BILL ANALYSIS
SENATE REVENUE & TAXATION COMMITTEE
Senator Lois Wolk, Chair
AB 1088 - Fletcher
Amended: March 1, 2010
Hearing: June 23, 2010 Fiscal: Yes
SUMMARY: Allows Taxpayers to Make Voluntary Contributions
to the California Veterans Home Fund on Their
State Personal Income Tax Returns.
EXISTING LAW allows taxpayers to contribute money to
one or more of 15 voluntary contribution funds by checking
a box on their state income tax return. California law
requires contributions made through check-offs to be made
from taxpayers' own resources (not from their tax
liability, as is possible on federal tax returns).
Check-off amounts may be claimed as charitable
contributions on taxpayers' tax returns during the
subsequent year.
Allows the Franchise Tax Board (FTB) to design tax
returns to provide for the designation of contributions to
specified funds either on the return itself or on a
separate schedule that must be attached to the return.
THIS BILL reinstates (under a new name) a voluntary
contribution fund (VCF) that fell below minimum
contribution requirements and was removed from state income
tax returns in 2007. Specifically, this bill:
Adds the California Veterans Home Fund to the list of
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voluntary contribution funds included on the personal
income tax form.
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.
Provides that all moneys transferred to the Fund, upon
appropriation by the Legislature, shall be allocated as
follows:
a) To the FTB and the State Controller for
reimbursement of costs incurred in administering the
check-off; and,
b) To the California Department of Veterans Affairs
(CDVA) for allocation to the administrators of
veterans' homes. Specifically, moneys shall be
distributed proportionally to the Morale, Welfare, and
Recreation Fund of each veteran's home.
Provides for the Fund provisions' automatic repeal on
either January 1 of the fifth taxable year following the
first appearance of the Fund on the personal income tax
return, or on January 1 of an earlier year, if FTB
estimates that the annual contribution amount will be less
than $250,000 or an adjusted amount for subsequent years.
Deletes the statutory provisions that authorized the
Veterans' Quality of Life Fund check-off, which was also
used to fund veterans' homes.
FISCAL EFFECT:
According to the FTB, this tax check-off will result
in an annual revenue loss of approximately $15,000 per year
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beginning in fiscal year (FY) 2011-12.
COMMENTS:
A. Purpose of the Bill
The author provides the following statement:
AB 1088 will establish a voluntary contribution fund
(The California Veterans Homes Fund) to finance
programs and services at the California Veteran's
Homes via the Morale, Welfare, and Recreation Account
provided for by Section 1048 of the Military and
Veterans Code.
The California Department of Veterans Affairs has a
mission "to provide the state's aged and/or disabled
veterans with rehabilitative, residential, and medical
care and services in a home-like environment at the
California Veterans Homes."
CDVA operates California Veterans' Homes campuses in
Yountville, Barstow, and Chula Vista. Grand openings
were held in November for locations at Lancaster and
Ventura. Three more homes are planned for West Los
Angeles, Homes in Fresno and Redding opened in May and
a home planned for West Los Angeles
Several activities and programs at the California
Veterans Homes are financed through the Morale,
Welfare and Recreation Account. State law provides
for the Morale, Welfare and Recreation Account to
accumulate proceeds from prisoner-of-war license plate
issuance revenue, funds derived from golf course green
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fees and range ball fees, donations to the fund,
interest earned on invested funds, funds derived from
the estates of deceased members, and money and
property received by the home from estate assets
located outside the home, regardless of amount.
AB 1088 would channel money from the California
Veterans Homes Fund into the California Veterans
Homes' Morale, Welfare, and Recreation Account.
With several new Veterans homes set to open in the
next few years, the Morale, Welfare, and Recreation
Account will be split further and stretched to provide
for a greater number of veterans. The existing
funding sources for the Morale, Welfare, and
Recreation Account are not expected to grow
significantly.
