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<ns0:Id>20250SB__112099INT</ns0:Id>
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<ns0:Action>
<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2026-02-17</ns0:ActionDate>
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<ns0:SessionYear>2025</ns0:SessionYear>
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<ns0:MeasureNum>1120</ns0:MeasureNum>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Senator McNerney</ns0:AuthorText>
<ns0:Authors>
<ns0:Legislator>
<ns0:Contribution>LEAD_AUTHOR</ns0:Contribution>
<ns0:House>SENATE</ns0:House>
<ns0:Name>McNerney</ns0:Name>
</ns0:Legislator>
</ns0:Authors>
<ns0:Title> An act to amend Sections 17059.2 and 23689 of the Revenue and Taxation Code, relating to taxation, and making an appropriation therefor. </ns0:Title>
<ns0:RelatingClause>taxation, and making an appropriation therefor</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>Personal Income Tax Law: Corporation Tax Law: credits: CalCompetes.</ns0:Subject>
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<ns0:DigestText>
<html:p>The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws including, for taxable years beginning on and after January 1, 2014, and before January 1, 2030, a California Competes Tax Credit in an amount allocated by the Governor’s Office of Business and Economic Development (GO-Biz) through the 2027–28 fiscal year, and provided in a written agreement between GO-Biz and the taxpayer, approved by the California Competes Tax Credit Committee, and based on specified factors, including the number of jobs the taxpayer will create or retain in the state and the amount of investment in the state by the taxpayer. </html:p>
<html:p>This bill would, for taxable years beginning on or after January 1, 2026, and before January 1, 2030, allow a taxpayer in a strategic industry, as defined, to
make an election in the form and manner provided by GO-Biz for the California Competes Tax Credit to be refundable to the taxpayer from the Tax Relief and Refund Account, as provided. By increasing the payments from the Tax Relief and Refund Account, a continuously appropriated fund, the bill would make an appropriation.</html:p>
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<ns0:VoteRequired>TWO_THIRDS</ns0:VoteRequired>
<ns0:Appropriation>YES</ns0:Appropriation>
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<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
<ns0:BillSection id="id_9703B6BA-BC48-43EC-8A07-120C2E42D69E">
<ns0:Num>SECTION 1.</ns0:Num>
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Section 17059.2 of the
<ns0:DocName>Revenue and Taxation Code</ns0:DocName>
is amended to read:
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<ns0:Num>17059.2.</ns0:Num>
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<html:p>
(a)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
For each taxable year beginning on and after January 1, 2014, and before January 1, 2030, there shall be allowed as a credit against the “net tax,” as defined in Section 17039, an amount as determined by the committee pursuant to paragraph (3) and approved pursuant to Section 18410.2.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
For taxable years beginning on or after January 1, 2026, and before January 1, 2030, a taxpayer in a strategic industry may elect for the credit allowed by this section to be
refundable subject to the provisions of subdivision (e).
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The credit under this section shall be allocated by GO-Biz with respect to the 2013–14 fiscal year through and including the 2027–28 fiscal year. The amount of credit allocated to a taxpayer with respect to a fiscal year pursuant to this section shall be as set forth in a written agreement between GO-Biz and the taxpayer and shall be based on the following factors:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The number of jobs the taxpayer will create or retain in this state.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The compensation
paid or proposed to be paid by the taxpayer to its employees, including wages and fringe benefits.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
The amount of investment in this state by the taxpayer.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
The extent of unemployment or poverty in the area according to the United States Census in which the taxpayer’s project or business is proposed or located.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
The incentives available to the taxpayer in this state, including incentives from the state, local government, and other entities.
</html:p>
<html:p>
(F)
<html:span class="EnSpace"/>
The incentives available to the taxpayer in other states.
</html:p>
<html:p>
(G)
<html:span class="EnSpace"/>
The duration of the proposed project and the duration the taxpayer commits to remain in this state.
</html:p>
<html:p>
(H)
<html:span class="EnSpace"/>
The
overall economic impact in this state of the taxpayer’s project or business.
</html:p>
<html:p>
(I)
<html:span class="EnSpace"/>
The strategic importance of the taxpayer’s project or business to the state, region, or locality.
