The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws. Existing law requires any bill authorizing a new income tax credit to contain, among other things, specific goals, purposes, and objectives that the tax credit will achieve, detailed performance indicators, and data collection requirements, as provided.

This bill, for taxable years beginning on or after January 1, 2018, and before January 1, 2022, would allow as a credit against those taxes an amount equal to $30 per acre of winter-flooded rice 40% of costs paid or incurred by a qualified taxpayer to maintain winter-flooded rice during the taxable year. The rice. The bill would require the qualified taxpayer to submit the total acreage used for winter-flooded rice submit, among other things, evidence of costs paid or incurred to the Department of Food and Agriculture for certification and for the Department of Food and Agriculture to provide a copy of each credit certificate to the taxpayer and, upon request, to the Franchise Tax Board. The bill would also include the additional information required for any bill authorizing a new income tax credit.

This bill would take effect immediately as a tax levy.

The Personal Income Tax Law and the Corporation Tax Law allows allow various credits against the taxes imposed by that law. those laws. Existing law requires any bill authorizing a new income tax credit to contain, among other things, specific goals, purposes, and objectives that the tax credit will achieve, detailed performance indicators, and data collection requirements, as provided.

This bill bill, for taxable years beginning on or after January 1, 2018, and before January 1, 2022, would allow as a credit against those taxes an amount equal to $30 per planted acre of winter-flooded rice paid or incurred by a qualified taxpayer to maintain winter-flooded rice during the taxable year. The bill would require the qualified taxpayer to submit the total acreage used for winter-flooded rice to the Department of Food and Agriculture for certification and for the Department of Food and Agriculture to provide a copy of each credit certificate issued to the Franchise Tax Board. The bill would also include that the additional information required for any bill authorizing a new income tax credit.

This bill would take effect immediately as a tax levy.

The Personal Income Tax Law and the Corporation Tax Law allows various credits against the taxes imposed by that law. Existing law requires any bill authorizing a new income tax credit to contain, among other things, specific goals, purposes, and objectives that the tax credit will achieve, detailed performance indicators, and data collection requirements, as provided.

This bill would allow as a credit against those taxes an amount equal to $30 per planted acre of winter-flooded rice paid or incurred by a qualified taxpayer to maintain winter-flooded rice during the taxable year. The bill would require the qualified taxpayer to submit the total acreage used for winter-flooded rice to the Department of Food and Agriculture for certification and for the Department of Food and Agriculture to provide a copy of each credit certificate issued to the Franchise Tax Board. The bill would also include that additional information required for any bill authorizing a new income tax credit.

This bill would make legislative findings and declarations regarding the need for special legislation.

This bill would take effect immediately as a tax levy.

Date of Hearing: May 24, 2017

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 832

Author:(Aguiar-Curry) – As Amended Ver:April 3, 2017

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill allows a Personal Income Tax (PIT) and Corporation Tax (CT) credit, for taxable years 2018 through 2021, equal to 40% of costs paid or incurred to maintain winter-flooded rice, which is defined as the intentional flooding of a California rice field that has been farmed to rice at least two of the last three growing seasons and is maintained in a flooded state during a specified period.

FISCAL EFFECT:

Annual General Fund (GF) revenue loss of $2.6 million in 2017-18, $10 million in 2018-19, and $15 million in 2019-20.

COMMENTS:

1. Purpose and Background. According to supporters of AB 832, winter-flooded rice has helped maintain migratory bird habitat as development pressures have eroded wetlands throughout the region. According to a 2010 California Rice Commission report, the state’s ricelands are used by 230 species of wildlife, including about 7 million waterfowl. The report also notes that any decline in ricelands would have a harmful impact on the bird population, with a 50% decrease in the number of acres of rice production resulting in a reduction in the capacity to support about 1.2 million ducks.

According to the author, AB 832 will help offset the cost of winter-flooding of rice fields, which provides critical wetland habitat for waterfowl and shorebirds in the Pacific Flyway. The author argues that this bill represents an investment in the ecology of California and the wildlife that rely on wetland habitats.

1. Fiscal implications of tax expenditures. Existing law provides various credits, deductions, exclusions, and exemptions for particular taxpayer groups. These features of tax law are referred to as "expenditures" since they are generally enacted to accomplish some governmental purpose and there is a determinable cost associated with each (in the form of foregone revenues). One ongoing concern about tax expenditures is the lack of control over revenue losses, since the number of taxpayers taking advantage of any given tax expenditure can vary each year. This bill enacts a new tax expenditure program, in the form of a PIT or CT credit, to help with the costs associated with maintaining winter-flooded rice fields.

