INCOME TAXES

Income tax expense (benefit) consisted of the following:



	Federal			State			Total
2016
Current	$	130		$	2		$	132
Deferred	26,603			81			26,684
Total	$	26,733		$	83		$	26,816
2015
Current	$	9,591		$	1,706		$	11,297
Deferred	15,374			(1,382		)	13,992
Total	$	24,965		$	324		$	25,289
2014
Current	$	(16,509	)	$	(1,852	)	$	(18,361	)
Deferred	44,730			1,603			46,333
Total income tax	$	28,221		$	(249	)	$	27,972

The Company's 2016, 2015 and 2014 federal qualified repairs and maintenance deductions totaled $72.0 million, $60.0 million, and $45.2 million, respectively.

The total federal NOL carry-forward was $52.1 million and the state NOL carry-forward was $49.2 million as of December 31, 2016. Management has concluded that the NOL carry-forward amounts are more likely than not to be recovered and therefore require no valuation allowance. The loss and credit carry-forward will begin to expire in 2032.

As of December 31, 2016, the California Enterprise Zone (EZ) credit was $3.7 million net of federal tax benefit for qualified property purchased before January 1, 2015, and placed in service before January 1, 2016. The Company has carry-forward California EZ credits of $2.2 million net of any unrecognized tax benefit. Unused State of California EZ credits can carry-forward until 2024.

The difference between the recorded and the statutory income tax expense was reconciled in the table below:



	2016			2015			2014
Statutory income tax	$	26,422		$	24,607		$	29,649
Increase (reduction) in taxes due to:
State income taxes net of federal tax benefit	4,341			4,043			4,871
Effect of regulatory treatment of fixed asset differences	(4,298		)	(3,450		)	(5,541		)
Investment tax credits	(74		)	(74		)	(74		)
Other	425			163			(933		)
Total income tax	$	26,816		$	25,289		$	27,972

The effect of regulatory treatment of fixed asset differences includes estimated repair and maintenance deductions and asset related flow through items.

The tax effects of differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2016 and 2015 are presented in the following table:



	2016		2015
Deferred tax assets:
Developer deposits for extension agreements and contributions in aid of construction	$	46,318	$	45,670
Net operating loss carryforward and tax credits	12,348		15,042
Pension	9,865		7,922
Other	5,651		3,341
Total deferred tax assets	74,182		71,975
Deferred tax liabilities:
Property related basis and depreciation differences	347,071		309,088
WRAM/MCBA and interim rates balancing accounts	20,714		23,894
Other	5,321		3,890
Total deferred tax liabilities	373,106		336,872
Net deferred tax liabilities	$	298,924	$	264,897

A valuation allowance was not required at December 31, 2016 and 2015. Based on historical taxable income and future taxable income projections over the period in which the deferred assets are deductible, management believes it is more likely than not that the Company will realize the benefits of the deductible differences.

The following table reconciles the changes in unrecognized tax benefits:



	December 31, 2016		December 31, 2015		December 31, 2014
Balance at beginning of year	$	10,298	$	7,916	$	612
Additions for tax positions taken during prior year	—		—		7,304
Additions for tax positions taken during current year	201		2,382
Reductions for tax positions taken during a prior year	—		—		—
Lapse of statute of limitations	—		—		—
Balance at end of year	$	10,499	$	10,298	$	7,916

The Company does not expect a material change in its unrecognized tax benefits within the next 12 months. The component of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of December 31, 2016, for the Company was $2.3 million, with the remaining balance representing the potential deferral of taxes to later years.

The Company federal income tax years subject to an examination are 2015, 2014 and 2013 and the state income tax years subject to an examination are 2015, 2014, 2013 and 2012. The State of California Franchise Tax Board is presently auditing the Company's 2008 through 2011 EZ credit filings which were amended by the Company in 2013. It is uncertain when the State audits will be completed.