BILL ANALYSIS Ó
AB 1851
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Date of Hearing: May 11, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
1851 (Gray) - As Amended April 13, 2016
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| |Revenue and Taxation | |6 - 3 |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill creates and expands a broad array of incentives to
increase the sales of clean air vehicles. Specifically, this
bill:
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1)Requires the Air Resources Board, beginning January 1, 2017,
until January 1, 2026, to provide the following Clean Vehicle
Rebate Program (CVRP) rebates, on the first $60,000 of the
manufacturer's suggested retail price (MSRP) or the final
sales price, whichever is lower:
a) 10% qualified plug-in hybrid electric vehicles;
b) 15% for qualified plug-in battery-electric vehicles;
and,
c) 25% for qualified fuel cell vehicles;
2)Requires the following rebates, as in (1), for residents of
disadvantaged communities:
a) 40% for qualified plug-in hybrid electric vehicles;
b) 45% for qualified plug-in battery-electric vehicles;
and,
c) 55% for qualified fuel cell vehicles.
3)Requires the ARB to suspend the CVRP pre-approval process if
there are insufficient funds available to award CVRP
incentives and to provide dealers and consumers with no less
than
30-days advanced notice if the pre-approval process is to be
suspended.
4)Requires the ARB, until January 1, 2026, to issue rebates to a
property owner or lessee for the purchase and installation of
up to two electric vehicle (EV) charging stations on
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residential properties, for residents of disadvantaged
communities, and up to 10 EV charging stations on commercial
or multifamily properties, with rebates provided as follows:
a) $2,000 for the first year of installation;
b) $1,500 following the first year of installation; and,
c) $1,000 following the second year of installation.
5)Requires that monies in the Greenhouse Gas Reduction Fund
(GGRF) be available, upon appropriation by the Legislature,
for the enhanced CVRP rebates and the charging station
rebates.
6)Removes the cap on the green sticker program, thereby allowing
an unlimited number of qualifying vehicles (plug-in electric
hybrid vehicles) access to high-occupancy vehicle lanes with
single occupants.
7)Excludes until January 1, 2026, from the sales price or gross
receipts on which Sales and Use Tax (SUT) is imposed, the
value of a motor vehicle traded in for a "qualified motor
vehicle" (QMV), which is defined as meeting either:
a) California's super ultra-low emission vehicle standard
for exhaust emissions and the federal inherently
low-emission vehicle evaporative emission standard, as
defined in Part 88 of Title 40 of the Code of Federal
Regulations as that part read on January 1, 2016; or,
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b) California's enhanced advanced technology partial
zero-emission vehicle standard or transitional
zero-emission vehicle standard.
8)Provides that moneys from the GGRF, upon appropriation of the
Legislature, are available to reimburse counties and cities
for any SUT revenue losses resulting from the SUT exclusion.
FISCAL EFFECT:
1)To create and expand various incentive programs, annual
administrative costs to the ARB will be around $800,000
ongoing for five full-time positions plus part-time legal
support. [GGRF]
2)CVRP Enhancements. The potential cost of the increased rebate
amounts will put substantial funding pressure on the CVRP. The
total cost will depend on the number, type, and MSRP of
vehicles for which rebates are obtained and the proportion of
vehicles sold to resident of disadvantage communities and thus
eligible for the much higher rebates. According to the ARB,
the current CRVP could fund rebates for up to 55,000 in
2015-16 at a cost of $123 million. (In the 12 months ending
March 31, 2016, almost 48,000 rebates were issued at cost of
$103 million.) Based on assumptions about the factors
discussed above, providing rebates pursuant to this bill for
55,000 vehicles could cost over $500 million. [GGRF]
3)Charging Stations. Cost are unknown, but likely in the tens of
millions of dollars annually. [GGRF]
4)Tax Exemption. The General Fund revenue loss associated with
the SUT exemption is estimated at $40 million in 2017-18, and
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would likely increase slightly each year assuming increase
sales of qualifying vehicles. Of this amount, about $21
million would be a revenue loss to cities and counties, which,
subject to an appropriation, could be backfilled by the GGRF.
COMMENTS:
1)Purpose. According to the author, "?California's consumers are
not purchasing ZEVs [zero emission vehicles] at a rate that
will meet the California Air Resources Board's ZEV mandate of
15.4% of new vehicles delivered for sale by 2025. In 2015,
California's new car dealers sold more than two million new
vehicles with a combined 3.1% of those sales comprising ZEVs
and plug-in hybrid vehicles. The market share for these
vehicles dropped from 3.2% in 2015. We estimate that 308,000
ZEVs must be delivered for sale in California by 2025; in just
nine years this represents 25% of all vehicles other than
SUVs, pickups and vans. This would be an unprecedented
adoption rate for new technology in automotive history.
"Nations throughout Europe provide massive incentives up to 50
percent of the vehicle's MSRP. In these countries the
adoption rate for alternative fueled vehicles is much more
favorable than in the US, including California." (It should be
noted that European countries tend to have much higher
gasoline prices than in the U.S.)
2)Additional Price Incentives. Under the existing CRVP, ZEV
hydrogen fuel cell vehicles qualify for a $5,000 rebate; ZEV
battery electric vehicles qualify for a $2,500 rebate; and
plug-in hybrid electric vehicles qualify for a $1,500 rebate.
There is also a federal tax credit of $2,500 to $7,500 for the
purchase of an electric vehicle depending on its battery
capacity.
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This bill would increase the above rebates substantially. For
example, individuals purchasing a Chevy Volt currently receive
a $1,500 rebate. Under this bill, the consumer would receive a
$3,300 rebate (or $13,000 for disadvantaged community
residents). For battery electric vehicles (such as a Nissan
LEAF) for which current rebates are set at $2,500, this bill
would provide rebates of $4,350, or $13,050 for disadvantaged
community residents.
As discussed in the Assembly Transportation Committee's
analysis of this bill, "If the state wishes to meet its clean
air and climate goals, it must definitely help complete the
transformation of the passenger fleet from traditional
petroleum fuel vehicles to zero- and near-zero-emission
vehicles. Yet despite spending millions of dollars, lagging
sales of ZEVs leaves one wondering if the efforts have been
for not or if additional effort, and expense, should be
imparted. This is a complex question with even more complex
answers and it is unclear if incentives alone, no matter how
much money is spent, will encourage buyers to adopt ZEVs,
particularly when gas prices are low and the cost of
conventional vehicles is competitive or lower than ZEVs."
3)Related Legislation. AB 1964 (Bloom), pending in the Assembly,
creates a green sticker program (upon expiration of the
existing program) to allow plug-in hybrid electric vehicles
access to HOV lanes for a three-year period, regardless of
vehicle occupancy level.
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.
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AB 1691 (Gipson), 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 1710 (Calderon), also on today's agenda, requires the ARB
to establish a comprehensive incentive program for purchase of
(ZEVs) or near zero-emission vehicles (NZEVs), and provides
specified sales tax and personal income tax exemptions for
purchase of such vehicles.
Analysis Prepared by:Chuck Nicol / APPR. / (916)
319-2081