Amended in Assembly May 27, 2016

Amended in Assembly May 16, 2016

California Legislature—2015–16 Regular Session

Assembly BillNo. 2334


Introduced by Assembly Members Mullin and Ting

(Principal coauthor: Assembly Member Eggman)

February 18, 2016


An act to amend Section 26011.8 of the Public Resources Code, and to amend Section 6010.8 of the Revenue and Taxation Code, relating to alternative energy, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

AB 2334, as amended, Mullin. Sales and use taxes: exclusion: alternative energy financing.

The California Alternative Energy and Advanced Transportation Financing Authority Act establishes the California Alternative Energy and Advanced Transportation Financing Authority. The act authorizes, until January 1, 2021, the authority to provide financial assistance in the form of a sales and use tax exclusion for any lease or transfer of title of tangible personal property constituting a project to any participating party, and defines a project and participating party for those purposes. The act limits the sales and use tax exclusion to $100,000,000 for each calendar year.

This bill wouldbegin delete extendend deletebegin insert expand those persons eligibend insertbegin insertle forend insert the sales and use taxbegin delete exclusionend deletebegin insert exclusion, which is limited in amount,end insert tobegin insert additionally includeend insert any contractor for use in the performance of a construction contract for the participating party that will use that property as an integral part of the approved project. This bill wouldbegin insert alsoend insertbegin delete provide for an additional sales and use tax exclusion amount of $475,000,000 for the 2016 calendar year and $250,000,000 for each calendar year thereafter, plusend deletebegin insert allow the exclusion amount granted by the authority in any year to includeend insert any amounts not granted or amounts granted but unused from the previous calendar year beginning in the 2017 calendar year.

begin insert

This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIII A of the California Constitution, and thus would require for passage the approval of 23 of the membership of each house of the Legislature.

end insert

This bill would take effect immediately as a tax levy.

Vote: begin deletemajority end deletebegin insert23end insert. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 26011.8 of the Public Resources Code
2 is amended to read:

3

26011.8.  

(a) The purpose of this section is to promote the
4creation of California-based manufacturing, California-based jobs,
5advanced manufacturing, the reduction of greenhouse gases, or
6reductions in air and water pollution or energy consumption. In
7furtherance of this purpose, the authority may approve a project
8for financial assistance in the form of the sales and use tax
9exclusion established in Section 6010.8 of the Revenue and
10Taxation Code.

11(b) For the purposes of this section, the following terms have
12the following meanings:

13(1) “Project” means tangible personal property if at least 50
14percent of its use is either to process recycled feedstock that is
15intended to be reused in the production of another product or using
16recycled feedstock in the production of another product or soil
17amendment, or tangible personal property that is used in the state
18for the design, manufacture, production, or assembly of advanced
19manufacturing, advanced transportation technologies, or alternative
20source products, components, or systems, as defined in Section
2126003. “Project” does not include tangible personal property that
22processes or uses recycled feedstock in a manner that would
23constitute disposal as defined in subdivision (b) of Section 40192.

P3    1(2) “Recycled feedstock” means materials that would otherwise
2be destined for disposal, having completed their intended end use
3and product lifecycle.

4(3) “Soil amendments” may include “compost,” as defined in
5Section 14525 of the Food and Agricultural Code, “fertilizing
6material,” as defined in Section 14533 of the Food and Agricultural
7Code, “gypsum” or “phosphatic sulfate gypsum,” as those terms
8are defined in Section 14537 of the Food and Agricultural Code,
9or a substance distributed for the purpose of promoting plant
10growth or improving the quality of crops by conditioning soils
11through physical means.

12(c) The authority shall publish notice of the availability of
13project applications and deadlines for submission of project
14applications to the authority.

15(d) The authority shall evaluate project applications based upon
16all of the following criteria:

17(1) The extent to which the project develops manufacturing
18facilities, or purchases equipment for manufacturing facilities,
19located in California.

20(2) The extent to which the anticipated benefit to the state from
21the project equals or exceeds the projected benefit to the
22participating party from the sales and use tax exclusion.

23(3) The extent to which the project will create new, permanent
24jobs in California.

25(4) To the extent feasible, the extent to which the project, or the
26product produced by the project, results in a reduction of
27greenhouse gases, a reduction in air or water pollution, an increase
28in energy efficiency, or a reduction in energy consumption, beyond
29what is required by federal or state law or regulation.

30(5) The extent of unemployment in the area in which the project
31is proposed to be located.

32(6) Any other factors the authority deems appropriate in
33accordance with this section.

34(e) At a duly noticed public hearing, the authority shall approve,
35by resolution, project applications for financial assistance.

36(f) Notwithstanding subdivision (j), and without regard to the
37actual date of any transaction between a participating party and
38the authority, any project approved by the authority by resolution
39for the sales and use tax exclusion pursuant to Section 6010.8 of
P4    1the Revenue and Taxation Code before March 24, 2010, shall not
2be subject to this section.

