Bill Text: CA SB998 | 2013-2014 | Regular Session | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Taxes: exemption and credits: new aerospace projects.
Spectrum: Partisan Bill (Republican 3-0)
Status: (Introduced - Dead) 2014-08-14 - Held in committee and under submission. [SB998 Detail]
Download: California-2013-SB998-Amended.html
Bill Title: Taxes: exemption and credits: new aerospace projects.
Spectrum: Partisan Bill (Republican 3-0)
Status: (Introduced - Dead) 2014-08-14 - Held in committee and under submission. [SB998 Detail]
Download: California-2013-SB998-Amended.html
BILL NUMBER: SB 998 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 22, 2014
AMENDED IN SENATE APRIL 9, 2014
INTRODUCED BY Senator Knight
FEBRUARY 13, 2014
An act to add Article 8 (commencing with Section 12099.8)
to Chapter 1.6 of Part 2 of Division 3 of Title 2 of the Government
Code, to amend Section 510 of, and to add Section 511.5 to, the Labor
Code, to add Sections 21080.38 and 21168.6.8 to the Public Resources
Code, to amend Sections 17059.2 and 23689 of, and to add Sections
17053.35, 17053.36, 23635, and 23636 to, the Revenue and Taxation
Code, and to add Section 10215.2 to the Unemployment Insurance Code,
relating to aerospace. Sections 17053.35 and 23635 of
the Revenue and Taxation Code, relating to taxation, to take effect
immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
SB 998, as amended, Knight. California Aerospace
Innovation Hub Act of 2014. Income taxes: credits: new
aerospace projects.
The Personal Income Tax Law and the Corporation Tax Law allow
various credits against the taxes imposed by those laws.
This bill would, for taxable years beginning on or after January
1, 2016, allow a credit against those taxes to a qualified taxpayer
in an amount equal to ____% of generated tax revenues in the taxable
year from a new aerospace project. This bill would require the
Franchise Tax Board, and authorize the State Board of Equalization,
to prescribe specified rules, guidelines, or procedures regarding the
determination of generated tax revenues.
This bill would take effect immediately as a tax levy.
(1) Existing law provides various incentives for industries such
as the aerospace industry to locate and invest in this state, such as
a program that allows local governments to establish a capital
investment incentive program to pay a capital investment incentive
amount to the proponents of a qualified manufacturing facility in the
aerospace business, and a sales and use tax exemption for the gross
receipts from the sale of, and the storage, use, or other consumption
of, qualified tangible personal property purchased by a person
engaged in aerospace products and parts manufacturing for use
primarily in manufacturing, processing, refining, fabricating, or
recycling of property. Existing law also creates the California
Innovation Hub Program within the Governor's Office of Business and
Economic Development and requires the office to designate innovation
hubs and to oversee, coordinate, and provide assistance to each
innovation hub.
The bill would require the Governor's Office of Business and
Economic Development to design and implement Aerospace Innovation
Hubs, as specified, based on existing geographically based clusters
of facilities of aerospace manufacturers and related businesses.
(2) The Personal Income Tax Law and the Corporation Tax Law allow
various credits against the taxes imposed by those laws.
The bill, for taxable years beginning on or after January 1, 2015,
and before January 1, 2025, would allow a credit against these taxes
to an aerospace manufacturer or related business operating within an
Aerospace Innovation Hub equal 10% of the qualified cost, as
defined, of qualified property, as defined, placed in service during
the taxable year, as provided. This credit would be in lieu of a
specified sales and use tax exemption.
The bill, for the same taxable years, would allow a credit against
these taxes for each taxable year equal to 25% of the charges for
electricity paid or incurred by an aerospace manufacturer or related
business operating within an Aerospace Innovation Hub during the
taxable year.
The Personal Income Tax Law and the Corporation Tax Law, for
taxable years beginning before January 1, 2025, allow a credit
against the taxes imposed by those laws for each taxable year in an
amount as determined by the Governor's Office of Business and
Economic Development, pursuant to a contractual agreement with the
taxpayer, agreed upon by the California Competes Tax Credit
Committee, and based on specified factors.
The bill would include among those factors whether the taxpayer is
an aerospace manufacturer or related business operating within an
Aerospace Innovation Hub.
(3) Existing law, with certain exceptions, establishes 8 hours as
a day's work and a 40-hour workweek, and requires payment of
prescribed overtime compensation for additional hours worked.
Existing law authorizes the adoption by 2/3 of employees in a work
unit of alternative workweek schedules providing for workdays no
longer than 10 hours within a 40-hour workweek. Under existing law,
any person who violates the provisions regulating work hours is
guilty of a misdemeanor.
