BILL ANALYSIS �
AB 2656
Page 1
Date of Hearing: May 25, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2656 (Calderon) - As Amended: May 16, 2012
Policy Committee: Revenue and
Taxation Vote: 7-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill authorizes the California Transportation Financing
Authority to award $500 million in tax credit certificates to
exporters and importers who meet specified criteria.
Specifically, this bill:
1)Authorizes the authority to award a tax credit certificate or
certificates to an exporter or importer that demonstrates to
the satisfaction of the authority that, in a taxable year
beginning on or after January 1, 2013, and before January 1,
2018, it met any of the following requirements:
a) An increase in exports or imports, as specified.
b) Specified export and import levels for ports or
airports.
c) A net increase, as specified, in the number of qualified
full-time employees hired in California during the taxable
year.
d) Incurred capital costs for a cargo facility constructed
in California during the taxable year.
2)Requires the authority to develop procedures for awarding
credits, administering the program and charging fees to cover
administrative costs.
3)Limits the total amount of tax credit certificates to be
awarded in each of the five calendar years to $100 million,
for a total of $500 million. Specifies that any portion of
AB 2656
Page 2
the authorized amount not awarded in a calendar year may be
awarded in a future calendar year ending before January 1,
2018.
4)Provides a formula for determining the allowable tax credit,
based on either tons of exports or imports through a port,
value of exports and imports through an airport, or a number
of new employees.
5)Takes effect immediately as a tax levy.
AB 2656
Page 3
FISCAL EFFECT.
This bill will result in annual GF costs of $25 million in
fiscal year (FY) 2012-13, $85 million in FY 2013-14, and $100
million in FY 2014-15 according to FTB estimates.
COMMENTS
1)Author's Statement . The author contends maintaining and
creating jobs in California should be the Legislature's top
priority as the expansion of the Panama Canal and port
improvements throughout the East Coast threaten California
jobs. The author argues AB 2656 will help create and grow
California's economy by ensuring that we remain competitive in
a global market. AB 2656 will encourage use of California
ports by providing a tax credit to those importers and
exporters who increase the volume of imports and exports, hire
employees, and make infrastructure improvements, and ensure
that California will continue to serve as a dominant force in
international trade.
2)Arguments in Support . Proponents of this bill state that
ports are a vital part of California's economy, providing
department stores, supermarkets, drug stores, mass merchandise
and convenience stores the ability to properly run their
businesses. Ports also provide high paying jobs for
Californians. Proponents assert that AB 2656 is a creative
and fiscally responsible proposal to enhance California's
ability to remain competitive in the face of increased
competition with the opening of the widened Panama Canal.
Proponents also contend California will receive environmental
benefits from this bill by reducing emissions at the ports
while creating jobs to improve California's competitiveness.
Finally, the proponents maintain California needs to send the
message that the state is attempting to address its
anti-business climate by offering financial incentives to help
mitigate the higher costs of doing business here.
3)Background. California is a major trade gateway on the
Pacific Rim and is home to three of the world's 50 largest
ports. There is concern about the future of the ports because
of growing competition around the world. On the West Coast,
Canada is aggressively marketing its mega port in Vancouver
AB 2656
Page 4
and new port facilities in Prince Rupert, specifically
highlighting the economic and time advantages over Southern
California ports. Mexico is also beginning to compete against
American ports. The biggest competition, however, may come
from improvements to the Panama Canal. In 2014, a $5.25
billion expansion of the Panama Canal will be completed. The
new expansion will allow larger ships to move through the
canal, allowing for a bigger share of Asian container freight
to move directly through to the eastern U.S.
4)Related Legislation.
a) SB 830 (Wright and Bradford), 2011, created a trade
infrastructure tax credit for taxpayers that invest in
and use public port facilities in California. SB 830
failed to pass out of the Senate Committee on Governance
and Finance.
AB 2687 (Bradford), 2010, created a trade infrastructure
investment tax credit and an import-export cargo tax
credit for taxpayers that invest in and use public port
facilities in California. AB 2687 was held on this
committee's Suspense File.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081