incentive program.
5)Requires ARB, to submit an annual report to the Legislature
regarding the effectiveness of the incentive program.
6)Declares the intent of the Legislature to enact legislation to
provide, a tax credit incentive program created by this bill,
in the cases where a credit exceeds the "net tax," that the
excess be refunded to the taxpayer.
7)Requires, for taxation purposes, on or after January 1, 2017
that low income buyers would not pay state sales taxes on the
first $40,000 of qualifying ZEVs or NZEVs.
8)Allows, for each taxable year beginning on or after January 1,
AB 1710
Page 3
2017, and before on January 1, 2026, buyers to receive a
$2,500 tax credit for the purchase of qualifying ZEVs or NZEVs
provided to the taxpayer in the taxable year that the vehicle
is purchased.
9)Requires that, where applicable, specified sections of the
Internal Revenue Code apply.
10)Requires that the Franchise Tax Board (FTB), in consultation
with the State Board of Equalization (BOE), prepare an annual
report to the Legislature on or before January 1, 2018 and
annually thereafter until January 1, 2027, detailing results
of the program.
11)Defines a variety of terms.
EXISTING LAW:
1)Requires ARB, pursuant to AB 32, (Núñez), Chapter 488,
Statutes of 2006, to develop a plan of how to reduce statewide
GHG emissions to 1990 levels by 2020.
2)Authorizes ARB, pursuant to AB 32, ARB to include the use of
market-based mechanisms (cap and trade) to comply with AB 32.
3)Establishes the GGRF in the State Treasury and requires all
money collected pursuant to cap and trade, with limited
exceptions, be deposited into the fund.
4)Creates the ARFVTP, pursuant to AB 118 (Núñez), Chapter 750,
Statutes of 2007, and requires the Commission to fund projects
that develop and deploy technologies and alternative and
AB 1710
Page 4
renewable fuels in the marketplace to help meet the state's
climate change policies.
5)Creates the Air Quality Improvement Program (AQIP),
administered by ARB and the Commission, in consultation with
local air districts, to fund specified air quality improvement
projects.
6)Established, by the Governor's Executive Order B-16-12, the
goal of placing 1.5 million ZEVs and NZEVs on California's
roadways by 2025.
7)Established the Clean Air Vehicle Rebate Program (CVRP),
pursuant to AB 32, promote the purchase of ZEVs and NZEVs by
providing rebates of up to $5,000 for per qualifying vehicles.
8)Established the Charge Ahead California Initiative, pursuant
to SB 1275 (de León),
Chapter 530, Statutes of 2014, to provide incentives that
increase the availability of ZEVs and NZEVs particularly in
disadvantaged communities and for low- and moderate income
consumers and established the goal of placing one million ZEVs
and NZEVs into service by January 1, 2023.
9)Establishes the Sales and Use Tax (SUT) Law that imposes a tax
on retailers measured by the gross receipts from the sale of
tangible personal property sold at retail in the state, or on
the storage and use, or consumption of tangible personal
property.
10)Established the Bradley-Burns Uniform Local Sales and Use Tax
Law authorizing cities and counties to impose local sales and
use taxes in conformity with the SUT.
AB 1710
Page 5
11)Allows, pursuant to the Personal Income Tax Law, various
credits against the taxes imposed. And allows deductions from
gross income in computing adjusted gross income under that
law.
FISCAL EFFECT: Unknown
COMMENTS: To help improve air quality and meet the state's GHG
reduction goals, a number of programs have been developed to
encourage vehicle owners to scrap their older, high-polluting
cars and trucks and replace them with newer, cleaner vehicles.
While many of these programs are offered to all consumers, some
programs are specifically target toward disadvantaged
communities and lower-income individuals. For example, the
Enhanced Fleet Modernization Program (EFMP), administered by
ARB, provides funding for vehicle owners to retire their
high-polluting vehicles. In addition, ARB also administers EFMP
Plus-Up in two air districts in California that are classified
as extreme non-attainment (San Joaquin Valley and South Coast).
EFMP Plus-Up, provides additional payment incentives (on top of
the "base" EFMP incentives) to further encourage individuals to
retire and replace their older, less-efficient vehicles with
advanced-technology cars.
