BILL ANALYSIS �
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THIRD READING
Bill No: AJR 3
Author: Dickinson (D), et al
Amended: 7/6/11 in Senate
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 9-0, 6/29/11
AYES: Wolk, Huff, DeSaulnier, Fuller, Hancock, Hernandez,
Kehoe, La Malfa, Liu
ASSEMBLY FLOOR : 60-0, 4/14/11 - See last page for vote
SUBJECT : Federal taxation
SOURCE : Author
DIGEST : This resolution urges the United States Congress
to extend the alternative minimum tax holiday for airport
private activity bonds.
ANALYSIS :
Existing law states:
1. The federal Revenue and Expenditure Control Act of 1968
(Act) classified debt issued by publicly owned airports
as tax-exempt private activity bonds.
2. The Act requires taxpayers to include interest income
from private activity bonds for purposes of the
alternative minimum tax.
CONTINUED
AJR 3
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3. The application of the alternative minimum tax (AMT)
within the bond marketplace results in investors
requiring higher interest rate premiums when airports
bring debt issues to market.
4. Airport bonds typically carry interest rates 1.5 percent
higher than nontaxable bonds, costing a $250 million
project $20 million in increased financing costs;.
5. Congress enacted an AMT holiday for private activity
bonds resulting in increased levels of capital projects
at airports nationwide.
6. Many airport capital construction projects address a
combination of safety, security, and capacity
requirements and will improve the efficiency of airport
operations.
7. California airports are currently investing
approximately $2 billion in capital construction
projects.
8. Capital investments at California airports are
generating hundreds of construction and permanent
employment opportunities.
This resolution respectfully urges the United States
Congress to extend the alternative minimum tax holiday for
private activity bonds for airports. The Joint Resolution
makes several findings regarding interest rate premiums,
airport bond interest rates, the American Recovery and
Reinvestment Act, the merits of airport capital
construction projects, as well as airport investments and
its resultant employment.
FISCAL EFFECT : Fiscal Com.: No
SUPPORT : (Verified 7/6/11)
California Airports Council
Long Beach Airport
Sacramento International Airport
San Diego International Airport
AJR 3
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ARGUMENTS IN SUPPORT : According to the author, "AJR 3
urges Congress to extend the AMT holiday for private
activity bonds to maintain strong capital investments at
California airports. California airports have greatly
benefited from the 2-year AMT holiday as they have enticed
investors to fund airport infrastructure projects. For
example, Sacramento International Airport's Central
Terminal B is currently under capital construction projects
with great thanks to the AMT holiday-$480 million. The tax
relief was a major beneficial factor in the financing of
the new terminal - without the AMT holiday, bond investors
would have demanded higher interest rates to compensate for
the tax liability of the interest. This has continued to
bring tremendous job growth to the Sacramento region, thus
boosting economic activity. In addition to Sacramento,
there are currently six other California airports that have
on-airport capital projects underway, all of which would
have been much smaller in scope or higher in costs absent
the AMT holiday. San Francisco International Airport will
be opening Terminal 2 on April 9, 2011 - funding for which
was aided by the AMT holiday."
ASSEMBLY FLOOR :
AYES: Achadjian, Allen, Ammiano, Atkins, Beall, Bill
Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Campos, Carter, Cedillo, Chesbro,
Cook, Davis, Dickinson, Donnelly, Eng, Fletcher, Fong,
Fuentes, Furutani, Gatto, Gordon, Hagman, Hall, Hayashi,
Roger Hern�ndez, Hill, Huber, Hueso, Huffman, Jeffries,
Lara, Bonnie Lowenthal, Ma, Mansoor, Miller, Mitchell,
Monning, Nestande, Nielsen, Norby, Pan, Perea, V. Manuel
P�rez, Portantino, Silva, Skinner, Smyth, Solorio,
Swanson, Torres, Valadao, Wieckowski, Yamada, John A.
P�rez
NO VOTE RECORDED: Alejo, Butler, Charles Calderon, Conway,
Feuer, Galgiani, Garrick, Gorell, Grove, Halderman,
Harkey, Jones, Knight, Logue, Mendoza, Morrell, Olsen,
Wagner, Williams, Vacancy
AGB:do 7/6/11 Senate Floor Analyses
AJR 3
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SUPPORT/OPPOSITION: SEE ABOVE
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