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AB-2957 Water: University of California: California Institute for Water Innovation and Technology: corporate income taxes: credit: water technology.(2017-2018)

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Date Published: 05/01/2018 09:00 PM
AB2957:v95#DOCUMENT

Amended  IN  Assembly  May 01, 2018
Amended  IN  Assembly  April 16, 2018
Amended  IN  Assembly  April 11, 2018
Amended  IN  Assembly  March 20, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 2957


Introduced by Assembly Member Gallagher

February 16, 2018


An act to add Chapter 16 (commencing with Section 92990) to Part 57 of Division 9 of Title 3 of the Education Code, and to add Section 23605 to the Revenue and Taxation Code, relating to water.


LEGISLATIVE COUNSEL'S DIGEST


AB 2957, as amended, Gallagher. Water: University of California: California Institute for Water Innovation and Technology: corporate income taxes: credit: water technology.
Existing provisions of the California Constitution provide that the University of California constitutes a public trust, and require that the university be administered by the Regents of the University of California, a corporation in the form of a board, with full powers of organization and government, subject to legislative control only for specified purposes. These provisions require that corporation to have all the powers necessary or convenient for the effective administration of its trust.
This bill would request the regents to establish the California Institute for Water Innovation and Technology in order to achieve specified goals, including developing California’s next generation of water professionals and technicians and growing the state’s economy by creating new opportunities for jobs in water research, management, and technology. The bill would request the regents to locate the institute at a satellite campus within the City of Oroville. Oroville, or in the County of Butte downstream of Lake Oroville. The bill would provide that if the regents act on this request to establish the institute within that location, the regents will post a notice of that decision on its Internet Web site, and submit that notice to the Legislature for publication in the daily journals of both houses.
The Corporation Tax Law allows various credits against the taxes imposed by that law, including allowing a hiring credit for taxpayers within the specified areas.
This bill would, for each taxable year beginning on or after January 1, 2019, five consecutive taxable years beginning on or after the date that the regents establish the institute and post the notice in the journal to establish the institute, allow a credit against the taxes imposed by the Corporation Tax Law to qualified taxpayers, as defined, located in a water technology and innovation zone for qualified wages paid to qualified employees during the taxable year, as provided.
This bill would make legislative findings and declarations as to the necessity of a special statute for the City of Oroville.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 (a) The Legislature finds and declares all of the following:
(1) Water is the lifeblood of California. Without safe and reliable water, no community or sector of the economy, from agriculture to high tech to manufacturing, can thrive or expand.
(2) Growing population, climate change, and the need to protect and grow California’s economy while protecting and restoring our fish and wildlife habitats make it essential for the state to invest in new water conservation, conveyance, treatment, efficiency, and supply technologies to help manage the state’s water resources as efficiently as possible.
(3) California has always faced cyclical water patterns with years of rain followed by years of drought, and due to this cyclical nature, it is important for California to increase water supply reliability.
(4) Improvements in technology, infrastructure, and management practices offer the potential for increasing water efficiency in California over time, providing an essential water management tool to meet the need for water for urban, agricultural, and environmental uses.
(5) Section 106.3 of the Water Code declares that it is the policy of the state that every human being has the right to safe, clean, affordable, and accessible water adequate for human consumption, cooking, and sanitary purposes.
(6) Section 85021 of the Water Code declares that it is the policy of the state to reduce reliance on the Delta in meeting California’s future water supply needs through improved regional self-reliance that includes investments in advanced water technologies.
(7) Thanks to technological advances by water professionals and the dedication of thousands of water industry professionals in the state, California drinking water and treated wastewater meet some of the most stringent water quality standards in the nation.
(8) California needs more trained water professionals to ensure smooth operation and maintenance of public water systems.
(9) It is in the interest of all Californians to establish training for water professionals and to incentivize new and emerging water technologies.
(b) (1) It is the intent of the Legislature in enacting Section 23605 of the Revenue and Taxation Code to provide local governments with opportunities to attract large manufacturing and research facilities to invest in their communities and to encourage water technology industries to locate and invest in those facilities in California.
(2) The Water Technology and Innovation Tax Incentive Program is hereby established for the purpose of encouraging investments in water technology and to promote the advancement of water management, efficiency, storage, conveyance, and conservation technology.
(3) The Water Technology and Innovation Tax Incentive Program’s purpose is also to provide tax incentives to eligible businesses qualified taxpayers that are located in a “water technology and innovation zone” and engage in specified activities related to water innovation. for qualified wages paid to qualified employees, provided that the Regents of the University of California establish the California Institute for Water Innovation and Technology within the City of Oroville or the County of Butte downstream of Lake Oroville.

