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SPONSOR: |
Maes |
DATE TYPED: |
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HB |
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SHORT TITLE: |
Water Assistance Tax Credit |
SB |
8/aSCC |
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ANALYST: |
Smith |
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REVENUE
|
Estimated Revenue |
Subsequent Years Impact |
Recurring or
Non-Rec |
Fund Affected |
|
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FY03 |
FY04 |
|
|
|
|
|
(3,000.0) |
(7,000.0) |
Recurring |
General
Fund |
(Parenthesis ( ) Indicate Revenue Decreases)
Responses
Received From
TRD
SUMMARY
Synopsis
of SCC Amendment
The Senate Conservation Committee amendment
corrects small drafting errors that made reference to “small business” and
“small business assistance” on page 4.
The amendment also strikes the word “of” and replaces it with “or” on
page 7, line 8.
Synopsis
of Original Bill
SB8 creates the “Water Technology Assistance Tax
Credit Act.” The Act provides a credit
of 100% of qualified expenditures to a national laboratory and its contractors
to provide technical assistance to various
To be eligible to claim the credit, the
laboratory must provide to the Taxation and Revenue Department (TRD) a
quarterly report including a list of partners assisted, certification from both
the laboratory and the partner that the assistance could not be obtained for a
reasonable cost from private industry, qualified expenditures attributed to
each partner, description of assistance
provided, and the name of the provider. The total annual credit amount is limited to
$7 million per year.
Additionally, a “water assistance council” is
created to provide some oversight of the program, and to assist the national
laboratory in identifying critical water needs of the state and potential
beneficiaries of the program.
FISCAL IMPLICATIONS
The
estimate assumes a lag time. However, it is a certainty that the labs would
find a way to utilize the full credit.
TECHNICAL ISSUES
TRD notes that on page 4, lines 17 through 23, there are
repeated references to “small business” and “small business assistance”. These should be changed to “partner” and
“water-related assistance.
OTHER SUBSTANTIVE ISSUES
·
TRD makes the following policy observations:
The laboratory may contract with outside
entities to aid in the provision of water technology assistance, so some of the
subsidy flows from the lab to contractors.
Thus the lab, rather than acting solely as a provider of technical
assistance, essentially becomes an administrator of a state-funded assistance
program responsible for allocating state funds. A direct appropriation to the relevant state
agency to operate this program by
contract is a less expensive means of funding this program and would
provide closer oversight.
·
The
proposed rate of subsidy is 100% up to the specified caps. Thus, the state is providing all of the
funding for the targeted activities.
·
This
law has a narrowly targeted number of beneficiaries. Targeting preferential tax
treatment to specific entities increases complexity and sets precedents that
other taxpayers can use to obtain similar tax preferences. By reducing the tax base, the large number of
exemptions and deductions in the gross receipts tax statutes reduces the
revenue that can be generated, puts pressure on state and local budgets, and
puts upward pressure on tax rates.
·
This
proposal is similar to the current “Laboratory Partnership with Small Business
Tax Credit Act” which provides a tax credit to the lab for providing technical
assistance to small businesses in the state.
The lab reports providing technical assistance to 300