SB 195: Income taxes: exclusions: wildfire loss mitigation payments.

Existing law establishes the California Wildfire Mitigation Financial Assistance Program to develop a comprehensive financial assistance program to help property owners, whole communities, and local governments retrofit existing housing, commercial, and public properties in wildfire hazard areas. The Safe Drinking Water, Wildfire Prevention, Drought Preparedness, and Clean Air Bond Act of 2024, approved by the voters as Proposition 4 at the November 5, 2024, statewide general election, authorizes the issuance of bonds to finance projects for, among other things, wildfire and forest resilience. That act makes $135,000,000 of those bond funds available, upon appropriation by the Legislature, to the Office of Emergency Services to establish a wildfire mitigation grant program to provide loans, rebates, direct assistance, and matching funds for projects that prevent wildfires, increase resilience, maintain existing wildfire risk reduction projects, reduce the risk of wildfires to communities, or increase home or community hardening.

The Personal Income Tax Law and the Corporation Tax Law, in conformity with federal income tax law, generally defines gross income as income from whatever source derived, except as specifically excluded, and provides various exclusions from gross income. Those exclusion include, for taxable years beginning on or after January 1, 2024, and before January 1, 2029, an exclusion for a California qualified wildfire loss mitigation payment, defined as any amount that is received through the California Wildfire Mitigation Financial Assistance Program for the benefit of a residential property owner or occupant with expenses paid or obligations incurred, for wildfire loss mitigation.

This bill would extend the tax exclusion provisions to taxable years beginning before January 1, 2031, and would revise the definition of California qualified wildfire loss mitigation payment to mean any grant, rebate, direct assistance, or other financial assistance for wildfire mitigation, home hardening, structure hardening, vegetation management, defensible space, fuel modification activities, or community wildfire resilience through either the California Wildfire Mitigation Financial Assistance Program or the above-described wildfire mitigation grant program established pursuant to the Safe Drinking Water, Wildfire Prevention, Drought Preparedness, and Clean Air Bond Act of 2024.

Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.

This bill also would include additional information required for any bill authorizing a new tax expenditure. In this regard, the bill would, among other things, require the Office of Emergency Services, no later than December 1, 2031, to submit a report to the Legislature detailing, to the extent data is available, the aggregate amount of funds distributed from the wildfire mitigation grant program and the number of individuals or entities who accepted funds from the program who may be eligible for the above-described income tax exclusions. The bill would appropriate $10,000 from the General Fund to the Office of Emergency Services for the purpose of abiding by those reporting requirements.

This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.