Analysis Prepared by: Luke Reidenbach / APPR. / (916) 319-2081

Date of Hearing: May 15, 2017

ASSEMBLY COMMITTEE ON REVENUE AND TAXATION

Sebastian Ridley-Thomas, Chair

ABPCA Bill Id:AB 832 (

Author:Aguiar-Curry) – As Amended Ver:April 3, 2017

Majority vote. Tax levy. Fiscal committee.

SUBJECT: Income and corporate taxes: credits: winter-flooded rice

SUMMARY: Enacts the Pacific Flyway Protection Tax Credit Act. Specifically, this bill:

1. Contains the following legislative findings:
   1. California's great Central Valley, encompassing the Sacramento and San Joaquin Valleys and joined by the Bay Delta, was once an expansive complex of permanent and seasonal wetlands. Over 100 years ago, an estimated four million acres of these valuable habitats lined the Central Valley supporting an estimated 20 million to 40 million waterfowl and countless millions of other shorebirds, wading birds, raptors, and other wildlife.
   2. By the 1970s, the rich ecological wetlands complex in the Central Valley dwindled to less than 250,000 acres, just 5% of historic levels.
   3. Habitat improvement in this Critical Conservation Area can make a significant and beneficial conservation impact on waterbird populations in the Pacific Flyway.
   4. The Central Valley is a critical hub to the Pacific Flyway – a major migratory corridor running from Alaska to South America.
   5. Over the past few decades, winter flooding of California rice lands has created high-quality habitat on approximately 350,000 acres annually. In recent years, the average total number of winter-flooded rice has decreased, and many waterbird conservationists are concerned that this trend will continue.
   6. For waterfowl, the consequences of fewer acres of winter-flooded rice is devastating, as the Central Valley Joint Venture has estimated that winter-flooded rice fields provide over 60% of the food required by waterfowl in the Sacramento Valley.
   7. Recent studies show that winter-flooded rice fields may also prove to be a valuable tool in improving the salmon populations by demonstrating that growth rates of juvenile salmon reared in these habitats are the highest on record.
   8. Considering the multiple threats facing the region, California should consider substantial conservation investments designed to help preserve the Pacific Flyway for future generations.
2. Allows a tax credit, under both the Personal Income Tax (PIT) Law and the Corporation Tax (CT) Law, equal to 40% of costs paid or incurred by a "qualified taxpayer" to maintain "winter-flooded rice".
3. Applies to taxable years beginning on or after January 1, 2018, and before January 1, 2022.
4. Defines a "qualified taxpayer" as any taxpayer who grows and maintains rice, including "winter-flooded rice".
5. Defines "winter-flooded rice" as the intentional flooding of a California rice field that has been farmed to rice at least two of the last three growing seasons and is maintained in a flooded state for at least 70 days between October 15 and March 15 of the following year.
6. Specifies that the credit shall be claimed in the year in which the 70-day requirement described above is satisfied.
7. Provides that, within an unspecified number of days of satisfying the 70-day requirement, the qualified taxpayer must submit evidence of costs paid or incurred to maintain winter-flooded rice, the taxpayer's name and property address, and the taxpayer's social security number or taxpayer identification number to the Department of Food and Agriculture for certification. The Department of Food and Agriculture, in turn, shall provide a copy of each credit certificate issued to the taxpayer and to the Franchise Tax Board (FTB) upon request of the FTB.
8. Provides that in cases where the credit amount exceeds the taxpayer's tax liability, the excess credit amount may be carried over to the following year, and succeeding six years if necessary, until the credit is exhausted.
9. Repeals the credit provisions on December 1, 2022.
10. Provides that, for purposes of complying with Revenue and Taxation Code (R&TC) Section 41, the Legislature finds and declares as follows:
    1. The specific goal of this tax credit is to maintain or expand the number of acres of winter-flooded rice.
    2. The baseline to be used to determine the progress of this tax credit is 2015.
    3. Growers utilizing the tax credit will submit costs paid or incurred for winter-flooding to the California Department of Food and Agriculture.
11. Takes immediate effect as a tax levy.

