BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
323 (Oropeza)
Hearing Date: 05/04/2009 Amended: 04/15/2009
Consultant: Mark McKenzie Policy Vote: Rev&Tax 5-2
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BILL SUMMARY: SB 323 would allow taxpayers to direct any
expected state tax refunds to a Qualified Tuition Program
account until December 31, 2014.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
FTB tax form expansion up to $2,000, if additional page is
required General
FTB departmental costs $351 $30
General*/
Special
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* Staff notes that the impact would be General Fund in a fiscal
year if costs are not reimbursed to FTB in the same fiscal year
from special funds (Scholarshare Administrative Fund).
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
Existing law provides tax exempt status to Qualified Tuition
Programs (QTPs), which are established and maintained by the
state or an eligible education institution to encourage savings
for education. Distributions from a QTP are generally not
taxable, and contributions to a QTP are not deductible.
California's Golden State Scholarshare Trust program is an
example of a QTP. There are currently 15 tax check offs on the
state income tax forms that provide an opportunity for taxpayers
to make a contribution to specified causes.
SB 323 would allow a taxpayer to designate any excess tax
liability in full dollar amounts, such as an expected refund, to
a single Qualified Tuition Program until December 31, 2014. The
bill would require the Franchise Tax Board (FTB) to revise tax
forms to include space for this designation, including the
amounts to be transferred and the QTP routing number and account
number. SB 323 would also require the California Scholarshare
Investment Board to reimburse FTB for actual costs incurred to
implement and maintain the bill's provisions through an
interagency agreement. Total costs reimbursed by the
Scholarshare Investment Board could not exceed $475,000.
FTB indicates that this bill requires changes to existing forms
and electronic applications that may result in the expansion of
the current tax form to three pages, which would result in costs
of over $2 million. If the form remained at two pages, the bill
would still require the development of an additional form that
would impact departmental printing processing, and storage
costs, some of which could be accomplished during normal annual
updates. SB 323 would also require FTB to manage the transfer
of funds to entities identified by taxpayers, resulting in
unknown administrative costs.
Page 2
SB 323 (Oropeza)
Staff notes that this bill is substantially similar to SB 918
(Oropeza), which was held on the Assembly Appropriations
Suspense File in 2007. The primary difference is the provision
that requires FTB costs to be reimbursed by the Scholarshare
Board, which is intended to insulate the impact to the General
Fund. FTB's analysis of SB 918 (Oropeza), as amended on March
29, 2007, identified one-time implementation costs of $350,914,
with annual ongoing costs of $30,398. For purposes of
estimation, staff assumes costs associated with the
implementation of SB 323 would be similar. FTB also determined
at that time that SB 918 would not increase the tax return to
three pages. The author is currently working with FTB to ensure
that SB 323 does not require the expansion of tax forms to a
third page, but FTB is unable to make that determination at this
time.