INCOME TAXES

Income tax expense (benefit) consisted of the following:



	Federal		State			Total
2018
Current	$	—	$	3		$	3
Deferred	15,995		(126		)	15,869
Total	$	15,995	$	(123	)	$	15,872
2017
Current	$	—	$	3		$	3
Deferred	35,881		943			36,824
Total	$	35,881	$	946		$	36,827
2016
Current	$	130	$	2		$	132
Deferred	26,603		81			26,684
Total income tax	$	26,733	$	83		$	26,816

The Company's 2018, 2017 and 2016 federal qualified repairs and maintenance deductions totaled $99.0 million, $85.7 million, and $84.9 million, respectively.

The total federal NOL carry-forward was $62.4 million and the state NOL carry-forward was $28.0 million as of December 31, 2018. 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 2027.

As of December 31, 2018, the California Enterprise Zone (EZ) credit was $4.2 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 $2.3 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 is reconciled in the table below:



	2018			2017			2016
Statutory income tax	$	17,105		$	38,419		$	26,422
Increase (reduction) in taxes due to:
State income taxes net of federal tax benefit	5,685			6,017			4,341
Effect of regulatory treatment of fixed asset differences	(5,954		)	(4,584		)	(4,298		)
Investment tax credits	(74		)	(74		)	(74		)
AFUDC equity	(1,106		)	(1,528		)	—
Share base stock compensation	(278		)	(581		)	—
Other	494			(842		)	425
Total income tax	$	15,872		$	36,827		$	26,816

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

On December 22, 2017, the U.S. government enacted expansive tax legislation commonly referred to as the TCJA. Among other provisions, the TCJA reduces the federal income tax rate from 35 percent to 21 percent beginning on January 1, 2018 and eliminated bonus depreciation for utilities. The TCJA required the Company to re-measure all existing deferred income tax assets and liabilities to reflect the reduction in the federal tax rate. The Company adjusted and recorded the impacts of the TCJA in accordance with rules issued by the SEC in Staff Accounting Bulletin No. 118, for the re-measurement of deferred tax balances as of December 31, 2017.

A TCJA refund of $108.0 million was recorded as a provisional estimate on December 31, 2017. During the year ended December 31, 2018, the Company completed its analysis of its deferred tax balances which resulted in a change from a net deferred income tax regulatory asset to a net regulatory liability. The TCJA refund was $107.0 million, with gross up $42.0 million, total regulatory liabilities for TCJA was $149 million as of December 31, 2018. The Company is still working with state regulators to finalize the ratepayer net refund of $107.0 million to ensure compliance with federal normalization rules. Changes in interpretations, guidance on legislative intent, and any changes in accounting standards for income taxes in response to the TCJA could impact the recorded amounts.

The deferred tax assets and deferred tax liabilities as of December 31, 2018 and 2017, are presented in the following table:



	2018		2017
Deferred tax assets:
Developer deposits for extension agreements and contributions in aid of construction	$	39,074	$	33,552
Net operating loss carryforward and tax credits	8,257		13,329
Pension liability	8,725		7,906
Income tax regulatory liability	44,072		41,712
Other	4,273		280
Total deferred tax assets	104,401		96,779
Deferred tax liabilities:
Property related basis and depreciation differences	288,544		262,442
WRAM/MCBA and interim rates balancing accounts	26,348		26,404
Other	2,542		2,550
Total deferred tax liabilities	317,434		291,396
Net deferred tax liabilities	$	213,033	$	194,617

The increases in developer deposits for extension agreements and contributions in aid of construction (CIAC) and property related basis and depreciation differences, as compared to the prior year, were mostly due to the TCJA. All developer deposits for CIAC are taxable in 2018 for federal income tax purposes. The increase in the deferred tax asset for the income tax regulatory liability represents the tax gross up to the revenue requirement for the re-measurement of net deferred taxes associated with a lower federal income tax rate as a result of the TCJA and reclassification of certain amounts to income tax regulatory liability, as well as the future tax benefit associated with the expected reduction in revenues related to the recovery of lower income taxes through customer rates.

A valuation allowance was not required at December 31, 2018 and 2017. 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, 2018			December 31, 2017		December 31, 2016
Balance at beginning of year	$	11,058		$	10,499	$	10,298
Additions for tax positions taken during prior year	—			—		—
Additions for tax positions taken during current year	1,787			559		201
Reduction to prior year tax position	(3,129		)	—		—
Lapse of statute of limitations	—			—		—
Balance at end of year	$	9,716		$	11,058	$	10,499

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, 2018, was $2.9 million, with the remaining balance representing the potential deferral of taxes to later years.

The Company's federal income tax years subject to an examination are from 2013 to 2018 and the state income tax years subject to an examination are from 2012 to 2018.