BILL ANALYSIS
AB 2665
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Date of Hearing: May 19, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2665 (Strickland) - As Amended: May 12, 2010
Policy Committee: Revenue and
Taxation Vote: 9-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill provides a personal income tax and corporate tax
credit for purchases emergency standby generators used at
independently owned service stations. Specifically, the bill:
1)Provides a credit, for taxable years beginning January 2011
and ending January 2016, equal to 5% of the cost to purchase
and install a standby generator (with a rating of at least 30
kilowatts).
2)Provides that, in cases where the credit amount exceeds the
taxpayer's tax liability, the excess credit amount may be
carried over and used to offset tax liabilities in succeeding
years, up to seven years in the future.
3)Requires that generators eligible for the credit meet any
future certification standards developed by the Air Resources
Board or State Energy Resources Conservation and Development
Commission.
FISCAL EFFECT
The bill will reduce GF revenues by about $90,000 in 2010-11,
$270,000 in 2011-12, and about $550,000 in the subsequent three
years.
COMMENTS
1)Background . Current federal and state law allows businesses to
take depreciation deductions for capital assets that they
purchase, including power generators, over the useful life of
AB 2665
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the asset. This bill would additionally provide a credit,
equal to 5% of the purchase price of the generator, which
would offset the businesses' tax liability.
2)Rationale . The bill is intended to encourage disaster
preparedness by providing service station owners incentives to
purchase standby generators, which will enable them to
continue operating during floods, earthquakes, and other
natural disasters.
3)Opponents indicate that businesses already are able to take
depreciation deductions for the equipment on their federal and
state returns, the additional incentive provided by this
credit is not likely to induce new purchases, and the state is
facing a major budget shortfall and can ill-afford the new tax
expenditures.
4)Prior legislation. AB 2623 (Strickland), of the 2007-08
legislative session, contained provisions similar to this
bill. That bill failed passage in the Assembly Revenue and
Taxation Committee.
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081