BILL ANALYSIS AND FISCAL IMPACT REPORT	Page 1 of  1

DATE:  February 20, 2001	Submitted by: TAXATION AND REVENUE DEPT.
	T. GLENN ELLINGTON, SECRETARY
BILL NUMBER: SB -745

SPONSOR: Senator Campos

BILL SHORT TITLE: Piggyback PIT & CIT Credit for Disabled Access Modifications

DESCRIPTION: This bill proposes a piggyback addition to the federal Disabled Access Credit. The federal credit is 50% of the eligible access expenditures over $250 and less than $10,250 for the year. The state credit amount is 25% of eligible access expenditures, limited to $5,000 for the year. The state credit is contingent on the federal credit being claimed and allowed. The federal qualification as a small business is: (1) gross receipts for the previous year of less than $1 million or (2) fewer than 30 full-time employees at any time during the preceding year. Expenditures for property claimed under the credit may not be deducted or depreciated as ordinary business expenses. Credit amounts in excess of liability for the year may be rolled forward for two years, but the amount of expenditures which may be credited, including any expenditures rolled forward from a previous year, may not exceed $5,000. This credit is available for sole proprietorships, partnerships, LLCs, LLPs, Sub-S corporations and regular corporations prorata to any ownership interest.

EFFECTIVE DATE: applicable for tax years beginning on or after January 1, 2001

FISCAL IMPACT (Thousands of dollars):  		Note: Parenthesis ( ) indicate a revenue loss:
		Recurring or		
Estimated Impact on Revenues	Nonrecurring	Funds 	
	 FY 2002 	Full Year	     Impact     t     	             Affected          .             	
	(500)*	(500)*	Recurring	General Fund	

* Indeterminate, but unlikely to exceed 100 projects a year. If each project generates the maximum credit, this will be a general fund impact of (500) on renovation and barrier removal expenditures of 20,000. This 100 project level is shown as an order of magnitude and might well be less.

ADMINISTRATIVE IMPACT: moderate. Forms and instructions modifications are relatively simple and can be implemented within existing resources. The only method of verification, however, is the information the Department will request be submitted with the tax return claiming the credit coupled with tape match verification when the federal credit is processed and the information provided to the Department. Undoubtedly, the Department will require the claimant to attach a copy of the federal credit claim to the state tax return.

OTHER IMPACTS AND ISSUES:
1.	The state credit is limited to $5,000, while the federal credit is limited to $5,125 despite the fact that the state credit percentage is only half that of the federal credit. Traditionally, piggyback credits are expressed as a percentage of the federal credit.  In this case, for expenditures in excess of $20,000, the state and federal credit amounts are almost identical.

2.	The Americans with Disabilities Act was passed in 1990. In the ensuing decade, governments have done a noteworthy job of removing barriers and improving access in most government buildings. While new commercial buildings are routinely designed and constructed to ADA guidelines, most older buildings – particularly those owned or rented by small businesses – have been much more slowly brought to ADA standards. These state and federal credits should remove the financial arguments inhibiting wholesale renovations of curbs, doors, hallways and bathrooms to ADA standards.