</html:p>
<html:p>
(J)
<html:span class="EnSpace"/>
The opportunity for future growth and expansion in this state by the taxpayer’s business.
</html:p>
<html:p>
(K)
<html:span class="EnSpace"/>
The extent to which the anticipated benefit to the state exceeds the projected benefit to the taxpayer from the tax credit.
</html:p>
<html:p>
(L)
<html:span class="EnSpace"/>
For a credit allocated beginning with the 2018–19 fiscal year, the training opportunities offered by the taxpayer to its employees.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
The written agreement entered into pursuant to paragraph (3) shall include:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Terms and conditions that include the taxable year or years for which the credit allocated shall be allowed, a minimum compensation level, and a minimum job retention period.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Provisions indicating whether the credit is to be allocated in full upon approval or in increments based on mutually agreed upon milestones when satisfactorily met by the taxpayer.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Provisions that allow the committee to recapture the credit, in whole or in part, if the taxpayer fails to fulfill the terms and conditions of the written agreement.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
For purposes of this section:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
“Committee” means the California Competes Tax Credit Committee established pursuant to Section 18410.2.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
“GO-Biz” means the Governor’s Office of Business and Economic Development.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
“Strategic industry” means industries involved in developing nuclear fusion technologies, quantum technology, or other industries identified in the California Jobs First State Economic Blueprint.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
For purposes of this section, GO-Biz shall do the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Give priority to a taxpayer whose
project or business is located or proposed to be located in an area of high unemployment or poverty.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Negotiate with a taxpayer the terms and conditions of proposed written agreements that provide the credit allowed pursuant to this section to a taxpayer.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Provide the negotiated written agreement to the committee for its approval pursuant to Section 18410.2.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Inform the Franchise Tax Board of the terms and conditions of the written agreement upon approval of the written agreement by the
committee, including whether the taxpayer is in a strategic industry and if the taxpayer intends for the credit to be refundable.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
Inform the Franchise Tax Board of any recapture, in whole or in part, of a previously allocated credit upon approval of the recapture by the committee.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
Post on its internet website all of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The name of each taxpayer allocated a credit pursuant to this section.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The estimated amount of the investment by each taxpayer.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
The estimated number of jobs created or retained.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
The amount of the credit allocated to the taxpayer.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
The amount of the credit recaptured from the taxpayer, if applicable.
</html:p>
<html:p>
(F)
<html:span class="EnSpace"/>
The primary location where the taxpayer has committed to increasing the net number of jobs or make investments. The primary location shall be listed by city or, in the case of unincorporated areas, by county.
</html:p>
<html:p>
(G)
<html:span class="EnSpace"/>
Information that identifies each tax credit award that was given a priority for being located in a high unemployment or poverty area, pursuant to paragraph (1).
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
Consider the extent to which the credit will influence the taxpayer’s ability, willingness, or both, to create jobs in this state that might not otherwise be created in the state by the taxpayer or any other taxpayer. GO-Biz may also consider other factors, including, but not limited to, the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The financial solvency of the taxpayer and the taxpayer’s ability to finance its proposed expansion.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The taxpayer’s current and prior compliance with federal and state laws.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Current and prior litigation involving the taxpayer.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
The reasonableness of the fee arrangement between the taxpayer and any third party providing any services related to the credit allowed pursuant to this section.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
For allocation periods beginning with the 2023–24 fiscal year, the taxpayer’s willingness to relocate jobs into California from a state that has enacted a law that does any of the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Voids or repeals, or has the
effect of voiding or repealing, existing state protections against discrimination on the basis of sexual orientation, gender identity, or gender expression.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Authorizes or requires discrimination against same-sex couples or their families, or discrimination on the basis of sexual orientation, gender identity, or gender expression.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
Creates an exemption to antidiscrimination laws in order to permit discrimination against same-sex couples or their families, or permits discrimination on the basis of sexual orientation, gender identity, or gender expression.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
Denies or interferes with, or has the effect of denying or interfering with, a woman’s right to choose to bear a child or to choose and obtain an abortion, as provided by Article 2.5 (commencing with Section 123460) of Chapter 2 of Part 2 of Division
106 of the Health and Safety Code.
