BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  SB 871
                                                                  Page  1


          (  Without Reference to File  )

          SENATE THIRD READING
          SB 871 (Budget and Fiscal Review Committee)
          As Amended  June 13, 2014
          Majority vote.  Tax levy
           
           SENATE VOTE  :   Vote not relevant  
           
           SUMMARY  :  This bill makes necessary statutory and technical  
          changes to implement changes to the Budget Act of 2014-15  
          related to solar tax exemptions.  Specifically,  this bill  : 

          1)Extends the sunset for a solar tax exemption for new active  
            solar energy systems on new construction.  

          2)Extends the exemption through 2023-24, and extends the sunset  
            through January 1, 2025.  The California Constitution  
            generally limits ad valorem taxes on real property to 1% of  
            the full cash value of that property.  For purposes of this  
            limitation, full cash value is defined as the assessor's  
            valuation of real property as shown on the 1975-76 tax bill  
            under full cash value, or thereafter, the appraised value of  
            that real property when purchased, newly constructed, or a  
            change in ownership has occurred.  Pursuant to authority  
            granted to the Legislature in the California Constitution,  
            existing law excludes, from the definition of "newly  
            constructed," the construction or addition of an active solar  
            energy system.

          3)Specifies that this exclusion for the construction or addition  
            of an active solar energy system applies through the 2023-24  
            fiscal year, and remains in effect only until January 1, 2025.

           FISCAL EFFECT  :  This bill should not result in an immediate  
          reduction in ad valorem tax revenues in the 2014-15 budget year.  
           Thereafter, the bill should result in reductions of $5 million,  
          per year, in ad valorem tax revenues.  Construction of active  
          solar energy systems costs approximately $30,000 per home.   
          Estimating an average of 170,000 new homes constructed per year,  
          the investment in active solar would be approximately $5.1  
          billion statewide.  The assessed value loss, calculated at 2.5%,  
          would equal about $128 million per year.









                                                                  SB 871
                                                                  Page  2


           COMMENTS  :  This bill provides the necessary statutory references  
          to enact the 2014-15 budget related to energy.


           Analysis Prepared by  :    Gabrielle Meindl / BUDGET / (916)  
          319-2099


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