BILL ANALYSIS
AB 94
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 94 (Evans)
As Amended September 1, 2009
Majority vote
-----------------------------------------------------------------
|ASSEMBLY: |70-7 |(June 1, 2009) |SENATE: |24-12|(September 3, |
| | | | | |2009) |
-----------------------------------------------------------------
Original Committee Reference: REV. & TAX.
SUMMARY : Reauthorizes the awarding of tax credits under the
Natural Heritage Preservation Tax Credit Act of 2000 (Act)
through fiscal year (FY) 2014-15.
The Senate amendments :
1)Reauthorize the awarding of tax credits under the Act through
FY 2014-15, instead of FY 2018-19.
2)Adopt technical language suggested by the Franchise Tax Board
(FTB) to clarify the dates for which the credit is available.
Clarify that credits shall be allowed for qualified
contributions made on or after January 1, 2000, and not later
than June 30, 2008, and on or after January 1, 2010, and not
later than June 30, 2015.
EXISTING LAW :
1)Establishes the Wildlife Conservation Board (WCB). The WCB is
charged with authorizing and allocating funds for the purchase
of property suitable for recreation and the preservation,
protection and restoration of wildlife habitat.
2)Requires the WCB to implement the Natural Heritage
Preservation Tax Credit Program (Program). Under the Program,
upon the WCB's approval, a "donor" may contribute qualified
property to a "donee" and receive a nonrefundable tax credit
equal to 55% of the fair market value of any qualified
contribution of property made on or before June 30, 2008.
3)Limits the total amount of tax credits that can be awarded
under the Act to $100 million and prohibits tax credits from
being awarded after FY 2007-08 without further statutory
AB 94
Page 2
authorization.
AS PASSED BY THE ASSEMBLY , this bill:
1)Deleted the provisions of the Act that:
a) Limit the total amount of tax credits that can be
awarded under the Act to $100 million; and,
b) Prohibit tax credits from being awarded after FY 2007-08
without further statutory authorization.
2)Provided that tax credits may be awarded under the Act only if
the amount of all lost revenue resulting from the award of tax
credits was reimbursed by transfer to the General Fund (GF) of
"moneys that are not from the GF."
3)Defined "moneys that are not from the GF" as any of the
following:
a) State bond funds as described in Public Resources Code
(PRC) Section 37032;
b) State funds available for the purposes of the Act, other
than funds specified in PRC Section 37014;
c) Court settlements;
d) Private or public donations;
e) Local government funds of any type; or,
f) Federal funds available for the purposes of the Act.
4)Expanded the Act's definition of "donee" to include a local
government that has submitted an application directly to the
WCB.
5)Provided that, if a local government applies directly to the
WCB for acceptance of a qualified donation, the WCB may
provide conditional approval for the local government to
acquire the property under the Act. The local government
shall reimburse the GF for the tax credit claimed by
transferring funds in the full amount of the approved tax
credit to the WCB for deposit into the Natural Heritage
AB 94
Page 3
Preservation Tax Credit Reimbursement Account.
6)Provided that, if a local government applies directly to the
WCB for acceptance of a qualified donation, and the WCB
provides conditional approval, the local government shall have
60 days to transfer to the WCB the full amount of funds
necessary to reimburse the GF. Upon receipt of these funds,
the WCB shall provide the donor and the local government with
a notice of final approval of the tax credit.
7)Specified that the information the FTB provides the WCB on tax
credits claimed shall include the tax year for which the
credit was claimed.
8)Provided that, if a local government applies for a designated
nonprofit organization to acquire and accept donated property,
the local government shall comply with all requirements of the
Act that apply to the local government transferring funds to
the WCB necessary to reimburse the GF.
9)Amended the definition of "displaced person" contained in the
Government Code chapter that provides for relocation
assistance to those displaced by a public entity.
Specifically, specified that a "displaced person" shall not
include "[a]ny person who donates or willingly sells his or
her property for the purposes of protecting fish and wildlife
habitat, providing recreational areas, or preserving cultural
or agricultural resources and open space and any person who
occupies that property on a rental basis." However, this
exclusion does not apply when a sale is in response to an
eminent domain proceeding.
10)Made certain technical and non-substantive changes to the
Act.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)No direct impact on the GF as the credits (estimated by FTB to
be about $7 million per year) are fully reimbursed by bond
funds, federal or local funds, donations, or other sources,
all of which could be used for other purposes, absent this
program.
2)Potential reallocation of tens of millions of Proposition 84
AB 94
Page 4
bond funds, to the extent the funds currently authorized to be
used to reimburse the GF for the credits would be available
for other purposes absent the reauthorization of this program.
3)Minor indirect impact (initially in the range of $20,000 per
year and growing over time) on GF expenditures to backfill
schools for reduced property taxes, to the extent that the
credit results in a higher level of land donations and, hence,
a reduced property tax roll.
COMMENTS : The author states, "With a continually expanding
population, California needs to preserve land, restore habitats,
and protect water supplies. However, we are also facing
uncertain fiscal times, where every dollar of previously
approved bonds must be maximized. This bill would extend a
'financial tool' that can save 45% on the purchase price if the
state or local agency chooses to use the tax credit program to
acquire recreation or habitat lands AND if the landowner agrees.
Effectively, this voluntary program allows California to
acquire $18 million of land for every $10 million of bond
funding, while providing fair value to the landowner, and
keeping the General Fund whole. During its previous
authorization period, the Natural Heritage Preservation Tax
Credit saved California approximately $40 million in the
acquisition of more than 8,000 acres of land in Calaveras, Lake,
Los Angeles, Madera, Marin, Monterey, Sacramento, San Luis
Obispo, Santa Barbara, Tehama, and Ventura Counties. This bill
would allow the state to once again work with interested
landowners to provide a legacy for future generations of
Californians."
Committee Staff Comments:
1)A Different Kind of Credit.
a) Credits are used to reduce the amount of taxes a
taxpayer owes. Typically, the Legislature enacts tax
credits to encourage socially beneficial behavior. Thus,
credit amounts are usually based on a percentage of
specified costs incurred by the taxpayer. In the present
case, the amount of the credit is equal to 55% of the fair
market value of land donated.
b) Tax credits can either be nonrefundable or refundable.
Nonrefundable credits, like those authorized by the Act,
AB 94
Page 5
work only to reduce a taxpayer's tax liability. Usually,
any remaining credit amount left after reducing the
taxpayer's liability to zero can be carried forward to
offset the taxpayer's tax liability in future years. With
a refundable credit, however, the state must refund the
remaining value of the credit after tax due is reduced to
zero. It should be noted that nonrefundable credits rarely
help lower-income taxpayers because these taxpayers have
little or no tax liability to offset.
c) The Natural Heritage Preservation Tax Credit operates
differently from other tax credits. Specifically, these
credits are funded by bond funds, private donations, and
other specified moneys, instead of foregone tax revenues
that would normally flow to the GF. Because these credits
have no direct impact on the GF, this bill removes the
current $100 million cap contained in the Act.
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098
FN: 0002826