BILL ANALYSIS Ó
AB 1710
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Date of Hearing: May 11, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
1710 (Calderon) - As Amended April 5, 2016
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill requires the Air Resources Board (ARB) to establish a
comprehensive incentive program for the purchase of
zero-emission vehicles (ZEVs) or near zero-emission vehicles
(NZEVs), and provides specified sales tax and personal income
tax exemptions for the purchase of such vehicles. Specifically,
this bill:
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1)Requires ARB, by January 1, 2019, to develop and implement a
comprehensive program, as specified, to promote ZEV and NZEV
deployment to meet the ZEV goals established by the Governor
and the Legislature. This is to include an incentive program
targeting companies located outside population centers or
companies whose employees commute from a 50-mile radius.
2)Provides that program incentives may include grants,
traditional loans, revolving loans, or other appropriate
measures, and requires 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.
3)Require the ARB, in consultation with the California Energy
Commission (CEC), to identify opportunities for coordinated
investments in ZEV and NZEV infrastructure.
4)Provides, on or after January 1, 2017, an exemption under the
Sales and Use Tax (SUT) Law, for that portion of the cost of a
new or used ZEV or NZEV that does not exceed $40,000 and is
purchased by a "low-income purchaser"-household income not
exceeding 80% of their county median income.
5)Allows, from 2017 through 2025, a Personal Income Tax (PIT)
credit to a "qualified taxpayer," as defined, equal to $2,500
for purchase of a ZEV or NZEV.
6)States legislative intent to enact legislation providing that
the credit shall be refundable, upon appropriation by the
Legislature.
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7)Allows, from 2017 through 2025, a PIT deduction of $2,500 to a
"qualified taxpayer," as defined, for purchase of a ZEV or
NZEV.
8)Requires the qualified taxpayer to irrevocably elect either
the tax credit or tax deduction.
9)Requires the Franchise Tax Board (FTB), in consultation with
the State Board of Equalization (BOE), to annually report to
the Legislature regarding the efficacy of the SUT exemption,
PIT credit, and PIT deduction.
FISCAL EFFECT:
1)General Fund revenue losses associated with the PIT
credit/deduction are estimated at $55 million in 2016-17, $120
million in 2017-18, and $160 million in 2018-10.
2)General Fund revenue loss associated with the SUT exemption is
estimated at $9.5 million in 2017-18, and would likely
increase slightly each year assuming increase sales of ZEV and
NZEV to qualified taxpayers.
3)Annual special fund costs to the ARB of around $150,000 to
develop and implement the employer incentive program and minor
annual costs for the reporting requirement. The ARB indicates
that costs to implement other aspects of the incentive program
are absorbable, as the commission is already developing and
implementing similar pilot projects. The ultimate cost of the
incentive program itself is unknown, but likely in the tens of
millions of dollars annually, from special funds.
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COMMENTS:
1)Background. 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 of placing one million ZEVs and NZEVs on California's
roadways by 2023.
To meet these 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 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 incentivize the purchase of ZEVs
and NZEVs include the Clean Air Vehicle Rebate Program (CVRP),
which provides rebates for purchase of new ZEVs or NZEVs.
Specifically $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. An additional
incentive of $1,500 is offered within CVRP for low-income
consumers.
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2)Purpose. The author and the sponsor (CALSTART) note that while
incentive programs have been successful in encouraging ZEV and
NZEV adoption, 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 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.
3)Related Legislation. AB 1965 (Cooper), pending on this
committee's Suspense file, expands the Enhanced Fleet
Modernization Program Plus-Up (EFMP Plus-Up) in disadvantaged
communities and in additional areas with poor air quality.
AB 1691 (Gipson), also on today's committee agenda, requires
the ARB to enhance EFMP guidelines to ensure that the program
is not misused and that priority is given to replacement of
the oldest, high-mileage vehicles.
AB 1851 (Gray), also on today's agenda, establishes and
expands incentive programs to increase the use of clean-air
vehicles.
Analysis Prepared by:Chuck Nicol / APPR. / (916)
319-2081
AB 1710
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