BILL ANALYSIS                                                                                                                                                                                                    




            SENATE REVENUE & TAXATION COMMITTEE
            Senator Jack Scott, Chair
                                             SB 430 - Vincent 
                                             Amended: April 23, 2001
                                                              Tax Levy
            Hearing: April 25, 2001                   Fiscal: Yes
            

            SUBJECT:  Provides a 100% credit, up to $100, for spaying  
                      and neutering of pets.

                 EXISTING LAW 

                 Provides various tax credits designed to provide tax  
            relief for taxpayers who incur certain expenses such as  
            adoption or to influence behavior such as business  
            practices and decisions.  These credits generally are  
            designed to provide incentive for taxpayers to perform  
            various actions or activities that they may not otherwise  
            undertake.  There is no existing law that provides any type  
            of tax benefit for spaying and neutering an animal.

                 THIS BILL 

            Provides a credit for the cost of spaying or neutering a  
            cat or dog that is purchased or adopted by a taxpayer.   
            Costs are limited to the actual costs of the spaying or  
            neutering operation and cannot exceed $100 per dog or cat,  
            specifically:

                   Allows the credit for a dog or cat purchased from a  
                 breeder or pet store located in the State or purchased  
                 or adopted from an animal control agency or shelter,  
                 society for the prevention of cruelty to animals  
                 shelter, humane society shelter, or rescue group. 
                   Requires the dog or cat to be adopted or purchased  
                 after January 1, 2001 and before January 1, 2006.

                   Defines a breeder as a person who breeds a dog that  
                 is registered with the American Kennel Club or a cat  
                 that is registered with either the International Cat  
                 Association, the Canadian Cat Association, or the Cat  
                 Fanciers' Association.









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                   Requires the taxpayer to provide the Franchise Tax  
                 Board with an adoption certificate or receipt of  
                 purchase, a certificate of spaying or neutering from a  
                 licensed veterinarian, and a delineation of costs.

                   Allows any unused credit to be carried over for  
                 eight years.

                   Sunsets this program on January 1, 2006.

                   As a tax levy, becomes effective immediately.




            FISCAL EFFECT: 

            According to the Franchise Tax Board, the projected amount  
            of revenue loss associated with this bill is approximately  
            $7 million annually, beginning in 2001-02.




            COMMENTS:

              A.     Purpose of the bill
              According to the supporters of this bill, the tax credit  
              provides a new way to encourage people to spay and neuter  
              their dogs and cats.  "We believe that this will be one  
              more step forward toward solving the problem described as  
              'too many pets, not enough homes.'"

              B.     Background
              The projected number of animals adopted from an animal  
              shelter or nonprofit animal welfare organization in  
              California in 2002 is approximately 200,000.  The  
              approximate number of pets purchased from private  
              breeders, based on an estimate by the American Kennel  
              Club is 70,000 annually.  The average cost of a spay or  
              neuter procedure is $30.  

              The American Society for Prevention of Cruelty to  
              Animal's (ASPCA) stated policy is to "spay or neuter all  








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              animals available for adoption in order to control pet  
              overpopulation."   Many local SPCA's offer "Litter Free  
              Spay Projects" that make spaying or neutering available  
              at no charge to people who could not otherwise afford it:  
              seniors on fixed incomes, referrals by local social  
              service agencies.

              This bill does not apply to pets acquired from friends or  
              found as strays.  According to SEAACA, statistics have  
              shown that these are the main source of pets in the home.  


              Statistics on pet overpopulation: in seven years, a  
              female cat and her offspring can produce 420,000 kittens;  
              a female dog and her offspring can produce 67,000 puppies  
              in six years.  One in five of these animals will be  
              placed in a home.

              C.     Unrestrained Growth
              This bill does not target a specific group, such as  
              low-income people, as tax credits often do.  The credit  
              proposed in this bill could become a credit for people  
              who do not need it. Additionally, exact numbers are not  
              known on pet adoptions in this state.  Although FTB uses  
              the best available data, it is possible that this bill  
              would have a larger than anticipated General Fund Impact.
              D.     Retroactive Incentive? 
              The bill would allow the credit to be claimed for spaying  
              and neutering expenses starting with the 2001 taxable  
              year.  The bill should probably be amended to apply to  
              costs incurred on or after the effective date of the  
              bill, since any expenses incurred before that date  
              presumably did not need this additional incentive.

            

















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            Support and Opposition

                     Support:SEAACA (if amended)
                Contra Costa Humane Society
                Doris Day Animal League
                Pets in Need
                Pet Industry Joint Advisory Committee (PIJAC)
                California Federation for Animal Legislation
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            Consultant: Gayle Miller
            04/26/:1 09:57