</html:p>
<html:p>
(F)
<html:span class="EnSpace"/>
For allocation periods beginning with the 2023–24 fiscal year, the taxpayer’s commitment to treating their workforce fairly and creating quality, full-time, wage and salary jobs in the state, evidence of which may include, but not be limited to, the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Training, career ladder, apprenticeship, and preapprenticeship programs for nonsupervisorial employees.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Joint labor-management letter of support.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
A high percentage of full-time wage and salary employees compared to part-time, temporary, and independent contractors.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
Little to no history of a bad safety record, or resolved or pending litigation, violations, citations, fines, or
penalties relating to any state or federal environmental and labor laws within the last 10 years.
</html:p>
<html:p>
(G)
<html:span class="EnSpace"/>
Any other factors GO-Biz deems necessary to ensure that the administration of the credit allowed pursuant to this section is a model of accountability and transparency and that the effective use of the limited amount of credit available is maximized.
</html:p>
<html:p>
(8)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
Implementation of subparagraphs (E) and (F) of paragraph (7) of this subdivision for the 2022–23 fiscal year is deemed an emergency and necessary for the immediate preservation of the public peace, health, and safety, or general welfare and, therefore, the Governor’s Office of Business and Economic Development is hereby authorized to adopt emergency regulations to implement subparagraphs (E) and (F) of paragraph (7) of this subdivision during the 2022–23 fiscal year in accordance with the rulemaking
provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Nothing in this subdivision shall require the Governor’s Office of Business and Economic Development to approve emergency regulations.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
For purposes of this section, the Franchise Tax Board shall do all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
Except as provided in subparagraph (B), review the books and records of all taxpayers allocated a credit pursuant to this section to ensure compliance with the terms and conditions of the written agreement between the taxpayer and GO-Biz.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
In the case of a taxpayer that is a “small business,” as defined in Section 17053.73, review the books and
records of the taxpayer allocated a credit pursuant to this section to ensure compliance with the terms and conditions of the written agreement between the taxpayer and GO-Biz when, in the sole discretion of the Franchise Tax Board, a review of those books and records is appropriate or necessary in the best interests of the state.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Notwithstanding Section 19542, notify GO-Biz of a possible breach of the written agreement by a taxpayer and provide detailed information regarding the basis for that determination.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
In the case where the credit allowed under this section exceeds the “net tax,” as defined in Section 17039, for a taxable year, the excess credit may be carried over to reduce the “net tax” in the following taxable year, and succeeding
five taxable years, if necessary, until the credit has been exhausted.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
For taxable years beginning on or after January 1, 2026, and before January 1, 2030, if the taxpayer is in a strategic industry, if the credit allowed under this section exceeds the “net tax” for the taxable year, the excess shall be credited against other amounts due, if any, and the balance, if any, shall be paid from the Tax Relief and Refund Account and refunded to the taxpayer if, at the time of applying for the credit, or within six months of the effective date of this paragraph, the taxpayer informs GO-Biz that the taxpayer is in a strategic industry and makes an election, in the form and manner provided by GO-Biz, for the credit to be refundable.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
Any recapture, in whole or in part, of a
credit approved by the committee pursuant to Section 18410.2 shall be treated as a mathematical error appearing on the return. Any amount of tax resulting from that recapture shall be assessed by the Franchise Tax Board in the same manner as provided by Section 19051. The amount of tax resulting from the recapture shall be added to the tax otherwise due by the taxpayer for the taxable year in which the committee’s recapture determination occurred.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
The aggregate amount of credit that may be allocated in any fiscal year pursuant to this section and Section 23689 shall be an amount equal to the sum of subparagraphs (A), (B), and (C), less the amount specified in subparagraphs (D) and (E):
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Thirty million dollars ($30,000,000) for the 2013–14 fiscal year, one hundred fifty million dollars ($150,000,000) for the 2014–15 fiscal year, two hundred million
dollars ($200,000,000) for each fiscal year from 2015–16 to 2017–18, inclusive, one hundred eighty million dollars ($180,000,000) for each fiscal year from 2018–19 to 2020–21, inclusive, two hundred ninety million dollars ($290,000,000) for the 2021–22 fiscal year, and one hundred eighty million dollars ($180,000,000) for each fiscal year from 2022–23 to 2027–28, inclusive.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The unallocated credit amount, if any, from the preceding fiscal year.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
The amount of any previously allocated credits that have been recaptured.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
The amount estimated by the Director of Finance, in consultation with the Franchise Tax Board and the California Department of Tax and Fee Administration, to be necessary to limit the aggregation of the estimated amount of exemptions claimed pursuant to Section 6377.1 and of the amounts
estimated to be claimed pursuant to this section and Sections 17053.73, 23626, and 23689 to no more than seven hundred fifty million dollars ($750,000,000) for either the current fiscal year or the next fiscal year.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
The Director of Finance shall notify the Chairperson of the Joint Legislative Budget Committee of the estimated annual allocation authorized by this paragraph. Any allocation pursuant to these provisions shall be made no sooner than 30 days after written notification has been provided to the Chairperson of the Joint Legislative Budget Committee and the chairpersons of the committees of each house of the Legislature that consider appropriations, or not sooner than whatever lesser time the Chairperson of the Joint Legislative Budget Committee, or the Chairperson’s designee, may determine.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
In no event shall the amount estimated in this subparagraph be less than
zero dollars ($0).
