BILL ANALYSIS
AB A 2014
Page 1
Date of Hearing: May 28, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2014 (Torrico) - As Amended: May 18, 2010
Policy Committee: Revenue and
Taxation Vote: 9-0
Natural Resources 7-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill establishes a pilot program for the counties of
Alameda, Contra Costa, San Mateo, and Santa Clara, whereby
homeowners can claim a credit against their income taxes for
energy efficiency improvements on their principal residence.
Specifically, the bill:
1)Makes the credit available to taxpayers who have commissioned
an energy audit that complies with standards established by
the State Energy Resources Conservation and Development
Commission.
2)Specifies that the amount of credit shall be the lesser of 50%
of the qualified costs incurred in the taxable year for
recommended improvements or $1,500.
3)Requires the credit to be claimed on original returns, and
that the FTB accept the credit claims through the end of the
quarterly period in which it anticipates receiving $250,000
worth of credit claims.
4)Applies to taxable years 2010 through 2014.
FISCAL EFFECT
1)The credit would reduce personal income taxes by $12 million
annually through 2014-15. As discussed below, the $250,000
cap would not be effective.
2)Unknown, potentially significant costs to FTB to administer
AB A 2014
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the credit.
COMMENTS
1)Rationale . According to the author, this bill is intended to
promote energy efficiency and reduce greenhouse gas emissions.
In addition, the author asserts the bill will create much
needed jobs in the energy efficiency, green construction, and
the home improvement fields.
2)Background . Under federal income tax law, homeowners making
energy efficient improvements to their homes are eligible for
a credit of to 30% of the cost the improvements, not to exceed
$1,500 for improvements placed in service in 2009 and 2010.
The credit applies to improvements such as adding insulation,
energy efficient exterior windows and energy-efficient heating
and air conditioning systems.
3)Fiscal issue . As currently constructed, the $250,000 cap in
the bill would not be effective. This is because the bill
requires FTB to accept claims through the end of the quarter
in which is anticipates reaching $250,000. Given the large
volume of claims expected, FTB anticipates that the limit
would be reached early within the January-through-March
quarter of each year, and that by the end of the quarter the
total credits claimed will be close to $12 million.
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081