EXISTING LAW:

1. Allows various tax credits under both the PIT Law and the CT Law. These credits are generally designed to encourage socially beneficial behavior or to provide relief to taxpayers who incur specified expenses.
2. Requires any bill authorizing a new credit to contain all of the following:
   1. Specific goals, purposes, and objectives that the tax credit will achieve;
   2. Detailed performance indicators for the Legislature to use when measuring whether the tax credit meets the goals, purposes, and objectives stated in the bill; and,
   3. Data collection requirements to enable the Legislature to determine whether the tax credit is meeting, failing to meet, or exceeding those specific goals, purposes, and objectives. The requirements shall include the specific data and baseline measurements to be collected and remitted in each year the credit is in effect, for the Legislature to measure the change in performance indicators, and the specific taxpayers, state agencies, or other entities required to collect and remit data. (R&TC Section 41.)

FISCAL EFFECT: The FTB estimates that this bill would reduce General Fund revenues by $2.6 million in fiscal year (FY) 2017-18, by $10 million in FY 2018-19, and by $15 million in FY 2019-20.

COMMENTS:

1. The author has provided the following statement in support of this bill:

AB 832 will create the Pacific Flyway Protection Tax Credit to help offset the cost of winter-flooding of rice fields, an agricultural practice that provides critical wetland habitat for wintering waterfowl and shorebirds in the Pacific Flyway. Each year at least a billion birds migrate along the flyway, stretching from the arctic tundra to the South American wetlands. The greater Central Valley, including the Sacramento and San Joaquin Valley regions, is an important stopping point for these birds. [. . .] AB 832 represents a critical investment in the ecology of our state, the greater Pacific Flyway, and wildlife that rely on wetland habitats. The Pacific Flyway Tax Credit will help ensure wetland-dependent wildlife continue to have a home in California.

1. This bill is supported by Audubon California, which notes the following:

The Central Valley is a critical hub to the Pacific Flyway – a major migratory corridor running from Alaska to South America. Habitat improvement in this Critical Conversation Area can make a significant and beneficial conservation impact on water bird populations in the Pacific Flyway.

Considering the multiple threats facing the region, California should consider substantial conservation investments designed to help preserve the Pacific Flyway for future generations.

Winter-flooded rice has helped maintain habitat even as development pressures have eroded the rich ecological wetlands complex in the Central Valley to a fraction of historic levels. In recent years, however, the average total acreage of winter-flooded rice has decreased any many water bird conservationists are concerned that this trend will continue.

1. This bill is opposed by the California Tax Reform Association, which notes the following:

[I]f compensation for winter flooding is appropriate, it should be done as an expenditure, not a tax credit, since a tax credit would proportionately reduce education funding. If compensation is appropriate, it should be done through the budget. In that case, it is possible that other funds which are based on fees and other charges would be more appropriate for environmental expenditures than the general fund. Finally, since this activity has otherwise been taking place on a widespread basis since burning of rice straw was banned, it would appear that the credit is compensating for activity that is otherwise taking place.

1. The FTB notes the following in its staff analysis of this bill:

Since the flooding-period between October 15 and March 15 exceeds 140 days, it would be possible for a qualified taxpayer to claim the credit both for the period from October 15 to December 31 and from January 1 to March 15 as both periods exceed the required 70 days. If this is inconsistent with the author's intent, it is recommended that the bill be amended.

1. Committee staff comments:
   1. What is a "tax expenditure"? Existing law provides various credits, deductions, exclusions, and exemptions for particular taxpayer groups. In the late 1960s, U.S. Treasury officials began arguing that these features of the tax law should be referred to as "expenditures" since they are generally enacted to accomplish some governmental purpose and there is a determinable cost associated with each (in the form of foregone revenues).
      
