FISCAL NOTE

House Bill 297 (Act 2022-341) as enacted amends the Railroad Modernization Act of 2019 to extend the program from December 31, 2022, currently, to December 31, 2027; and for tax years 2023 through 2027: (1) increases the per-mile cap on the income tax credit available under current law from $3,500 per mile, currently, to $4,100 per mile annually; (2) increases the total amount of income tax credits that may be claimed in a tax year from $3.7 million, currently, to $4.5 million; and (3) caps the cumulative amount of tax credit that may be claimed over this period at $22.5 million.

This act could reduce receipts to the Education Trust Fund by a maximum of $4.5 million annually in fiscal years 2024 through 2028 ($22.5 million total) dependent on the amount of tax credits claimed each year. According to the Department of Commerce, the current cap of $3.7 million in tax credits were reserved in tax years 2020 and 2021, and $1,444,679 in tax credits were claimed in tax year 2021.

In addition this act will increase the obligations of the Department of Revenue to develop standards for the approval of qualified railroad rehabilitation expenditures for which a tax credit is being sought.

Pursuant to the provisions of the ETF Rolling Reserve Act contained in Section 29-9-3(b)(3), Code of Alabama 1975, the provisions of this act will reduce the ETF fiscal year appropriation cap for fiscal year 2024 by $4.5 million.