Senator McNerney's proposal to modify California's Alternative Energy and Advanced Transportation Financing Authority Act makes three fundamental changes to the state's sales and use tax exclusion program for advanced manufacturing and energy projects. The legislation removes the program's January 2026 sunset date, increases the annual cap on tax exclusions from $100 million to $300 million, and expands eligibility to include electrical generation facilities using nuclear fusion technology.

The bill maintains the program's core focus on promoting California-based manufacturing, job creation, and environmental benefits through tax incentives for qualifying projects. Under the modified framework, the Authority evaluates applications based on factors including manufacturing facility development, job creation potential, environmental impact, and local unemployment rates. Out-of-state and international entities remain eligible if they commit to establishing manufacturing operations in California.

For implementation and oversight, the Authority must publish notices about application availability and deadlines, conduct public hearings for project approvals, and submit a report to the Legislature by January 2027 analyzing the program's effects on jobs, economic output, and environmental outcomes. The legislation authorizes the Authority to issue bonds for refinancing existing debt and funding project expansions, with proceeds managed according to specified investment and repayment parameters.

The bill takes effect immediately upon enactment as a tax levy, ensuring continuous program operation as the current authorization approaches expiration. This timing allows the Authority to implement the expanded funding cap and broader project eligibility without interruption to existing application review and approval processes.