Current fiscal constraints demand alternative methods
to augment and maintain funding for veterans. This
measure will enhance the Moral, Welfare and Recreation
Account, without raising taxes, for the veterans who
have given so much of themselves for the security of
others.
B. Background
As noted by the CDVA, the Veterans Home of California
is first and foremost a place where veterans come to live.
Specifically, "It offers complete medical and dental care
amidst the amenities of a small town atmosphere. Residents
may participate in on- or off-campus activities, civic
affairs or attend veteran's service organization meetings.
On campus, residents have the option of participating in
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the Therapeutic Employment Program or by helping other
veterans through volunteer service." CDVA currently
operates campuses in Yountville (Napa County), Barstow (San
Bernardino County), Chula Vista (San Diego County),
Lancaster (Los Angeles County), and Ventura (Ventura
County). CDVA is also designing and constructing three new
homes in West Los Angeles (Los Angeles County), Fresno
(Fresno County), and Redding (Shasta County).
C. A Returning VCF with a New Name
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. While the
Fund has been given a new name, there is little reason to
believe it will fare any better than the ill-fated
Veterans' Quality of Life Fund, which failed to meet its
voluntary contribution threshold. Moreover, the Committee
may wish to consider whether AB 2177 creates a precedent of
simply re-establishing failed VCFs under new names. Should
the Committee approve this measure, it should expect
advocates for other previously-expired VCFs to ask for
their worthy causes to be resurrected.
D. Many Worthy Causes
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
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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 the VCFs
have historically ranged from $250,000 to $800,000 per
year. All but one VCF (the California Seniors Special Fund)
have sunset dates, and most-except for the California Peace
Officer Memorial Foundation Fund and the California
Firefighters' Memorial Fund -- must meet a minimum annual
contribution to remain on the return.
In the past, the Committee has expressed concern that
countless worthy causes may be funded by tax check-offs.
The Committee has stated that the current check-off system
forces them to choose between worthy charities and
non-profits for a spot on the tax return. The current
system remains subjective and is limited to those
organizations that can convince the Legislature to include
them on the form. Additionally, taxpayers may currently
contribute portions of their refunds to worthy
organizations. Taxpayers may also claim a deduction for
charitable contributions. The Committee may wish to
consider whether the state should use the tax code to
encourage contributions to certain charitable
organizations.
In addition to this bill, the following bills have
been introduced this year:
AB 658 (Hayashi) would create a VCF designation on
the personal income tax return in order for taxpayers
to contribute to the California Police Activities Fund
(CALPAL). This bill passed the Senate Revenue and
Taxation Committee June 9th. and is awaiting action in
the Senate Appropriations Committee.
AB 1008 (Block) would create a VCF designation on
the personal income tax form for taxpayers to
contribute to the National Guard Education Assistance
Fund. This bill is waiting to be heard in the Senate
Revenue and Taxation Committee.
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AB 1983 (Torrico) would create a VCF designation on
the personal income tax return for taxpayers to
contribute to the Safely Surrender Babies Fund. This
bill is waiting to be heard in the Senate Revenue and
Taxation Committee.
AB 2017 (Hall) would create a VCF designation on the
personal income tax return for taxpayers to contribute
to the Young Men's Christian Association (YMCA) Youth
and Government Fund. This bill is awaiting assignment
in the Senate Rules Committee.
SB 1076 (Price) would create a VCF designation on
the personal income tax return for taxpayers to
contribute to the Arts Council Fund. This bill has
been held in the Senate Appropriations Committee.
Support and Opposition
Support: American Legion of California, AMVETS,
Department of California, California Association of County
Veterans Service Officers, San Diego County Veterans
Advisory Council, San Diego County Veterans Service
Officers, San Diego United Veterans Council, Vietnam
Veterans of America-California State Council, Sacramento
Veteran's affiliated Council
Oppose: None on file.
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Consultant: Meg Svoboda
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