BILL ANALYSIS �
SB 1128
Page 1
Date of Hearing: August 16, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 1128 (Padilla) - As Amended: August 7, 2012
Policy Committee: Revenue and
Taxation Vote: 8-0
JEDE 5-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill expands the sales and use tax (SUT) exemption under
the California Alternative Energy and Advanced Transportation
Financing Authority (CAEATFA) by including advanced
manufacturing projects and makes technical clarifying changes to
other provisions related to the program. Specifically, this
bill:
1)Changes a notice requirement for awarding more than $100
million in SUT exemptions in a year to a limit of $100 million
per year.
2)Requires CAEATFA to study and provide an interim report by
January 1, 2015 on the efficacy of SB 1128's provisions,
including recommendations on how to increase efficacy in
creating jobs, and whether eligibility for the program should
be extended to other manufacturing types.
3)Establishes conformity with state law and business practices
concerning conduit bond financing and makes other technical
and conforming changes to the operations of CAEATFA.
4)Requires the Legislative Analyst's Office to report on the
effectiveness of this program.
FISCAL EFFECT
1)One-time costs of approximately $500,000 to be paid by a loan
from the General Fund for the development of emergency
regulations and reporting costs. These costs may eventually be
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recovered through fees on applicants to the program, depending
on the level of program participation.
2)Uncertain, but potentially tens to hundreds of thousands of
dollars, from the General Fund beginning in 2013-14 through
2015-16 due to increase loss of sales tax. However, these
revenues may be offset by increased economic activity,
although it is unclear to the extent of revenues that will be
generated.
COMMENTS
1)Purpose of the Bill : According to the author, President Obama
launched the Advanced Manufacturing Partnership, to invest in
the emerging technologies that will create high quality
manufacturing jobs. The author notes the program provides
more than $1 billion to promoting advanced manufacturing and
offers new opportunities for California to draw down federal
dollars, attract new investment, and employ our workforce.
The author notes, CAEATFA is an existing authority within the
Office of the State Treasurer with programs to attract and
retain manufacturers. The author states that in the first
year of the SB 71 program, CAEATFA approved 26 projects that
generated $950 million in investments in California. These
investments are projected to create an estimated 6,027 jobs.
The author argues SB 1128 will expand the success of the
program by adding advanced manufacturing as one of the top
criteria CAEATFA will use to determine the allocation of
exemptions.
2)CAEATFA was established in 1980 for the purpose of providing
capital for facilities utilizing alternative sources of energy
and facilities needed for the development and
commercialization of advanced transportation technologies.
CAEATFA covers a range of financial products including conduit
bond and revenue bond financings, loan guarantees, loan loss
reserve accounts among other financial products that support
the development and commercialization of technologies that
conserve energy, reduce air pollution, and promote economic
development and jobs.
Recently, the role of CAEATFA was expanded to include
administration of a SUT exemption for property used in the
design, manufacture, production, or assembly of advanced
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transportation technologies or alternative energy source
products, components, or systems. This was accomplished
through the enactment of SB 71 (Padilla), Chapter 10, Statutes
of 2010. The intent of the SUT exemption program is to
promote the creation of California-based manufacturing,
California-based jobs, and the reduction of greenhouse gases.
Interest in the program was high at the program's inception
but has since tapered off, as indicated by the fact that
approximately 60% of the projects were approved within the
first eight months of the program.
1)The SB 71 Program . The enactment of SB 71 (Padilla), Chapter
10, Statutes of 2010 created a program of SUT exemption to
promote the creation of California-based manufacturing,
California-based jobs and the reduction of greenhouse gases.
According to the CAEATFA's 2011 annual report to the
Legislature, as of December 31, 2011, it had approved 39
projects under the SB 71 program, which include, electric
vehicles and solar photovoltaic manufacturing, biomass
processing and fuel production, and biogas capture and
production. Of those 39 projects, nine are inactive. The 30
active projects have been approved for $937.7 million in
anticipated qualified property purchases, estimated to result
in approximately $80.3 million in SUT exemptions ($25 million
was utilized by Solyndra, a manufacturer that filed for
bankruptcy on September 6, 2011).
The CAEATFA staff estimates the projects will produce $37.2
million in environmental benefits and $108.4 million in fiscal
benefits, resulting in approximately $65.2 million of net
benefits. But, at the October 11, 2011 joint informational
hearing held by the Senate Committee on Governance and Finance
and the Committee on Energy, Utilities, and Communications,
the committees learned that the current SB 71 program costs
about $153,000 per job created, including the Solyndra
allocation.
4)There is no registered opposition to this bill.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081