BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SJR 10|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
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UNFINISHED BUSINESS
Bill No: SJR 10
Author: Stone (R), et al.
Amended: 9/10/15
Vote: 21
SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 6/24/15
AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach,
Pavley
SENATE FLOOR: 38-0, 8/20/15
AYES: Allen, Anderson, Bates, Beall, Berryhill, Block,
Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hancock,
Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno,
Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Moorlach,
Morrell, Nielsen, Pan, Pavley, Roth, Runner, Stone, Vidak,
Wieckowski, Wolk
NO VOTE RECORDED: Hall, Nguyen
ASSEMBLY FLOOR: 77-1, 9/10/15 - See last page for vote
SUBJECT: Federal Investment Tax Credit: solar energy
SOURCE: Author
DIGEST: This resolution requests Congress of the United States
to take immediate action to extend two renewable energy tax
credits.
Assembly Amendments add coauthors and insert a word.
ANALYSIS:
Existing federal law:
SJR 10
Page 2
1)Allows taxpayers to claim a credit for residential energy
property initially applied to solar-electric systems, solar
water heating systems and fuel cells placed in service during
the taxable year, established by the Energy Policy Act of 2005
(Internal Revenue Code §25D):
a) Allows, additionally, taxpayers claim the credit for
small wind-energy systems and geothermal heat pumps,
effective January 1, 2008 under the Energy Improvement and
Extension Act of 2008.
b) Provides that the credit is equal to 30% of qualified
expenditures for a system that serves "a dwelling unit
located in the United States that is owned and used as a
residence by the taxpayer."
c) Allows the taxpayer to carry over the excess of any
credit to the succeeding six taxable years.
d) Repeals the credit on January 1, 2017.
2)Enacts an investment tax credit for 30% of the basis of a
qualified energy property owned by the taxpayer placed in
service during the taxable year (Internal Revenue Code §48):
a) Allows the credit for qualified energy property, which
includes fuel cells, microturbines, geothermal energy,
small wind energy, combined heat and power.
b) Additionally allows the credit equipment that uses solar
energy to:
i) Generate heat,
ii) Heat, cool, or provide hot water use in a structure,
iii) Provide solar process heat, except for swimming
pools, or
iv) Illuminate the inside of a structure using
fiberoptic distributed sunlight.
c) Reduces the percentage from 30% to 10% on January 1,
2017.
SJR 10
Page 3
Existing state law allows various income tax credits,
deductions, sales and use tax exemptions to provide incentives
to compensate taxpayers that incur certain expenses, such as
child adoption, or to influence behavior, including business
practices and decisions, such as research and development
credits.
This resolution:
1)Requests the Congress of the United States to take immediate
action to extend the federal investment tax credit in Section
48 and 25D of the Internal Revenue Code.
2)Makes several findings and declarations supporting its
purposes.
Comments
The effective period of the two federal tax credits that SJR 10
urges Congress to extend coincide with a rapid increase in solar
energy generation: solar energy installations increased than
1,600% since the credit was implemented in 2006. Tax credit
supporters state that industry employment has grown by 86% in
the last four years, and creates jobs at a rate nearly 20 times
higher than employment growth in the overall economy.
Additionally, public investment in solar energy has reduced its
costs, thereby allowing more widespread deployment. However,
the renewable energy industry has matured significantly since
Congress enacted the credit, and will likely continue to grow
without a tax credit subsidy, which increases the current
federal budget deficit by approximately $1.7 billion annually,
according to the Joint Committee on Taxation. Allowing the
credit to phase out under existing law resembles the structure
of California's signature solar energy program, the California
Solar Initiative. Enacted by the Legislature in 2006 with the
goal of supporting 2,000 megawatts of solar energy in the state,
the initiative offered financial incentives to individuals that
shrank over time to account for lower costs as solar technology
advanced and demand increased. By 2014, the incentives had been
exhausted, yet solar energy installation in California continues
apace, indicating that installing solar energy makes sense
without a subsidy.
SJR 10
Page 4
FISCAL EFFECT: Appropriation: No Fiscal
Com.:NoLocal: No
SUPPORT: (Verified9/10/15)
California Solar Energy Industries Association
Environment California
OPPOSITION: (Verified9/10/15)
None received
ARGUMENTS IN SUPPORT: According to the author, "SJR 10 is a
resolution that calls on the U.S. Congress to extend the Federal
Investment Tax Credit for Solar Energy. The tax credit is set
to decrease from 30 percent to 10 percent for commercial
consumers and from 30 percent to 0 percent for residential
consumers after December 31, 2016. The solar energy industry
employs 54,000 Californians and is one of the nation's fastest
growing job creators, employing 173,807 people nationwide and
growing at a rate nearly 20 times faster than the overall
economy, according to The Solar Foundation. The solar industry
adds more than $15 billion to the United States economy and
increased energy production from domestic solar energy resources
would attract substantial new investments in energy
infrastructure and create local economic growth. The loss of
the investment tax credit would not only lead to significant job
losses in California and beyond in 2017, but would also make
solar energy less affordable to all who want to take advantage
of this source of clean energy. This is a worthy tax credit,
and is deserving of being extended."
ASSEMBLY FLOOR: 77-1, 9/10/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,
SJR 10
Page 5
Chau, Chiu, Chu, Cooley, Cooper, Dababneh, 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, Levine, Linder, Lopez, Low,
Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,
Nazarian, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon,
Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark
Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams,
Wood, Atkins
NOES: Chávez
NO VOTE RECORDED: Dahle, Obernolte
Prepared by:Colin Grinnell / GOV. & F. / (916) 651-4119
9/11/15 8:50:13
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