The bill would allow an individual nonexempt employee of an
aerospace manufacturer or related business operating within an
Aerospace Innovation Hub to request an employee-selected flexible
work schedule providing for workdays up to 10 hours per day within a
40-hour workweek, and would allow the employer to implement this
schedule without the obligation to pay overtime compensation for
those additional hours in a workday, except as specified. The bill
would require the Division of Labor Standards Enforcement in the
Department of Industrial Relations to enforce this provision and
adopt regulations.
(4) Existing law specifies that moneys in the Employment Training
Fund are to be expended only for particular purposes relating to
employment training and related administrative costs. Existing law
authorizes the Employment Training Panel to allocate money in the
fund for particular purposes related to employment training.
The bill would allow the Employment Training Panel to expend
moneys in the Employment Training Fund to reimburse an aerospace
manufacturer or related business operating within an Aerospace
Innovation Hub for its reasonable costs of workforce training upon
appropriation by the Legislature.
(5) The California Environmental Quality Act (CEQA) requires a
lead agency, as defined, to prepare, or cause to be prepared, and
certify the completion of, an environmental impact report (EIR) on a
project that it proposes to carry out or approve that may have a
significant effect on the environment or to adopt a negative
declaration if it finds that the project will not have that effect.
CEQA also requires a lead agency to prepare a mitigated negative
declaration for a project that may have a significant effect on the
environment if revisions in the project would avoid or mitigate that
effect and there is no substantial evidence that the project, as
revised, would have a significant effect on the environment.
CEQA establishes a procedure by which a person may seek judicial
review of the decision of the lead agency made pursuant to CEQA.
The bill would require the lead agency to undertake specified
steps in the preparation of the EIR for certain aerospace projects,
which would be designated by the Governor. The bill would require a
public agency, in certifying the EIR and in granting approvals for
those designated aerospace projects, to concurrently prepare the
record of proceeding and to certify the record of proceeding within 5
days of the filing of a specified notice. The bill would require the
Judicial Council, on or before July 1, 2015, to adopt a rule of
court to establish procedures applicable to actions or proceedings
seeking judicial review of a public agency's action in certifying the
EIR and in granting approval of those designated aerospace
manufacturing projects that requires the actions or proceedings,
including any appeals therefrom, be resolved, to the extent feasible,
within 270 days of the certification of the record of proceeding.
The bill would, for the calendar years from 2015 to 2020, inclusive,
require the Governor to designate 4 aerospace projects each year
meeting specified requirements for which the above provisions would
apply.
The bill would exempt from the requirements of CEQA a project or
an activity related to the retooling or alteration for manufacturing
purposes of an existing aerospace manufacturing facility or
aerospace-related facility in an Aerospace Innovation Hub within the
facility's existing footprint.
Because this bill would impose additional duties on local
agencies, it would impose a state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
The bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes no .
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 17053.35 is added to the
Revenue and Taxation Code , to read:
17053.35. (a) For taxable years beginning on or after January 1,
2016, there shall be allowed to a qualified taxpayer a credit against
the "net tax," as defined in Section 17039, an amount equal to ____
percent (____%) of generated tax revenues in the taxable year from a
new aerospace project.
(b) For purposes of this section, all of the following shall
apply:
(1) (A) "Generated tax revenues" means the amount equal to sum of
the following amounts:
(i) The difference between the "net tax," as defined in Section
17039, of the qualified taxpayer in the taxable year and the
estimated "net tax" of the qualified taxpayer, if the new aerospace
project of the qualified taxpayer was not in this state, in the
taxable year. If the difference is zero or less than zero, then the
amount shall be zero.
(ii) The amount of ad valorem property tax attributable to any
increases in assessed valuation of real property due to the purchase
or new construction of real property by the qualified taxpayer that
is primarily used for the new aerospace project.
(B) If the amount of generated tax revenues determined in
subparagraph (A) exceeds one hundred million dollars ($100,000,000),
the amount to be used for purposes of calculating the amount of
credit allowed under this section shall be one hundred million
dollars ($100,000,000).
(2) "Manufacturing" means the activity of converting or
conditioning property by changing the form, composition, quality, or
character of the property for ultimate sale at retail or use in the
manufacturing of a product to be ultimately sold at retail.
Manufacturing includes any improvements to tangible personal property
that result in a greater service life or greater functionality than
that of the original property.
(3) "New aerospace project" means the manufacturing of aircraft,
aircraft engine, guided missiles, space vehicles, propulsion units,
or related parts by the qualified taxpayer, pursuant to a contractual
agreement between the qualified taxpayer and a purchaser, that
commences in this state on or after January 1, 2016, and has not
commenced outside of this state prior to that date.