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
For the 2015–16 fiscal year and each fiscal year thereafter, the amount of credit estimated by the Director of Finance to be allowed to all qualified taxpayers for that fiscal year pursuant to subparagraph (A) or subparagraph (B) of paragraph (1) of subdivision (c) of Section 23636.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
If the amount available per fiscal year pursuant to this section and Section 23689 is less than the aggregate amount of credit estimated by the Director of Finance to be allowed to qualified taxpayers pursuant to subparagraph (A) or subparagraph (B) of paragraph (1) of subdivision (c) of Section 23636, the aggregate amount allowed pursuant to Section 23636 shall not be reduced and, in addition to the reduction required by clause (i), the aggregate amount of credit that may be allocated pursuant to this section and Section 23689 for the next fiscal
year shall be reduced by the amount of that deficit.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
It is the intent of the Legislature that the reductions specified in this subparagraph of the aggregate amount of credit that may be allocated pursuant to this section and Section 23689 shall continue if the repeal dates of the credits allowed by this section and Section 23689 are removed or extended.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
In addition to the other amounts determined pursuant to paragraph (1), the Director of Finance may increase the aggregate amount of credit that may be allocated pursuant to this section and Section 23689 by up to twenty-five million dollars ($25,000,000) per fiscal year through the 2027–28 fiscal year. The amount of any increase made pursuant to this paragraph, when combined with any increase made pursuant to paragraph (2) of subdivision (g) of Section 23689, shall not exceed twenty-five million
dollars ($25,000,000) per fiscal year through the 2027–28 fiscal year.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
It is the intent of the Legislature that the Director of Finance increase the aggregate amount under subparagraph (A) in order to mitigate the reduction of the amount available due to the credit allowed to all qualified taxpayers pursuant to subparagraph (A) or (B) of paragraph (1) of subdivision (c) of Section 23636.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Each fiscal year through the 2017–18 fiscal year, 25 percent of the aggregate amount of the credit that may be allocated pursuant to this section and Section 23689 shall be reserved for small business, as defined in Section 17053.73 or 23626.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Each fiscal year, no more than 20 percent of the aggregate amount of the credit that may be allocated pursuant to this section shall be allocated to any one taxpayer.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
GO-Biz may prescribe rules and regulations as necessary to carry out the purposes of this section. Any rule or regulation prescribed pursuant to this section may be by adoption of an emergency regulation in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
A written agreement between GO-Biz and a taxpayer with respect to the credit authorized by this section shall comply with existing law on the date the agreement is executed.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
Upon the effective date of this section, the Department of Finance shall estimate the total dollar amount of credits that will be claimed under this section with respect to each fiscal year from the 2013–14 fiscal year to the 2029–30 fiscal year, inclusive.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The Franchise Tax Board shall annually provide to the Joint Legislative Budget Committee, by no later than March 1, a report of the total dollar amount of the credits claimed under this section with respect to the relevant fiscal year. The report shall compare the total dollar amount of credits claimed under this section with respect to that fiscal year with the department’s estimate with respect to that same fiscal year. If the total dollar amount of credits claimed for the fiscal year is less than the estimate for that fiscal year, the report shall identify options for increasing annual claims of the credit so as to meet estimated amounts.