   2. How is a tax expenditure different from a direct expenditure? As the Department of Finance notes in its annual Tax Expenditure Report, there are several key differences between tax expenditures and direct expenditures. First, tax expenditures are reviewed less frequently than direct expenditures once they are put in place. While this affords taxpayers greater financial predictability, it can also result in tax expenditures remaining a part of the tax code without demonstrating any public benefit. Second, there is generally no control over the amount of revenue losses associated with any given tax expenditure. Finally, it should also be noted that, once enacted, it takes a two-thirds vote to rescind an existing tax expenditure absent a sunset date, effectively resulting in a "one-way ratchet" whereby tax expenditures can be conferred by majority vote, but cannot be rescinded, irrespective of their cost or efficacy, without a supermajority vote.
   3. What would this bill do? This bill would enact a new tax expenditure program for rice farmers to encourage the winter flooding of rice fields, thereby conserving wetland habitat. According to the California Rice Commission, winter flooding creates valuable foraging conditions for ducks and other migratory birds by providing waste grains and invertebrate prey as food sources. As the cost of water has increased, however, concerns have been raised about the continued willingness of farmers to use winter flooding to decompose rice straw. Some growers have reportedly resorted to lower cost methods of decomposing rice straw that do not depend on flooding.^[1] Conservationists worry that a continuation of this trend may reduce wetland habitat relied upon by many birds along the Pacific Flyway.
   4. Double dipping: This bill would allow taxpayers in certain circumstances to claim multiple tax benefits for the same items of expense. Specifically, certain taxpayers could claim both the credit allowed by this bill and a deduction for the costs paid or incurred to maintain the rice fields, such as water used to flood the fields and related equipment and labor costs. The author and Committee may wish to consider amendments prohibiting this double-dipping of tax benefits.

REGISTERED SUPPORT / OPPOSITION:

Support

Audubon California

California Rice Commission

California Waterfowl

Defenders of Wildlife

Ducks Unlimited

Friends of the Napa River

Grassland Water District

Nature Conservancy

Rural County Representatives of California

Yolo Basin Foundation

Opposition

California Tax Reform Association

Analysis Prepared by: M. David Ruff / REV. & TAX. / (916) 319-2098

1. The author's office notes, "Eliminating rice straw before the growing season is necessary for seedling establishment and disease control. In 1997, the Legislature prohibited rice straw burning, [except] in the case of disease, to improve air quality. As an alternative, most farmers began flooding rice fields with recycled agricultural water, a method that accelerates the decomposition of rice straw into the soil." ↑

Date of Hearing: March 27, 2017

ASSEMBLY COMMITTEE ON REVENUE AND TAXATION

Sebastian Ridley-Thomas, Chair

ABPCA Bill Id:AB 832 (

Author:Aguiar-Curry) – As Amended Ver:March 20, 2017

Majority vote. Tax levy. Fiscal committee.

SUBJECT: Income and corporate taxes: credits: winter-flooded rice

SUMMARY: Enacts the Pacific Flyway Protection Tax Credit Act. Specifically, this bill:

1. Contains the following legislative findings:
   1. California's great Central Valley, encompassing the Sacramento and San Joaquin Valleys and joined by the Bay Delta, was once an expansive complex of permanent and seasonal wetlands. Over 100 years ago, an estimated four million acres of these valuable habitats lined the Central Valley supporting an estimated 20 to 40 million waterfowl and countless millions of other shorebirds, wading birds, raptors, and other wildlife.
   2. By the 1970s, the rich ecological wetlands complex in the Central Valley dwindled to less than 250,000 acres, just 5% of historic levels.
   3. Habitat improvement in this Critical Conservation Area can make a significant and beneficial conservation impact on waterbird populations in the Pacific Flyway.
   4. The Central Valley is a critical hub to the Pacific Flyway – a major migratory corridor running from Alaska to South America.
   5. Over the past few decades, winter flooding of California ricelands has created high-quality habitat on approximately 350,000 acres annually. In recent years, the average total number of winter-flooded rice has decreased and many waterbird conservationists are concerned that this trend will continue.
   6. For waterfowl, the consequences of fewer acres of winter-flooded rice is devastating, as the Central Valley Joint Venture has estimated that winter-flooded rice fields provide over 60% of the food required by waterfowl in the Sacramento Valley.
   7. Recent studies show that winter-flooded rice fields may also prove to be a valuable tool in improving the salmon populations by demonstrating that growth rates of juvenile salmon reared in these habitats are the highest on record.
   8. Considering the multiple threats facing the region, California should consider substantial conservation investments designed to help preserve the Pacific Flyway for future generations.
2. Allows a tax credit, under both the Personal Income Tax (PIT) Law and the Corporation Tax (CT) Law, equal to $30 per acre of "winter-flooded rice" paid or incurred by a "qualified taxpayer" to maintain "winter-flooded rice" during the taxable year.
3. Applies to taxable years beginning on or after January 1, 2018, and before January 1, 2022.
4. Defines "winter-flooded rice" as the intentional flooding of a California rice field that has been farmed to rice at least two of the last three growing seasons and is maintained in a flooded state for at least 70 days between October 15 and March 15 of the following year.
5. Defines a "qualified taxpayer" as any taxpayer who grows and maintains rice, including winter-flooded rice.
6. Requires the qualified taxpayer to submit the total acreage used for winter-flooded rice to the Department of Food and Agriculture for certification. The Department of Food and Agriculture, in turn, shall provide a copy of each credit certificate issued to the Franchise Tax Board (FTB).
7. Provides that in cases where the credit amount exceeds the taxpayer's tax liability, the excess credit amount may be carried over to the following taxable year, and succeeding years if necessary, until the credit is exhausted.
8. Repeals the credit provisions on December 1, 2022.
9. Provides that, for purposes of complying with Revenue and Taxation Code (R&TC) Section 41, the Legislature finds and declares as follows:
   1. The specific goal of this tax credit is to maintain or expand the number of acres of winter-flooded rice.
   2. The baseline to be used to determine the progress of this tax credit is 2015.
   3. Growers utilizing the tax credit will submit the total acreage used for winter-flooding to the California Department of Food and Agriculture.
10. Takes immediate effect as a tax levy.

