BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                        SJR 10|
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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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