</html:p>
<html:p>
(k)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
Section 19542 shall apply to all information obtained by the Franchise Tax Board and GO-Biz for the purpose of administering the California Competes Tax Credit established under this section.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Notwithstanding Section 19542 and paragraph (1), the Franchise Tax Board may disclose information to GO-Biz and GO-Biz may disclose information to the Franchise Tax Board for administration of the California Competes Tax Credit established under this section.
</html:p>
<html:p>
(
<html:i>l</html:i>
)
<html:span class="EnSpace"/>
This section shall remain in effect only until December 1, 2030, and as of that date is repealed.
</html:p>
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<ns0:Num>SEC. 2.</ns0:Num>
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Section 23689 of the
<ns0:DocName>Revenue and Taxation Code</ns0:DocName>
is amended to read:
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<ns0:LawSection id="id_60A94853-D371-4855-BB54-F49915629596">
<ns0:Num>23689.</ns0:Num>
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<ns0:Content>
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(a)
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(1)
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For each taxable year beginning on and after January 1, 2014, and before January 1, 2030, there shall be allowed as a credit against the “tax,” as defined in Section 23036, an amount as determined by the committee pursuant to paragraph (3) and approved pursuant to Section 18410.2.
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(2)
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For taxable years beginning on or after January 1, 2026, and before January 1, 2030, a taxpayer in a strategic industry may elect for the credit allowed by this section to be
refundable subject to the provisions of subdivision (e).
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(3)
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The credit under this section shall be allocated by GO-Biz with respect to the 2013–14 fiscal year through and including the 2027–28 fiscal year. The amount of credit allocated to a taxpayer with respect to a fiscal year pursuant to this section shall be as set forth in a written agreement between GO-Biz and the taxpayer and shall be based on the following factors:
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(A)
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The number of jobs the taxpayer will create or retain in this state.
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(B)
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The compensation
paid or proposed to be paid by the taxpayer to its employees, including wages and fringe benefits.
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(C)
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The amount of investment in this state by the taxpayer.
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(D)
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The extent of unemployment or poverty in the area according to the United States Census in which the taxpayer’s project or business is proposed or located.
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(E)
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The incentives available to the taxpayer in this state, including incentives from the state, local government, and other entities.
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(F)
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The incentives available to the taxpayer in other states.
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(G)
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The duration of the proposed project and the duration the taxpayer commits to remain in this state.
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(H)
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The
overall economic impact in this state of the taxpayer’s project or business.
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(I)
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The strategic importance of the taxpayer’s project or business to the state, region, or locality.
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(J)
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The opportunity for future growth and expansion in this state by the taxpayer’s business.
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(K)
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The extent to which the anticipated benefit to the state exceeds the projected benefit to the taxpayer from the tax credit.
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(L)
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For a credit allocated beginning with the 2018–19 fiscal year, the training opportunities offered by the taxpayer to its employees.
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(4)
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The written agreement entered into pursuant to paragraph (3) shall include:
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(A)
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Terms and conditions that include the taxable year or years for which the credit allocated shall be allowed, a minimum compensation level, and a minimum job retention period.
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(B)
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Provisions indicating whether the credit is to be allocated in full upon approval or in increments based on mutually agreed upon milestones when satisfactorily met by the taxpayer.
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(C)
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Provisions that allow the committee to recapture the credit, in whole or in part, if the taxpayer fails to fulfill the terms and conditions of the written agreement.
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(b)
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For purposes of this section:
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(1)
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“Committee” means the California Competes Tax Credit Committee established pursuant to Section 18410.2.
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(2)
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“GO-Biz” means the Governor’s Office of Business and Economic Development.
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(3)
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“Strategic industry” means industries involved in developing nuclear fusion technologies, quantum technology, or other industries identified in the California Jobs First State Economic Blueprint.
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(c)
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For purposes of this section, GO-Biz shall do the following:
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(1)
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Give priority to a taxpayer whose
project or business is located or proposed to be located in an area of high unemployment or poverty.