Other programs designed to incentive the purchase of ZEVs and
NZEVs include the CVRP, administered by ARB and the Commission,
in consultation with local air districts. CVRP provides rebates
of up to $5,000 for purchasing or leasing a new qualifying ZEV
or NZEV. Specifically, CVRP allows ZEV and NEV buyers to obtain
a $5,000 rebate for a hydrogen fuel-cell vehicle; a $2,500
rebate for a zero-emission battery electric vehicle; a $1,500
voucher for a plug-in hybrid electric vehicle; or a $900 rebate
for a neighborhood electric vehicle. Recently, an additional
incentive of $1,500 is offered within CVRP for low-income
consumers. While there is no cap on the number of rebates which
may be issued, rebates are subject to funding availability and
AB 1710
Page 6
the program has more than once been forced to stop issuing
rebates and create a waiting list when funds were fully
expended.
Both the Legislature and the Governor have called for increased
deployment of advanced-technology vehicles to improve air
quality, address climate change, and meet the Governor's target
of getting 1.5 million ZEVs and NZEVs on California's roadways
by 2025 as well as the Legislature's goal (SB 1275) of placing
one million ZEVs and NZEVs on California's roadways by 2023.
These targets were set, in part, to help achieve turnover of the
existing light-duty (passenger) fleet which, as part of the
overall effort to address transportation sector.
The author and the sponsor (CALSTART) note that while incentive
programs, such as CVRP, have been successful in encouraging ZEV
and NZEV adoption, by providing over 141,000 rebates for these
vehicles to date, they also point out that California is far
from reaching a its ZEV adoption goals. For example, they note
that the ZEV Mandate requires that 15% of new car sales in 2025
must be ZEVs, yet last year, (2015) ZEVs made up only 3.1% of
new cars sold. The author correctly points out that a
substantial "ramp up" must occur to increase the rate of ZEV
sales in order to achieve the ZEV Mandate by 2025.
To address this issue, the author has introduced this bill which
would further incentivize the purchase of ZEVs and NZEV using a
two-pronged approach. First, this bill would require ARB, in
consultation with the Commission develop a comprehensive program
to promote ZEV and NZEV deployment. While the author leaves
AB 1710
Page 7
much of the development of the program to ARB, this bill does
specify certain program parameters including the requirement
that the program include an employer incentive program targeting
companies located outside of population centers or companies
whose employees commute from a 50-mile radius; incentives such
as grants, loans, or other measures targeted to incentivize
low-income individuals to purchase or lease ZEVs or NZEV; as
well as unspecified on-road incentives. To ensure program
evaluation occurs, this bill also requires ARB to submit an
annual report to the Legislature regarding the effectiveness of
the incentive program.
To further incentivize ZEV adoption, this bill also includes a
variety of tax incentives. The first providing that no state
sales taxes would be collected from low-income purchasers on the
first $40,000 of a qualifying vehicle. Additionally, AB 1710
also provides two separate incentives with the first lowering
the buyers taxable income by $2,500 and the second providing a
tax credit of $2,500 to the buyer. To achieve feedback on
efficacy of the tax incentives, the FTB, in consultation with
BOE would be required to prepare an annual report to the
Legislature detailing results of the program.
Writing in support, the Global Automakers note that while the
state should be commended for its efforts to encourage ZEV and
NZEV adoption, despite various efforts and activities, the fact
that ZEV sales remains low, and is seemingly dropping, is
concerning. They note that meeting the ZEV Mandate will require
consistent and ongoing support to increase ZEV and NZEV sales
and meeting these goals cannot be accomplished by the automobile
industry alone and, instead. To that end, they support the
author's efforts further incentive the purchase of these
vehicles.
AB 1710
Page 8
Committee concerns: Undoubtedly this bill will incentivize ZEV
and NZEV purchases, particularly since these incentives are
added to existing incentive programs. While this bill focuses on
meeting emissions reduction goals for the light-duty sector (or
passenger fleet), it is important to recognize that the
light-duty vehicle sector is only one component of a much larger
transportation system, including ports, trucking, maritime, and
rail industries, that each contribute to overall transportation
sector emissions. It is also important to recognize that the
freight sector has some of the greatest adverse effects on
disadvantaged communities because these communities tend to
border freight corridors and associated facilities such as
warehouses and freight hubs. Therefore, Legislature may wish
consider taking the transportation system into account when
evaluating where and how much to should be allocated to achieve
the greatest emissions benefits.
