BILL ANALYSIS
AB 1088
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Date of Hearing: January 21, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 1088 (Fletcher) - As Amended: January 11, 2010
Policy Committee: Revenue and
Taxation Vote: 5-0
Veterans Affairs 8-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill reinstates (under a new name) a voluntary contribution
fund that fell below minimum contribution requirements and thus
was removed from state income tax returns in 2007. Specifically,
the bill:
1)Adds the California Veterans Fund to the list of voluntary
contribution funds included on the personal income tax form.
2)Provides that the new fund will be included on the return upon
removal of an existing fund, and will remain on the form for
five years unless contributions fall below $250,000 per year.
3)Requires the California Department of Veterans Affairs (CDVA)
to allocate the funds to the administrators of veterans' homes
for the support of veterans' home services.
FISCAL EFFECT
1)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 about
$15,000.
2)Administrative costs will be deducted from the contribution
proceeds.
COMMENTS
1)Rationale . The bill is intended to provide additional funding
AB 1088
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for veterans home programs. The author notes that, with five
new California Veterans Homes set to be built, present funding
for veterans' home programs is being stretched thin.
2)Background-voluntary contribution funds (VCFs) . California
taxpayers can make voluntary contributions to any of 15 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, endangered species preservation, and emergency food
assistance. Contributions to most VCFs have historically
ranged from $300,000 to $800,000 per year. All but one VCF
(the California Seniors Special Fund) have sunset dates, and
most must meet a minimum annual contribution to remain on the
return.
3)Second try . AB 357 (Horton), Chapter 143, Statutes of 2005,
authorized the addition of a virtually identical VCF called
the Veterans' Quality of Life Fund to augment the amount of
money available to the state's veterans' homes. The Veterans'
Quality of Life Fund appeared on the 2005 and 2006 tax
returns. For tax years beginning on or after January 1, 2007,
the fund needed to meet a minimum contribution threshold of
$250,000 but failed to do so (receiving less than $170,000 in
each of its first two years), and as a result, the fund ceased
to be operative. It is not clear whether anything has changed
that would lead to higher contribution levels in the future.
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081