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(2)
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Negotiate with a taxpayer the terms and conditions of proposed written agreements that provide the credit allowed pursuant to this section to a taxpayer.
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(3)
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Provide the negotiated written agreement to the committee for its approval pursuant to Section 18410.2.
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(4)
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Inform the Franchise Tax Board of the terms and conditions of the written agreement upon approval of the written agreement by the
committee, including whether the taxpayer is in a strategic industry and if the taxpayer intends for the credit to be refundable.
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(5)
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Inform the Franchise Tax Board of any recapture, in whole or in part, of a previously allocated credit upon approval of the recapture by the committee.
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(6)
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Post on its internet website all of the following:
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(A)
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The name of each taxpayer allocated a credit pursuant to this section.
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(B)
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The estimated amount of the investment by each taxpayer.
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(C)
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The estimated number of jobs created or retained.
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(D)
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The amount of the credit allocated to the taxpayer.
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(E)
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The amount of the credit recaptured from the taxpayer, if applicable.
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(F)
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The primary location where the taxpayer has committed to increasing the net number of jobs or make investments. The primary location shall be listed by city or, in the case of unincorporated areas, by county.
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(G)
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Information that identifies each tax credit award that was given a priority for being located in a high unemployment or poverty area, pursuant to paragraph (1).
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(7)
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Consider the extent to which the credit will influence the taxpayer’s ability, willingness, or both, to create jobs in this state that might not otherwise be created in the state by the taxpayer or any other taxpayer. GO-Biz may also consider other factors, including, but not limited to, the following:
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(A)
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The financial solvency of the taxpayer and the taxpayer’s ability to finance its proposed expansion.
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(B)
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The taxpayer’s current and prior compliance with federal and state laws.
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(C)
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Current and prior litigation involving the taxpayer.
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(D)
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The reasonableness of the fee arrangement between the taxpayer and any third party providing any services related to the credit allowed pursuant to this section.
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(E)
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For allocation periods beginning with the 2023–24 fiscal year, the taxpayer’s willingness to relocate jobs into California from a state that has enacted a law that does any of the following:
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(i)
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Voids or repeals, or has the
effect of voiding or repealing, existing state protections against discrimination on the basis of sexual orientation, gender identity, or gender expression.
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(ii)
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Authorizes or requires discrimination against same-sex couples or their families, or discrimination on the basis of sexual orientation, gender identity, or gender expression.
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(iii)
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Creates an exemption to antidiscrimination laws in order to permit discrimination against same-sex couples or their families, or permits discrimination on the basis of sexual orientation, gender identity, or gender expression.
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(iv)
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Denies or interferes with, or has the effect of denying or interfering with, a woman’s right to choose to bear a child or to choose and obtain an abortion, as provided by Article 2.5 (commencing with Section 123460) of Chapter 2 of Part 2 of Division
106 of the Health and Safety Code.
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(F)
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For allocation periods beginning with the 2023–24 fiscal year, the taxpayer’s commitment to treating their workforce fairly and creating quality, full-time, wage and salary jobs in the state, evidence of which may include, but not be limited to, the following:
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(i)
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Training, career ladder, apprenticeship, or preapprenticeship programs for nonsupervisorial employees.
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(ii)
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Joint labor-management letter of support.
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(iii)
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A high percentage of full-time wage and salary employees compared to part-time, temporary, and independent contractors.
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(iv)
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Little to no history of a bad safety record, or resolved or pending litigation, violations, citations, fines, or
penalties relating to any state or federal environmental and labor laws within the last 10 years.
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(G)
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Any other factors GO-Biz deems necessary to ensure that the administration of the credit allowed pursuant to this section is a model of accountability and transparency and that the effective use of the limited amount of credit available is maximized.
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(8)
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(A)
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Implementation of subparagraphs (E) and (F) of paragraph (7) of this subdivision for the 2022–23 fiscal year is deemed an emergency and necessary for the immediate preservation of the public peace, health, and safety, or general welfare and, therefore, the Governor’s Office of Business and Economic Development is hereby authorized to adopt emergency regulations to implement subparagraphs (E) and (F) of paragraph (7) of this subdivision during the 2022–23 fiscal year in accordance with the rulemaking
provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
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(B)
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Nothing in this subdivision shall require the Governor’s Office of Business and Economic Development to approve emergency regulations.