It is also important to note that a number of other bills on
this same topic are before the Legislature this year. These
bills each provide increased rebates and incentives to encourage
ZEV and NZEV sales and, alone or in combination, these proposals
could easily expend annual GGRF revenues many times over. Given
the significant "call" on these funds, is imperative that the
Legislature establish clear funding priorities and goals so that
the monies can achieve the greatest possible emissions
reductions benefit.
Related legislation: AB 1965 (Cooper), requires ARB to expand
the Enhanced Fleet Modernization Plus Up Program in
disadvantaged communities and in areas with poor air quality to
increase retirement of high polluting vehicles and replace them
with cleaner cars. AB 1965 is scheduled to be heard by this
committee on April 11, 2016.
AB 1710
Page 9
AB 1691 (Cooper), requires the state board, in consultation with
the bureau, to adopt, as a part of the program, an element of
the program to commence on July 1, 2017, subject to
appropriation by the Legislature, with a goal of annually
replacing 10,000 vehicles from disadvantaged communities over a
5-year period. AB 1691 is scheduled to be heard by this
committee on April 18, 2016.
AB 1851 (Gray and Ting), creates and expands a broad array of
incentive programs, including but not limited to the CVRP, and
apply tax credits to the purchase of ZEVs and NZEVs to increase
the sales and use these clean air vehicles. AB 1851 is
scheduled to be heard by this committee on April 11, 2016.
Previous legislation: SB 1275 (de León), Chapter 530, Statutes
of 2014, established the Charge Ahead California Initiative
that, among other things, set the goal of placing one million
zero- and near-zero-emission vehicles into service on
California's roadways by January 1, 2023, and increasing access
to these vehicles for disadvantaged, low-, and moderate-income
communities and consumers.
AB 8 (Perea), Chapter 401, Statutes of 2013, extended until
January 1, 2024, extra fees on vehicle registrations, boat
registrations, and tire sales in order to fund the programs that
support the production, distribution, and sale of alternative
fuels and vehicle technologies, as well as air emissions
reduction efforts.
AB 1710
Page 10
SB 535 (de León), Chapter 830, Statutes of 2013, required that a
minimum of 25% of the available moneys in the GGRF go to
projects that provide benefits to identified disadvantaged
communities and that a minimum of 10% of the available moneys in
the fund to projects located within identified disadvantaged
communities.
AB 945 (Ting) of 2015, would have provided a partial Sales and
Use Tax exemption for the purchase and use of a qualified
vehicle. AB 945 was returned to the Chief Clerk by the Assembly
Appropriations Committee pursuant to Joint Rule 56.
AB 1077 (Ting and Muratsuchi), of the 2013-14 Legislative
Session, provided a partial SUT exemption for QMV, as specified,
and reduced the amount of vehicle license fee imposed on an
owner of a QMV. AB 1077 was held on the Assembly Appropriation
Committee's suspense file.
AB 118, (Núñez), Chapter 750, Statutes of 2007, created the
California Alternative and Renewable Fuel, Vehicle Technology,
Clean Air, and Carbon Reduction Act of 2007 that required the
Commission to implement the ARFVTP and provide funding measures
to specified entities to develop and deploy technologies and
alternative and renewable fuels in the marketplace to help
attain the state's climate change policies.
AB 32 (Núñez), Chapter 488, Statutes of 2006, required the ARB
to develop a plan of how to reduce emissions to 1990 levels by
the year 2020 and also required ARB to ensure that, to the
extent feasible, GHGs reduction requirement and programs direct
public and private investment toward the most disadvantaged
communities.
AB 1710
Page 11
AB 1007 (Pavley), Chapter 371, Statutes of 2005, required ARB
and the Commission to develop a plan to increase alternative
fuels use in California.
AB 32, (Núñez), Chapter 488, Statutes of 2006, to develop a plan
of how to reduce statewide GHG emissions to 1990 levels by 2020.
REGISTERED SUPPORT / OPPOSITION:
Support
CALSTART (Sponsor)
Alta Motors
Global Automakers
Sierra Club California
Opposition
None on file
AB 1710
Page 12
Analysis Prepared by:Victoria Alvarez / TRANS. / (916) 319-2093