BILL ANALYSIS �
AB 1339
Page 1
Date of Hearing: May 27, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1339 (Gorell) - As Amended: May 24, 2011
Policy Committee: Revenue and
Taxation Vote: 8-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill allows a credit under both the Personal Income Tax
(PIT) Law and the Corporation Tax (CT) Law for costs incurred in
purchasing and installing an emergency standby generator at a
service station so that service stations can provide services
during power outages. Specifically, this bill:
1)Allows a credit for taxable years beginning on or after
January 1, 2012, and before January 1, 2017, equal to 50% of
the amount paid or incurred during the taxable year to
purchase and install an emergency standby generator at a
service station located in California.
2)Limits the eligibility for the credit to a taxpayer with less
than $1 million in gross receipts.
3)Provides that if, in any calendar year, the State Air
Resources Board (ARB) or the State Energy Resources
Conservation and Development Commission (Commission)
establishes a certification standard for energy efficient or
low emission emergency standby generators, the credit shall be
limited, for subsequent taxable years, to emergency standby
generators that satisfy that certification standard.
4)Provides that, in cases where the credit amount exceeds the
taxpayer's tax liability, the excess credit amount may be
carried over for up to eight years until the credit is
exhausted.
5)Sunsets on December 1, 2017.
AB 1339
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FISCAL EFFECT
The Franchise Tax Board estimates that this bill would reduce
General Fund revenues by $300,000 in fiscal year (FY) 2011-12,
$1.3 million in FY 2012-13, and $2.4 million in FY 2013-14.
COMMENTS
1)Purpose . The author argues that AB 1339 is an emergency
preparedness measure that will provide independently owned gas
stations an incentive to purchase and install standby
generators so that they can continue to provide fuel during
power outages, which is critical for emergency relief efforts.
The author also states that knowing California is prone to
natural disasters - with floods, fire, and earthquakes - we
should not be left flat footed in the case of a tragic event.
This bill is not only asking service station owners to be
prepared, but for the entire state to be prepared when natural
disasters occur.
2)Optimal credit : AB 2665 (Strickland) of the 2009-10
Legislative Session would have allowed a credit equal to 5% of
the amount paid or incurred to purchase and install an
emergency standby generator at a service station located in
California. At the time, questions were raised about whether
a 5% credit was sufficient to affect purchasing decisions. AB
1339 increases this credit to 50%, which is quite high in
comparison to other state and federal income tax credits.
Given the attractive credit, many service stations may
purchase such a generator. The state could be paying for a
lot of generators and not every service station needs one for
emergency preparedness reasons.
3)Opposition . The California Tax Reform Association states that
many critical operations, such as hospitals, already maintain
emergency standby generators without being provided a tax
credit to do so. If the generator conveys a market advantage
to a service station, then it will be in the operator's
interest to purchase one without a tax credit.
4)Prior legislation. Both AB 2665 (Strickland), of the 2009-10
Legislative Session and AB 2623 (Strickland), of the 2007-08
Legislative Session, would have allowed a credit equal to 5%
of the amount paid to purchase and install an emergency
standby generator at a service station located in California.
AB 1339
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AB 2665 was held by the Assembly Committee on Appropriations
and AB 2623 failed passage in Assembly Revenue and Taxation
Committee.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081