BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  AB 2434
                                                                  Page  1

          Date of Hearing:   May 21, 2014

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

                     AB 2434 (Gomez) - As Amended:  May 19, 2014

          Policy Committee:                              Revenue &  
          Taxation     Vote:                            9-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              No

           SUMMARY  

          This bill allows an exclusion from gross income under both the  
          personal income tax and corporation tax laws, for taxable years  
          beginning on or after January 1, 2014 and before January 1,  
          2019, for amounts received as a rebate, voucher, or other  
          financial incentive issued by a local water agency for  
          participation in a turf removal water conservation program.

           FISCAL EFFECT  

          1)Insignificant cost to the Franchise Tax Board (FTB) to  
            implement the exclusion.

          2)Significant GF revenue decreases, in the hundreds of thousands  
            of dollars annually, over the duration of the program.

           COMMENTS  

           Purpose.   According to the author, many local governments and  
          water agencies have been offering payments for water  
          conservation programs, including turf removal.  The Legislature  
          has recognized the importance of these incentive programs and  
          protected many financial incentives for conservation from  
          taxation.  For example, the current personal income tax law  
          provides an exclusion from gross income for rebates from local  
          water agencies or suppliers for the purchase of a water  
          conservation water closet, energy efficient clothes washer, or  
          water saving plumbing device.

          Proponents argue these programs and incentives help stimulate  
          local economies and have a significant collective impact on  








                                                                  AB 2434
                                                                  Page  2

          environmental sustainability.  Taxing the value of these rebates  
          and vouchers diminishes some of the incentive to participate in  
          these programs.





           Analysis Prepared by  :    Joel Tashjian / APPR. / (916) 319-2081