BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2901|
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CONSENT
Bill No: AB 2901
Author: Committee on Jobs, Economic Development, and the
Economy
Amended: 4/12/16 in Assembly
Vote: 21
SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 9-0, 6/13/16
AYES: Hill, Bates, Block, Gaines, Galgiani, Hernandez,
Jackson, Mendoza, Wieckowski
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 76-0, 5/19/16 (Consent) - See last page for
vote
SUBJECT: Income taxation: credits: California Competes Tax
Credit Committee: GO-Biz
SOURCE: Author
DIGEST: This bill creates three additional disclosure
requirements for the California Competes Tax Credit Program
(Program) under the Governor's Office of Business and Economic
Development (GO-Biz).
ANALYSIS:
Existing law:
1)Establishes GO-Biz to serve as the lead state entity for
economic strategy and marketing of California on issues
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relating to business development, private sector investment,
and economic growth. (Government Code §§ 12096 - 12098.5)
2)Requires GO-Biz to post information on its Web site relating
to the Program including: (Revenue and Taxation Code (RTC) §
17059.2 and § 23689)
a) The name of each taxpayer allocated a credit pursuant to
this section;
b) The estimated amount of the investment by each taxpayer;
c) The estimated number of jobs created or retained;
d) The amount of the credit allocated to the taxpayer; and
e) The amount of the credit recaptured from the taxpayer,
if applicable.
1)Requires that priority for the Program be given to
applications from taxpayers with projects or businesses
located in high unemployment or high poverty areas. (RTC §
17059.2(c)(1) and § 23689(c)(1))
2)Requires that at least 25 percent of the Program's tax credits
be awarded to small businesses annually. (RTC §
17059.2(g)(2)(3) and § 23689(g)(2)(3))
This bill expands the reporting requirements of the Program to
include, on its Web site, the following information:
1)The primary location of the facility(s) for which the taxpayer
is applying for credits listed by city or, in the case of
unincorporated areas, by county;
2)Information that identifies each tax credit award that was
given a priority for being located in a high unemployment or
poverty area, as specified; and
3)Information that identifies each tax credit award that is
being counted toward the requirement that, each fiscal year,
25 percent of the aggregate amount of credits allocated are
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required to be reserved for small business, as defined.
Background
According to the author, in March 2015, the Assembly Committee
on Jobs, Economic Development, and the Economy (JEDE) held the
first in a series of reviews of GO-Biz programs. The content of
this bill was developed as part of the JEDE Committee's research
for that hearing. According to the author, this bill "codifies
the reporting of key elements of the tax credit program,
including the identification of business or project location,
credits awarded to small businesses, and credit awards that
received priority consideration. Each of these new reporting
requirements represents a key element of the tax credit program
and is essential to providing appropriate oversight and program
transparency. These elements include information to identify:
areas that are not currently being served; whether the
requirements of the small business set aside are being met; and
which areas of the state are benefiting from the priority
application requirements for high unemployment and high
poverty."
The California Competes Tax Credit is a competitive tax credit
that rewards companies for job creation and new investments made
in the state. The Program negotiates credits on an individual
basis, the value of which is determined by the California
Competes Tax Credit Committee. Each award is documented through
a written agreement between GO-Biz and the taxpayer; however, no
taxpayer may receive more than 20 percent of the total annual
allocation. Enforcement of the individual commitments is the
responsibility of the Franchise Tax Board (FTB), which is
directed to review the books and records of every non-small
business taxpayer who receives a credit. FTB has the authority,
but is not mandated, to review the books and records of small
business taxpayers.
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Program priority is given to taxpayers whose project or business
is located or proposed to be located in an area of high
unemployment or high poverty. High poverty areas are those that
are at or above the federal poverty rate at the time of the tax
credit award. High unemployment areas are those that are at or
above the state unemployment rate at the time of the tax credit
award.
At least 25 percent of the tax credits are required to be
awarded to small businesses on an annual basis. A small
business is defined as having net revenues of less than $5
million in the prior five tax years. The FTB is responsible for
providing GO-Biz with confirmation that a taxpayer is a "small
business." Since inception, GO-Biz has awarded 24.4 percent of
the tax credits to small businesses. Relative to the number of
taxpayers receiving credits, 33.7 percent were small businesses.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
SUPPORT: (Verified6/28/16)
None received
OPPOSITION: (Verified6/28/16)
None received
ASSEMBLY FLOOR: 76-0, 5/19/16
AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,
Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,
Calderon, Campos, Chau, Chávez, Chiu, Chu, Cooley, Cooper,
Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines,
Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson,
Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger
Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey,
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Levine, Linder, Lopez, Low, Maienschein, Mayes, Medina,
Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,
Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago,
Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,
Wilk, Wood, Rendon
NO VOTE RECORDED: Chang, Mathis, McCarty, Williams
Prepared by:Nicole Billington / B., P. & E.D. / (916) 651-4104
6/29/16 15:50:56
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