EXISTING LAW:

1. Allows various tax credits under both the PIT Law and the CT Law. These credits are generally designed to encourage socially beneficial behavior or to provide relief to taxpayers who incur specified expenses.
2. Requires any bill authorizing a new credit to contain all of the following:
   1. Specific goals, purposes, and objectives that the tax credit will achieve;
   2. Detailed performance indicators for the Legislature to use when measuring whether the tax credit meets the goals, purposes, and objectives stated in the bill; and,
   3. Data collection requirements to enable the Legislature to determine whether the tax credit is meeting, failing to meet, or exceeding those specific goals, purposes, and objectives. The requirements shall include the specific data and baseline measurements to be collected and remitted in each year the credit is in effect, for the Legislature to measure the change in performance indicators, and the specific taxpayers, state agencies, or other entities required to collect and remit data. (R&TC Section 41.)

FISCAL EFFECT: The FTB's revenue estimate for this bill is currently pending. The originally introduced version of this bill was estimated to result in General Fund revenue losses of $1.8 million in fiscal year (FY) 2017-18, $7.3 million in FY 2018-19, and $8.9 million in FY 2019-20.

COMMENTS:

1. The author has provided the following statement in support of this bill:

AB 832 will create the Pacific Flyway Protection Tax Credit to help offset the cost of winter-flooding of rice fields, an agricultural practice that provides critical wetland habitat for wintering waterfowl and shorebirds in the Pacific Flyway. Each year at least a billion birds migrate along the flyway, stretching from the arctic tundra to the South American wetlands. The greater Central Valley, including the Sacramento and San Joaquin Valley regions, is an important stopping point for these birds. This bill will institute a $30 tax credit per acre of winter-flooded rice to help incentivize farmers to continue providing agricultural wetlands in this region. AB 832 represents a critical investment in the ecology of our state, the greater Pacific Flyway, and wildlife that rely on wetland habitats. The Pacific Flyway Tax Credit will help ensure wetland-dependent wildlife continue to have a home in California.

1. This bill is supported by Audubon California, which notes the following:

For years, Audubon California has worked diligently with a number of partners and stakeholders to protect and enhance critical winter habitat for migratory birds, including working with rice farmers to provide a crucial connection between agricultural and wetland habitats. Ricelands for example play an integral part of the solution to supplement lost wetlands, especially when managed with birds in mind. In California, the current annual cultivation of some 550,000 acres of rice supports nearly 230 wildlife species including 50 species of waterbirds. During the winter, rice fields and managed wetlands in the Central Valley host nearly half of the [region's] shorebirds and two-thirds of the entire waterfowl populations of the Pacific Flyway – including nearly 20 percent of North America's ducks.

1. This bill is opposed by the California Tax Reform Association, which notes the following:

[I]f compensation for winter flooding is appropriate, it should be done as an expenditure, not a tax credit, since a tax credit would proportionately reduce education funding. If compensation is appropriate, it should be done through the budget. In that case, it is possible that other funds which are based on fees and other charges would be more appropriate for environmental expenditures than the general fund. Finally, since this activity has otherwise been taking place on a widespread basis since burning of rice straw was banned, it would appear that the credit is compensating for activity that is otherwise taking place.

