BILL ANALYSIS                                                                                                                                                                                                    






                      SENATE COMMITTEE ON VETERANS AFFAIRS
                             JEFF DENHAM, CHAIRMAN
                                             


          Bill No:        AB 1088
          Author:         Fletcher
          Version:        February 27, 2009
          Hearing Date:   April 13, 2010
          Fiscal:         Yes
          Consultant:     Donald E. Wilson



                                 SUBJECT OF BILL
                                         
          Taxpayer contributions: California Veterans' Quality of  
          Life Fund.
                                         

                                  PROPOSED LAW  
          
          1.Allows for the renewal and changes the name of the  
            Veterans' Quality of Life Fund, a voluntary tax refund  
            contribution designation on state tax forms, to the  
            California Veterans' Home Fund.

          2.Requires another voluntary tax contribution (VCF)  
            designation be removed from the tax return form before  
            this designation can be added.

          3.Intent language stating money raised is to be in addition  
            to not "supplant," existing money.

          4.Sets $250,000 as the minimum annual contribution  
            threshold beginning the second year after it appears on  
            the tax form.

          5.Adjusts the minimum annual contribution threshold by  
            indexing inflation to the Consumer Price Index (CPI) as  
            stated on or before August 1 of the calendar year.

          6.Has a five-year sunset date after the first year the  
            Veterans' Quality of Life Fund appears on the tax form.











                           EXISTING LAW AND BACKGROUND
                                         
          1.California opened its first veterans' home in Yountville  
            in 1884 when land was donated to the state for the  
            purpose of taking care of civil war veterans.  

          2.The Morale, Recreation, and Welfare fund was established  
            to provide activities at the home for its resident  
            veterans.

          3.Under existing law regulating the administration of the  
            Personal Income Tax Law, individual taxpayers are allowed  
            to contribute amounts in excess of their tax liability  
            for the support of specified funds or accounts,  
            including, among others, the Veterans' Quality of Life  
            Fund.

          4.Existing law requires the expenditure of all moneys  
            contributed to the fund, upon appropriation by the  
            Legislature, for administrative costs and for  
            distribution into the Morale, Welfare, and Recreation  
            Fund for each of the veterans' homes.

          5.Existing law sets a minimum dollar threshold that a  
            check-off fund must raise in order to remain on tax  
            return forms. 

          6.According to the Assembly Revenue and Taxation Committee  
            -
               "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 in calendar years 2006 and 2007,  
            respectively.  The prior fund received $135,345 in 2006  
            and $168,146 in 2007.  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,  
            and as a result, the fund ceased to be operative."


                                     COMMENT  
          

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          1.Within the next few years an entire eight-home system  
            will be completed.  All homes will eventually need to  
            have a Morale, Recreation, and Welfare Fund.

          2. The state can fill the Morale fund from the general  
            fund, which is unlikely in these economic times.   
            Allowing people to donate the money directly from their  
            tax returns relieves the need to find the money in an  
            appropriation through the legislative process.

          3.Any administrative costs associated with the tax check  
            off will be covered by donations to the account - not the  
            state treasury.

          4.According to the Franchise Tax Board, since the donations  
            are tax deductible and not a tax credit a significant  
            amount of money ($250,000) can be donated to the quality  
            of life fund with an impact of only $15,000 to the  
            state's general fund. 

          5.Prior votes-
               a)     Assembly Floor 71-0
               b)     Assembly Appropriations 17-0
               c)     Assembly Veterans' Affairs 8-0
               d)     Assembly Revenue & Taxation 5-0


                                     SUPPORT
                                         
          American Legion, Department of California
          AMVETS, Department of California
          California Association of County Veterans Service Officers 
          Vietnam Veterans of America, California State Council


                                      OPPOSE  
          None received







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