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(d)
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For purposes of this section, the Franchise Tax Board shall do all of the following:
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(1)
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(A)
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Except as provided in subparagraph (B), review the books and records of all taxpayers allocated a credit pursuant to this section to ensure compliance with the terms and conditions of the written agreement between the taxpayer and GO-Biz.
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(B)
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In the case of a taxpayer that is a “small business,” as defined in Section 23626, review the books and
records of the taxpayer allocated a credit pursuant to this section to ensure compliance with the terms and conditions of the written agreement between the taxpayer and GO-Biz when, in the sole discretion of the Franchise Tax Board, a review of those books and records is appropriate or necessary in the best interests of the state.
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(2)
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Notwithstanding Section 19542, notify GO-Biz of a possible breach of the written agreement by a taxpayer and provide detailed information regarding the basis for that determination.
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(e)
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(1)
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In the case where the credit allowed under this section exceeds the “tax,” as defined in Section 23036, for a taxable year, the excess credit may be carried over to reduce the “tax” in the following taxable year, and succeeding five
taxable years, if necessary, until the credit has been exhausted.
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(2)
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For taxable years beginning on or after January 1, 2026, and before January 1, 2030, if the taxpayer is in a strategic industry, if the credit allowed under this section exceeds the tax for the taxable year, the excess shall be credited against other amounts due, if any, and the balance, if any, shall be paid from the Tax Relief and Refund Account and refunded to the taxpayer if, at the time of applying for the credit, or within six months of the effective date of this paragraph, the taxpayer informs GO-Biz that the taxpayer is in a strategic industry and makes an election, in the form and manner provided by GO-Biz, for the credit to be refundable.
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(f)
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Any recapture, in whole or in part, of a credit
approved by the committee pursuant to Section 18410.2 shall be treated as a mathematical error appearing on the return. Any amount of tax resulting from that recapture shall be assessed by the Franchise Tax Board in the same manner as provided by Section 19051. The amount of tax resulting from the recapture shall be added to the tax otherwise due by the taxpayer for the taxable year in which the committee’s recapture determination occurred.
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(g)
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(1)
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The aggregate amount of credit that may be allocated in any fiscal year pursuant to this section and Section 17059.2 shall be an amount equal to the sum of subparagraphs (A), (B), and (C), less the amount specified in subparagraphs (D) and (E):
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(A)
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Thirty million dollars ($30,000,000) for the 2013–14 fiscal year, one hundred fifty million dollars ($150,000,000) for the 2014–15 fiscal year, two hundred million
dollars ($200,000,000) for each fiscal year from 2015–16 to 2017–18, inclusive, one hundred eighty million dollars ($180,000,000) for each fiscal year from 2018–19 to 2020–21, inclusive, two hundred ninety million dollars ($290,000,000) for the 2021–22 fiscal year, and one hundred eighty million dollars ($180,000,000) for each fiscal year from 2022–23 to 2027–28, inclusive.
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(B)
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The unallocated credit amount, if any, from the preceding fiscal year.
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(C)
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The amount of any previously allocated credits that have been recaptured.
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(D)
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The amount estimated by the Director of Finance, in consultation with the Franchise Tax Board and the California Department of Tax and Fee Administration, to be necessary to limit the aggregation of the estimated amount of exemptions claimed pursuant to Section 6377.1 and of the amounts
estimated to be claimed pursuant to this section and Sections 17053.73, 17059.2, and 23626 to no more than seven hundred fifty million dollars ($750,000,000) for either the current fiscal year or the next fiscal year.
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(i)
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The Director of Finance shall notify the Chairperson of the Joint Legislative Budget Committee of the estimated annual allocation authorized by this paragraph. Any allocation pursuant to these provisions shall be made no sooner than 30 days after written notification has been provided to the Chairperson of the Joint Legislative Budget Committee and the chairpersons of the committees of each house of the Legislature that consider appropriations, or not sooner than whatever lesser time the Chairperson of the Joint Legislative Budget Committee, or the Chairperson’s designee, may determine.
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(ii)
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In no event shall the amount estimated in this subparagraph be less than
zero dollars ($0).
