LEGISLATIVE FISCAL OFFICE
Fiscal Note
Fiscal Note On: SB 24 SLS 201ES 168
Bill Text Version: ENROLLED
Opp. Chamb. Action:
Proposed Amd.:
Sub. Bill For.:
Date: June 30, 2020 5:00 PM Author: HARRIS, JIMMY
Dept./Agy.: Economic Development
Subject: Angel Investor Tax Credit Program / Opportunity Zones Analyst: Greg Albrecht
TAX/TAXATION EN DECREASE GF RV See Note Page 1 of 1
Provides for eligibility for the Angel Investor Tax Credit for investments made in federal opportunity zones. (Item #19) (gov
sig)
Present law provides the Angel Investor Tax Credit Program which awards tax credits for investments in qualified businesses.
The credit rate is currently 25% of eligible investments, with an annual program credit award cap of $3.6 million for
applications received before July 1, 2021. No additional credits can be awarded for applications received after that date.
Credits can be claimed against tax liabilities starting two years beyond the year of award, and allows them to be spread
evenly over a three-year period.
Proposed law extends the program applications through fiscal year 2025. Provides an enhanced credit of 35% for
investments in businesses located in newly established federal opportunity zones (Tax Cuts and Jobs Act enacted in late
2017). All program credits, with or without enhancement can be spread over two years rather than three years. The annual
program credit award cap is increased by $3.6 million (to a program total of $7.2 million; $3.6 million for opportunity zone
investments provided in this bill). Effective upon governor's signature.
EXPENDITURES 2020-21 2021-22 2022-23 2023-24 2024-25 5 -YEAR TOTAL
State Gen. Fd. $0 $0 $0 $0 $0 $0
Agy. Self-Gen. $0 $0 $0 $0 $0 $0
Ded./Other $0 $0 $0 $0 $0 $0
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds $0 $0 $0 $0 $0 $0
Annual Total $0 $0 $0 $0 $0 $0
REVENUES 2020-21 2021-22 2022-23 2023-24 2024-25 5 -YEAR TOTAL
State Gen. Fd. DECREASE DECREASE DECREASE DECREASE DECREASE
Agy. Self-Gen. $0 $0 $0 $0 $0 $0
Ded./Other $0 $0 $0 $0 $0 $0
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds $0 $0 $0 $0 $0 $0
Annual Total
EXPENDITURE EXPLANATION
There is no anticipated direct material effect on governmental expenditures as a result of this measure. The Dept. of
Economic Development indicates that the changes to the program proposed by this bill will not require additional resources
to administer.
REVENUE EXPLANATION
The current program can award tax credits though FY21, with realization of those credits against state tax liabilities
beginning in FY24, and occurring through FY26. Thus, some program credit costs will occur throughout the fiscal note
horizon regardless of the program application extension proposed by this bill.
Extension of Program: Considering FY14 - FY19 (excluding abnormally low FY16 claims) as a baseline of credit awards that
the bill is likely to maintain; an average of $1.6 million annually. These costs do not account for any additional participation
in the program attributable to this bill, beyond a continued baseline assumption. LED has not typically fully awarded the
available current law program cap of credit ($3.6 million from 2015 to present, $5 million from 2011 - 2015). The bill’s
extension of the program will add increasing costs each year relative to the baseline expectation of annually declining costs
sometime after FY23. Based on the program’s 24-month delay between credit certification and the ability of taxpayers to
utilize the credits, the earliest year of potential impact is FY25, with costs rising each year, maintaining the roughly $1.6
million per year normal cost of the program. Shortening the time frame within which program credits can be claimed from
three years to two years effectively increases annual credit realizations relative to the program baseline by roughly 1/3
($533,000 per year). If applicable to existing program participants, additional credits may be realized as early as FY21.
Opportunity Zone Enhancement: Based on a 2019 analysis by LED, approximately 16 applications per year receive
reservation amounts for the existing program credit total ($3.6 million per year), with an average of 10 per year actually
receiving credit awards. LED indicates that under the new federal law, there have been 150 Opportunity Zones designated
for the state, although LED is not aware of the number of potentially eligible investments within these zones. It is possible
that some additional applications would be received and approved, over and above the normal level for the program, as
result of this bill (applying for the opportunity zone enhanced credit of 35%), and program credit costs would be greater
than what would occur with only a simple program extension baseline. This additional cost increase is speculative, and not
included in the estimates above, but may be able to begin being realized as early as FY23.
Senate Dual Referral Rules House
13.5.1 >= $100,000 Annual Fiscal Cost {S & H} 6.8(F)(1) >= $100,000 SGF Fiscal Cost {H & S}
John D. Carpenter
x 13.5.2 >= $500,000 Annual Tax or Fee 6.8(G) >= $500,000 Tax or Fee Increase
Change {S & H} Legislative Fiscal Officer
or a Net Fee Decrease {S}


Statutes affected:
SB24 Original: 47:6020(D)(2)
SB24 Engrossed: 47:6020(D)(2)
SB24 Enrolled: 47:6020(D)(2)
SB24 Act : 47:6020(D)(2)