BILL ANALYSIS                                                                                                                                                                                                    




          Appropriations Committee Fiscal Summary

                                AB 97  (Torlakson)

Hearing Date:8/16/99            Amended:2/25/99        
Consultant: Anne Maitland           Policy Vote:Housing:  
5-0           
____________________________________________________________ 

BILL SUMMARY: 

AB 97 makes permanent the low-income housing tax credit and  
increases the annual credit allocation to $50 million

                         Fiscal Impact (in thousands)
  
Major Provisions      1999-00      2000-01     2001-02   2002-03    2003-04*       Fund  

  Tax credit                     -0-          -0-            $2,000    10,000     
 25,000    General
* revenue loss increases to $40 million in 2004-05 and $50 million in 2005-06  
and future years

STAFF COMMENTS:  

This bill meets the criteria to be placed on the Suspense  
file.


Currently, both federal and state law provides a credit for  
taxpayers who invest in low-income housing projects.  Under  
federal law, the amount of credit varies: developments in  
high-cost areas qualify for more credits; developments  
which receive a partial federal subsidy qualify for fewer  
credits.  The federal credit is claimed over a 10-year  
period.  Under state law, a 30% credit may be claimed for  
projects which receive no federal subsidy; a 13% credit may  
be claimed for projects which receive a federal subsidy.   
These credits are claimed over a 4-year period.

The Tax Credit Allocation Committee annually allocates both  
the federal and state credits to developers of low-income  
housing.  The federal government allocates about $40  
million annually.  In 1998 and 1999, $50 million in state  
credits was allocated; formerly, $35 million was allocated  
annually.  The $40 million in federal credits represents  










only the first year costs of the credit; the succeeding 9  
years of credit are "off budget" and not counted against  
the $40 million annual allocation.  The $35 or $50 million  
state allocation represents the full four-year cost of the  
credit.  The federal credit is permanent; the state credit  
expires at the end of 1999.

This bill would eliminate the sunset date for the  
low-income housing credit.  The state credit would expire  
only if the federal credit were repealed.  In addition, AB  
97 sets the amount of credit allocated annually at $50  
million per year.