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(E)
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(i)
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For the 2015–16 fiscal year and each fiscal year thereafter, the amount of credit estimated by the Director of Finance to be allowed to all qualified taxpayers for that fiscal year pursuant to subparagraph (A) or subparagraph (B) of paragraph (1) of subdivision (c) of Section 23636.
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(ii)
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If the amount available per fiscal year pursuant to this section and Section 17059.2 is less than the aggregate amount of credit estimated by the Director of Finance to be allowed to qualified taxpayers pursuant to subparagraph (A) or subparagraph (B) of paragraph (1) of subdivision (c) of Section 23636, the aggregate amount allowed pursuant to Section 23636 shall not be reduced and, in addition to the reduction required by clause (i), the aggregate amount of credit that may be allocated pursuant to this section and Section 17059.2 for the next
fiscal year shall be reduced by the amount of that deficit.
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(iii)
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It is the intent of the Legislature that the reductions specified in this subparagraph of the aggregate amount of credit that may be allocated pursuant to this section and Section 17059.2 shall continue if the repeal dates of the credits allowed by this section and Section 17059.2 are removed or extended.
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(2)
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(A)
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In addition to the other amounts determined pursuant to paragraph (1), the Director of Finance may increase the aggregate amount of credit that may be allocated pursuant to this section and Section 17059.2 by up to twenty-five million dollars ($25,000,000) per fiscal year through the 2027–28 fiscal year. The amount of any increase made pursuant to this paragraph, when combined with any increase made pursuant to paragraph (2) of subdivision (g) of Section 17059.2, shall not exceed
twenty-five million dollars ($25,000,000) per fiscal year through the 2027–28 fiscal year.
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(B)
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It is the intent of the Legislature that the Director of Finance increase the aggregate amount under subparagraph (A) in order to mitigate the reduction of the amount available due to the credit allowed to all qualified taxpayers pursuant to subparagraph (A) or (B) of paragraph (1) of subdivision (c) of Section 23636.
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(3)
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Each fiscal year through the 2017–18 fiscal year, 25 percent of the aggregate amount of the credit that may be allocated pursuant to this section and Section 17059.2 shall be reserved for “small business,” as defined in Section 17053.73 or 23626.
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(4)
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Each fiscal year, no more than 20 percent of the aggregate amount of the credit that may be allocated pursuant to this section shall be allocated to any one
taxpayer.
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(h)
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GO-Biz may prescribe rules and regulations as necessary to carry out the purposes of this section. Any rule or regulation prescribed pursuant to this section may be by adoption of an emergency regulation in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code.
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(i)
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(1)
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A written agreement between GO-Biz and a taxpayer with respect to the credit authorized by this section shall not restrict, broaden, or otherwise alter the ability of the taxpayer to assign that credit or any portion thereof in accordance with Section 23663.
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(2)
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A written agreement between GO-Biz and a taxpayer with respect to the credit authorized by this section must comply with existing law on the date the agreement is executed.
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(j)
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(1)
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Upon the effective date of this section, the Department of Finance shall estimate the total dollar amount of credits that will be claimed under this section with respect to each fiscal year from the 2013–14 fiscal year to the 2029–30 fiscal year, inclusive.
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(2)
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The Franchise Tax Board shall annually provide to the Joint Legislative Budget Committee, by no later than March 1, a report of the total dollar amount of the credits claimed under this section with respect to the relevant fiscal year. The report shall compare the total dollar amount of credits claimed under this section with respect to that fiscal year with the department’s estimate with respect to that same fiscal year. If the total dollar amount of credits claimed for the fiscal year is less than the estimate for that fiscal year, the report shall identify options for increasing annual claims
of the credit so as to meet estimated amounts.
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(k)
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(1)
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Section 19542 shall apply to all information obtained by the Franchise Tax Board and GO-Biz for the purpose of administering the California Competes Tax Credit established under this section.
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(2)
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Notwithstanding Section 19542 and paragraph (1), the Franchise Tax Board may disclose information to GO-Biz and GO-Biz may disclose information to the Franchise Tax Board for administration of the California Competes Tax Credit established under this section.
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(
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)
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This section shall remain in effect only until December 1, 2030, and as of that date is repealed.
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