BILL ANALYSIS �
SB 355
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Date of Hearing: August 6, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 355 (Beall) - As Amended: August 4, 2014
Policy Committee: Revenue &
Taxation Vote: 7-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill extends the Natural Heritage Preservation (NHP) tax
credit program from June 30, 2015 to June 30, 2020, and extends
the period of time for which a donor of a land contribution made
on or after January 1, 2015 may carry forward any unused credit
to reduce future personal income or corporation tax from 8 to 15
years.
FISCAL EFFECT
1)Minor and absorbable administration costs to the Wildlife
Conservation Board (WCB) and Franchise Tax Board (FTB).
2)Estimated GF revenue decreases of $450,000, $1.3 million, and
$2.8 million in FY 2014-15, FY 2015-16, and FY 2016-17,
respectively, reimbursed from the NHP Tax Credit Reimbursement
Account (see Comment 2 below). The reimbursement results in
increased utilization of bond funds or private donations to
offset any current GF revenue decrease, however the use of
bond funds will result in marginal increased debt service
costs and reduced interest revenue.
COMMENTS
1) Purpose. According to the author, no property owners have
utilized the NHP tax credit program since 2006, in part
because most land owners do not have sufficient state tax
liability to make the tax credit attractive. The author
asserts this bill would give donors an additional seven years
to carry forward the tax credit, helping ensure a greater
amount of the total credit is available to incentivize
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donations.
2) Natural Heritage Preservation Tax Credit Program. According
to the author, the NHP tax credit program has protected 8,006
acres of land since its inception in 2000. Under the program,
the state acquires the donated land at 55% of fair market
value. Total donations under the program to date represent a
net savings to the state of approximately $40 million compared
to acquisition at full fair market value.
Upon approval from the WCB, a donor may contribute property
that meets the qualifying criteria to a state agency, local
government, or designated nonprofit organization. The donor
receives a nonrefundable tax credit equal to 55% of the fair
market value of the contribution, any unused portion of which
currently may be carried forward for up to eight years.
The value of any decrease in revenue to the General Fund
resulting from the issuance of an NHP tax credit is reimbursed
by the WCB or local agency through the NHP Tax Credit
Reimbursement Account. Current law authorizes the WCB to
direct bond funds from any of the following for reimbursement
of NHP credits: the California Clean Water, Clean Air, Safe
Neighborhood Parks, and Coastal Protection Act of 2002
(Proposition 40); the Water Security, Clean Drinking Water,
Coastal and Beach Protection Act of 2002 (Proposition 50); and
the Safe Drinking Water, Water Quality and Supply, Flood
Control, River and Coastal Protection Bond Act of 2006
(Proposition 84), among other sources. The WCB must reimburse
the General Fund within 60 days of the FTB's notification to
WCB that a taxpayer has claimed an NHP tax credit.
3) Modest Change. This bill does not change the core provisions
of the NHP tax credit program, but instead allows donors to
carry forward any unused tax credits issued under the program
for an additional seven years, potentially leading to greater
utilization of the incentive and encouraging land owners to
donate additional properties.
As mentioned above, no property owners have contributed land
under the program since 2006. WCB indicates it is currently
in contact with three land owners who are considering a
contribution under the program, and the revenue estimates
above reflect the potential donation of those projects. It
remains unclear, however, whether the additional tax credit
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carry forward period will make those potential contributions
more attractive.
Analysis Prepared by : Joel Tashjian / APPR. / (916) 319-2081