1. Committee staff comments:
   1. What is a "tax expenditure"? Existing law provides various credits, deductions, exclusions, and exemptions for particular taxpayer groups. In the late 1960s, U.S. Treasury officials began arguing that these features of the tax law should be referred to as "expenditures" since they are generally enacted to accomplish some governmental purpose and there is a determinable cost associated with each (in the form of foregone revenues).
      
   2. How is a tax expenditure different from a direct expenditure? As the Department of Finance notes in its annual Tax Expenditure Report, there are several key differences between tax expenditures and direct expenditures. First, tax expenditures are reviewed less frequently than direct expenditures once they are put in place. While this affords taxpayers greater financial predictability, it can also result in tax expenditures remaining a part of the tax code without demonstrating any public benefit. Second, there is generally no control over the amount of revenue losses associated with any given tax expenditure. Finally, it should also be noted that, once enacted, it takes a two-thirds vote to rescind an existing tax expenditure absent a sunset date, effectively resulting in a "one-way ratchet" whereby tax expenditures can be conferred by majority vote, but cannot be rescinded, irrespective of their cost or efficacy, without a supermajority vote.
   3. What would this bill do? This bill would enact a new tax expenditure program for rice farmers to encourage the winter flooding of rice fields, thereby conserving wetland habitat. According to the California Rice Commission, winter flooding creates valuable foraging conditions for ducks and other migratory birds by providing waste grains and invertebrate prey as food sources. As the cost of water has increased, however, concerns have been raised about the continued willingness of farmers to use winter flooding to decompose rice straw. Some growers have reportedly resorted to lower cost methods of decomposing rice straw that do not depend on flooding.^[1] Conservationists worry that a continuation of this trend may reduce wetland habitat relied upon by many birds along the Pacific Flyway.
   4. Implementation concerns: Committee staff has identified the following implementation concerns, and will work with the author's office to resolve these and any subsequently identified issues as this bill progresses through the legislative process:
      1. What are we incentivizing? Tax credits are typically provided as a matter of legislative grace to encourage taxpayers to engage in socially beneficial behavior that may not occur absent a financial incentive. In its current form, this bill provides a credit of $30 per acre of winter-flooded rice "paid or incurred" by a rice farmer. This language raises a few issues: specifically, tax credits are typically calculated as a percentage of qualified expenses incurred by the taxpayer. It is not entirely clear to Committee staff, however, whether this bill's credit is intended as a per-acre credit or a credit based on costs incurred to flood rice fields. The author may wish to take amendments making this intent clear. If the intent is to provide a per-acre credit, in turn, the credit might reward both farmers who incur expenses to flood their fields in the winter and farmers whose rice fields flood naturally during the winter. Again, if this is contrary to the author's intent, clarifying amendments may be useful.
      2. Credit certification: This bill would require taxpayers to submit the total acreage used for winter-flooded rice to the Department of Food and Agriculture for certification. A timeline for providing this information is not specified, however. In addition, it may be useful to require the certification to include information such as the taxpayer's name and property address, taxpayer identification number, and date of certification.
      3. What year are we talking about? As noted above, tax credits are typically calculated based on costs incurred during the taxable year (i.e., the calendar year for PIT filers). This bill, however, provides that "winter-flooded rice" must be maintained in a flooded state for at least 70 days between October 15 and March 15 of the following year. If this 70-day period were to span two separate calendar years, it is not clear when the credit would be taken. Clarifying amendments on this point would be useful.
      4. Unlimited carryover: This bill allows a taxpayer to carry forward any unused credit amount to the following year, and succeeding years if needed, until the credit is exhausted. By allowing for an indefinite carryover period, this bill would require the FTB to maintain this credit on its forms in perpetuity. Moreover, experience has shown that the vast majority of credits are fully utilized within seven or eight years. Thus, the author and Committee may wish to limit the carryforward period in keeping with this Committee's past practice.

REGISTERED SUPPORT / OPPOSITION:

Support

Audubon California

California Rice Commission

Delta Waterfowl

Northern California Water Association

Opposition

California Tax Reform Association

Analysis Prepared by: M. David Ruff / REV. & TAX. / (916) 319-2098

1. The author's office notes, "Eliminating rice straw before the growing season is necessary for seedling establishment and disease control. In 1997, the Legislature prohibited rice straw burning, [except] in the case of disease, to improve air quality. As an alternative, most farmers began flooding rice fields with recycled agricultural water, a method that accelerates the decomposition of rice straw into the soil." ↑