BILL ANALYSIS                                                                                                                                                                                                    

                                                                    AB 2055

                                                                    Page  1

          Date of Hearing:   May 18, 2016


                               Lorena Gonzalez, Chair

          2055 (Gipson) - As Amended April 26, 2016

          |Policy       |Revenue and Taxation           |Vote:|9 - 0        |
          |Committee:   |                               |     |             |
          |             |                               |     |             |
          |             |                               |     |             |

          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No

          This bill requires that 25% of the California Competes Tax  
          Credit (CCTC) allocation be reserved for taxpayers that make  
          qualified sustainable freight investments beginning in FY  

          FISCAL EFFECT:

          1)No additional revenue loss from the CCTC. This bill reserves a  
            share of program dollars that will go to freight  
            infrastructure and does not increase the total amount of  
            dollars allocated. 


                                                                    AB 2055

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          2)One-time administrative costs to the Governor's Office of  
            Business and Economic Development (Go-Biz) in excess of  
            $200,000 to develop new regulations, make application changes,  
            modify the existing review processes and checklist, and to  
            conduct outreach to affected taxpayers. 

          1)Purpose. According to the author, AB 2055 works within the  
            current framework of the CCTC to help achieve Governor Brown's  
            plan for long-term, environmental sustainability. The  
            Administration has identified the replacement of 100,000  
            pieces of conventional freight equipment or vehicles with  
            zero-emission technology as a primary goal of the state.

          2)Background on the CCTC. In 2014, Governor Brown signed AB 93  
            (Committee on Budget), Chapter 69, Statutes of 2014, which  
            among other things created the CCTC program. Existing law  
            requires that each fiscal year at least 25% of the aggregate  
            credit amount be reserved for small businesses, i.e., a  
            business with $2 million or less in gross receipts, minus  
            returns and allowances.   

            While the CCTC program is scheduled to sunset on January 1,  
            2025, the Administration is only authorized to award this  
            credit to qualified taxpayers until FY 2018-19, up to an  
            annually capped amount.  The amount equals $30 million for the  
            FY 2013-14, $150 million for the FY 2014-15, and $200 million  
            for the FY 2015-16, FY 2016-17, and FY 2017-18, plus certain  
            statutorily prescribed adjustments.  

          3)Argument for including freight projects in the CCTC program.  
            California is home to three of the world's largest ports. The  
            real property at these ports is publicly owned. However, the  
            ports are operated as enterprises with private revenue  


                                                                    AB 2055

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            streams. The primary form of infrastructure funding comes from  
            revenue bonds secured against future operations or lease  
            The author states that California's maritime industry has made  
            significant improvements of port infrastructure, upgrading all  
            ships, trucks, cranes, trains, tugs and cargo handling  
            equipment to ensure that they are amongst the cleanest in the  
            word.  As a result, the air quality has improved markedly  
            around California's ports.  However, their environmental  
            efforts have not been replicated by the competitors in other  
            ports across North America.  

            Many argue that California's ports and their partners are  
            losing cargo because of higher costs, which negatively affects  
            the industry's profits needed to reinvest in newer air quality  
            improvement projects. California can further reduce  
            environmental impacts and address the ports' competitiveness  
            by helping seaports transition from its more conventional  
            equipment to the next generation of zero-emissions and  
            near-zero emissions infrastructure and equipment, and  
            consequently, improve ports' emissions profile.   

          Analysis Prepared by:Luke Reidenbach / APPR. / (916)