BILL ANALYSIS                                                                                                                                                                                                    

                                                                  AB 2291
                                                                  Page  1

          Date of Hearing:   April 30, 2008

                                  Mark Leno, Chair

                   AB 2291 (Mendoza) - As Amended:  April 21, 2008 

          Policy Committee:                              Revenue and  
          Taxation     Vote:                            8-1

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              

          This bill adds the Low Cost/Free Spay-Neuter Fund checkoff to  
          the personal income tax form upon the removal of another  
          voluntary contribution fund (VCF) from the form. Specifically,  
          the bill:
          1)Establishes the fund in the State Treasury, which will receive  
            all voluntary contributions from the checkoff program.

          2)Requires that, after reimbursing the Franchise Tax Board and  
            Controller for administrative expenses, remaining proceeds to  
            this fund be appropriated to Department of Food and  
            Agriculture, for allocation to municipal shelters to provide  
            low cost or free spay-neuter services.

          3)Allows the Department of Food and Agriculture to use no more  
            than 5% of the contributions for administrative costs.

          4)Specifies that the checkoff program shall be repealed on  
            January 1 of the fifth taxable year following its first  
            appearance on the PIT return, or on January 1 of an earlier  
            year if the FTB determines that annual contributions the  
            Spay-Neuter fund are less than $250,000.

           FISCAL EFFECT  

          The contributions may be taken as an itemized deduction on  
          income tax returns. The Franchise Tax Board estimates that the  
          annual revenue losses from these deductions would be around  


                                                                  AB 2291
                                                                  Page  2


          1)Rationale  .  The author indicates that over 1 million cats and  
            dogs are born in California each year. Many of these animals  
            end up on the streets without a home or owners, and eventually  
            wind up in animal shelters. The author notes that a major  
            barrier to effective population control of cats and dogs is  
            the high cost of spay and neutering services. This bill is  
            intended to help municipal shelters overcome that barrier.

           2)Background-voluntary contribution funds  . California taxpayers  
            can make voluntary contributions to any of 14 contribution  
            funds listed on the state personal income tax return. The  
            contributions are in addition to any tax liabilities otherwise  
            owed. Thus, they do not directly reduce state taxes otherwise  
            available to support state-funded programs in the year in  
            which they are made. However, the amounts are allowed as an  
            itemized deduction for charitable contributions on the  
            subsequent year's income tax return. 

            These voluntary contributions support various purposes,  
            including cancer research, Alzheimer's research, endangered  
            species preservation, and emergency food assistance.  
            Contributions to the VCFs have historically ranged from  
            $300,000 to $800,000 per year. In most cases, the VCFs remain  
            on the state income tax return until they are repealed or they  
            fail to meet minimum contribution amounts (generally $250,000  
            in the first year, with future year minimums increased for  
            inflation). All but one of the VCFs have sunset dates.

           3)Other checkoff measures.  Presently, there are at least four  
            other bills in the Legislature that would add new VCFs to the  
            PIT return. These include AB 1812 (Arambula) relating to fire  
            protection, AB 2518 (Torrico) relating to the Northern  
            California Cancer Center research, AB 1935 (Fuller) relating  
            to ovarian cancer research, and SB 1502 (Steinberg) related to  
            Amyotrophic Lateral Sclerosis research.

           Analysis Prepared by  :    Brad Williams / APPR. / (916) 319-2081