3(g) The Legislative Analyst’s Office shall report to the Joint
4Legislative Budget Committee on the effectiveness of this program,
5on or before January 1, 2019, by evaluating factors, including, but
6not limited to, the following:

7(1) The number of jobs created by the program in California.

8(2) The number of businesses that have remained in California
9or relocated to California as a result of this program.

10(3) The amount of state and local revenue and economic activity
11generated by the program.

12(4) The types of advanced manufacturing, as defined in
13paragraph (1) of subdivision (a) of Section 26003, utilized.

14(5) The amount of reduction in greenhouse gases, air pollution,
15water pollution, or energy consumption.

16(h) (1) begin delete(A)The end deletebegin insertTheend insert exclusions granted pursuant tobegin delete paragraph
17(1)end delete
begin insert paragraphs (1) and (2)end insert of subdivision (a) of Section 6010.8 of
18the Revenue and Taxation Code for projects approved by the
19authority pursuant to this section shall not exceed one hundred
20million dollars ($100,000,000) for each calendar year before the
212017 calendar year.

begin delete

22(B)

end delete

23begin insert(2)end insert For the 2017 calendar year and each calendar year thereafter,
24the exclusions granted pursuant tobegin delete paragraph (1)end deletebegin insert paragraphs (1)
25and (2)end insert
of subdivision (a) of Section 6010.8 of the Revenue and
26Taxation Code for projects approved by the authority pursuant to
27this section shall not exceed one hundred million dollars
28($100,000,000) plus any amounts not granted or amounts granted
29but unused from the previous calendar year.

begin delete

30(2) In addition to the amount described in paragraph (1), the
31amount of exclusions that may be granted pursuant to paragraphs
32(1) and (2) of subdivision (a) of Section 6010.8 of the Revenue
33and Taxation Code for projects approved by the authority pursuant
34to this section per calendar year shall be as follows:

end delete
begin delete

35(A) For the 2016 calendar year, four hundred seventy-five
36million dollars ($475,000,000).

end delete
begin delete

37(B) For the 2017 calendar year and each calendar year thereafter,
38two hundred fifty million dollars ($250,000,000) plus any amounts
39not granted or amounts granted but unused from the previous
40calendar year.

end delete

P5    1(i) (1) The authority shall study the efficacy and cost benefit
2of the sales and use tax exemption as it relates to advanced
3manufacturing projects. The study shall include the number of jobs
4 created, the costs of each job, and the annual salary of each job.
5The study shall also consider a dynamic analysis of the economic
6output to the state that would occur without the sales and use tax
7exemption. Before January 1, 2017, the authority shall submit to
8the Legislature, consistent with Section 9795 of the Government
9Code, the result of the study.

10(2) Before January 1, 2015, the authority shall, consistent with
11Section 9795 of the Government Code, submit to the Legislature
12an interim report on the efficacy of the program conducted pursuant
13to this section. The study shall include recommendations on
14program changes that would increase the program’s efficacy in
15creating permanent and temporary jobs, and whether eligibility
16for the program should be extended or narrowed to other
17manufacturing types. The authority may work with the Legislative
18Analyst’s Office in preparing the report and its recommendations.

19(j) This section shall remain in effect only until January 1, 2021,
20and as of that date is repealed, unless a later enacted statute, that
21becomes operative on or before January 1, 2021, deletes or extends
22that date. The sale or purchase of tangible personal property of a
23project approved before January 1, 2021, shall continue to be
24excluded from sales and use taxes pursuant to Section 6010.8 of
25the Revenue and Taxation Code for the period of time set forth in
26the authority’s resolution approving the project pursuant to this
27section.

28

SEC. 2.  

Section 6010.8 of the Revenue and Taxation Code, as
29amended by Section 5 of Chapter 788 of the Statutes of 2015, is
30amended to read:

31

6010.8.  

(a) (1) “Sale” and “purchase” do not include any lease
32or transfer of title of tangible personal property constituting any
33project to any participating party.

34(2) On and after the operative date of the act adding this
35paragraph, “sale” and “purchase” do not include any lease or
36transfer of title of tangible personal property constituting any
37project to any contractor for use in the performance of a
38construction contract for the participating party that will use that
39property as an integral part of the approved project.

P6    1(b) As used in this section, “project” has the meaning specified
2in subparagraph (B) of paragraph (8) of subdivision (a) of Section
326003 of the Public Resources Code and “participating party” has
4the meaning specified in subparagraph (B) of paragraph (7) of
5subdivision (a) of Section 26003 of the Public Resources Code.

6(c) This section shall remain in effect only until January 1, 2021,
7and as of that date is repealed, unless a later enacted statute, that
8is enacted before January 1, 2021, deletes or extends that date.

9

SEC. 3.  

This act provides for a tax levy within the meaning of
10Article IV of the California Constitution and shall go into
11immediate effect.



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