(4) "New construction" has the same meaning as that term is
defined in Section 70.
(5) "Primarily" means more than 50 percent.
(6) "Qualified taxpayer" means a person who is primarily engaged
in those lines of business described in Code 3364 of the North
American Industry Classification System (NAICS) published by the
United States Office of Management and Budget (OMB), 2012 edition.
(c) No credit shall be allowed under this section after the
conclusion or completion of the contractual agreement that is the
subject of the new aerospace project.
(d) In the case where the credit allowed by this section exceeds
the "net tax," the excess may be carried over to reduce the "net tax"
in the following year, and succeeding nine years if necessary, until
the credit is exhausted.
(e) (1) The Franchise Tax Board shall prescribe rules, guidelines,
or procedures to be used by the qualified taxpayer to determine its
estimated "net tax" amount described in clause (i) of subparagraph
(A) of paragraph (1) of subdivision (b), and may prescribe other
rules, guidelines, or procedures necessary or appropriate to carry
out the purposes of this section, except as provided in paragraph
(2).
(2) The State Board of Equalization may prescribe rules,
guidelines, or procedure necessary or appropriate for the
determination of the amount of increased ad valorem property tax
described in clause (ii) of subparagraph (A) of paragraph (1) of
subdivision (b).
SEC. 2. Section 23635 is added to the
Revenue and Taxation Code , to read:
23635. (a) For taxable years beginning on or after January 1,
2016, there shall be allowed to a qualified taxpayer a credit against
the "tax," as defined in Section 23036, an amount equal to ____
percent (____%) of generated tax revenues in the taxable year from a
new aerospace project.
(b) For purposes of this section, all of the following shall
apply:
(1) (A) "Generated tax revenues" means the amount equal to sum of
the following amounts:
(i) The difference between the "tax," as defined in Section 23036,
of the qualified taxpayer in the taxable year and the estimated "tax"
of the qualified taxpayer, if the new aerospace project of the
qualified taxpayer was not in this state, in the taxable year. If the
difference is zero or less than zero, then the amount shall be zero.
(ii) The amount of ad valorem property tax attributable to any
increases in assessed valuation of real property due to the purchase
or new construction of real property by the qualified taxpayer that
is primarily used for the new aerospace project.
(B) If the amount of generated tax revenues determined in
subparagraph (A) exceeds one hundred million dollars ($100,000,000),
the amount to be used for purposes of calculating the amount of
credit allowed under this section shall be one hundred million
dollars ($100,000,000).
(2) "Manufacturing" means the activity of converting or
conditioning property by changing the form, composition, quality, or
character of the property for ultimate sale at retail or use in the
manufacturing of a product to be ultimately sold at retail.
Manufacturing includes any improvements to tangible personal property
that result in a greater service life or greater functionality than
that of the original property.
(3) "New aerospace project" means the manufacturing of aircraft,
aircraft engine, guided missiles, space vehicles, propulsion units,
or related parts by the qualified taxpayer, pursuant to a contractual
agreement between the qualified taxpayer and a purchaser, that
commences in this state on or after January 1, 2016, and has not
commenced outside of this state prior to that date.
(4) "New construction" has the same meaning as that term is
defined in Section 70.
(5) "Primarily" means more than 50 percent.
(6) "Qualified taxpayer" means a person who is primarily engaged
in those lines of business described in Code 3364 of the North
American Industry Classification System (NAICS) published by the
United States Office of Management and Budget (OMB), 2012 edition.
(c) No credit shall be allowed under this section after the
conclusion or completion of the contractual agreement that is the
subject of the new aerospace project.
(d) In the case where the credit allowed by this section exceeds
the "net tax," the excess may be carried over to reduce the "net tax"
in the following year, and succeeding nine years if necessary, until
the credit is exhausted.
(e) (1) The Franchise Tax Board shall prescribe rules, guidelines,
or procedures to be used by the qualified taxpayer to determine its
estimated "net tax" amount described in clause (i) of subparagraph
(A) of paragraph (1) of subdivision (b), and may prescribe other
rules, guidelines, or procedures necessary or appropriate to carry
out the purposes of this section, except as provided in paragraph
(2).
(2) The State Board of Equalization may prescribe rules,
guidelines, or procedure necessary or appropriate for the
determination of the amount of increased ad valorem property tax
described in clause (ii) of subparagraph (A) of paragraph (1) of
subdivision (b).
SEC. 3. This act provides for a tax levy within the
meaning of Article IV of the Constitution and shall go into
immediate effect. All matter omitted in this version of the
bill appears in the bill as amended in the Senate, April 9, 2014.
(JR11)