SEC. 2.

 Chapter 16 (commencing with Section 92990) is added to Part 57 of Division 9 of Title 3 of the Education Code, to read:
CHAPTER  16. California Institute for Water Innovation and Technology

92990.
 (a) The Regents of the University of California are requested to establish the California Institute for Water Innovation and Technology in order to achieve all of the following goals:
(1) Ensure California is a leader in water management and adapts to changing conditions by developing California’s next generation of water professionals and technicians.
(2) Grow California’s economy by creating new opportunities for jobs in water research, management, and technology.
(3) Utilize public-private partnerships to perform innovative research in water technology.
(4) Strengthen California’s position as a global leader in water management by increasing the state’s water research, development, and design.
(b) The regents are requested to locate the California Institute for Water Innovation and Technology at a satellite campus within the City of Oroville, or in the County of Butte downstream of Lake Oroville, so that the institute is located in close proximity to Lake Oroville, which is a key part of the State Water Project and California’s water system. If the regents act on this request to establish the institute within the location described in this subdivision, the regents shall post a notice to that effect on its Internet Web site, and shall submit that notice to the Legislature for publication in the daily journal of each house of the Legislature.

SEC. 3.

 Section 23605 is added to the Revenue and Taxation Code, to read:

23605.
 (a) (1) For each taxable year five consecutive taxable years beginning on or after January 1, 2019, the first January 1 after this section becomes operative pursuant to subdivision (f), there shall be allowed a credit against the “tax,” as defined by Section 23036, to a qualified taxpayer who employs a qualified employee in a water technology and innovation zone during the taxable year. The credit shall be equal to the sum of each of the following:
(A) Fifty percent of qualified wages in the first year of employment.
(B) Forty percent of qualified wages in the second year of employment.
(C) Thirty percent of qualified wages in the third year of employment.
(D) Twenty percent of qualified wages in the fourth year of employment.
(E) Ten percent of qualified wages in the fifth year of employment.
(2) The total amount of qualified wages that may be taken into account for purposes of claiming the credit allowed by this section shall not exceed two million dollars ($2,000,000) per taxable year.
(b) For purposes of this section:
(1) “Qualified employee” means an individual employed by the qualified taxpayer during the taxable year in the water technology and innovation zone.
(2) “Qualified taxpayer” means a person or entity that is located in a water technology and innovation zone and engages in either of the following:
(A) Water resource management research or education.
(B) Water efficiency, recycling, conservation, treatment, or supply technology research or manufacturing.
(3) “Qualified wages” means that portion of wages paid or incurred by the qualified taxpayer during the taxable year to qualified employees that does not exceed 150 percent of the minimum wage.
(4) “Water innovation and technology zone” means the City of Oroville or areas within 10 miles downstream of Lake Oroville.
(c) In the case where the credit otherwise allowed under this section exceeds the “tax” for the taxable year, that portion of the credit that exceeds the “tax” may be carried over and added to the credit, if any, in the succeeding two taxable years, if necessary, until the credit is exhausted.

(d)(1)Any deduction otherwise allowed under this part for the wages paid or incurred by the qualified employer upon which the credit is based shall be reduced by the amount of the credit.

(2)Any credit otherwise allowed under this part for the wages paid or incurred by the qualified employer upon which this credit is based shall not be reduced by the amount of this credit.

(d) No other credit or deduction shall be allowed under this part with respect to the amounts paid or incurred by a qualified taxpayer for qualified wages paid or incurred by the qualified taxpayer to qualified employees that are taken into account in computing the credit allowed under this section.
(e) Section 41 does not apply to the credit allowed by this section.
(f) This section shall become operative on the first January 1 occurring after the date the Regents of the University of California establish the California Institute for Water Innovation and Technology within the City of Oroville or in the County of Butte downstream of Lake Oroville and post the notice as described in subdivision (b) of Section 92990 of the Education Code.

SEC. 4.

 The Legislature finds and declares that a special statute is necessary and that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because Lake Oroville is in close proximity to the City of Oroville, home of Lake Oroville, is the cornerstone and starting point of the State Water Project, provides drinking water to 25 million people, and is the location of the largest reservoir in the State Water Project system. Additionally, the City of Oroville is a leader in water management.