BILL ANALYSIS SB 1076 Page 1 Date of Hearing: August 4, 2010 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair SB 1076 (Price) - As Amended: August 2, 2010 Policy Committee: Revenue and Taxation Vote: 8-1 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill adds the Arts Council Fund checkoff to the personal income tax (PIT) form upon the removal of another voluntary contribution fund (VCF) from the form. Specifically, the bill: 1)Allocates contributions received by the fund to the Arts Council, which would in turn allocate grants to individuals or organizations administering arts programs. 2)Sunsets in five years after becoming operative, or whenever FTB estimates the annual contribution amount will be less than $250,000, as adjusted for inflation. 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)State administrative costs will be deducted from the contribution proceeds. COMMENTS 1)Purpose . The bill is intended to supplement funding for the California Arts Council, which has seen a major reduction in its GF budget over the past decade. 2)Background - voluntary contributions . Taxpayers can make voluntary contributions to any of 15 funds listed on the state SB 1076 Page 2 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 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 must meet a minimum annual contribution to remain on the return. 3)Background - California Arts Council . This counsel, which is comprised of 11 members, is charged with encouraging artistic awareness, promoting the employment of artists, and assisting independent local groups in developing their own art programs. It is responsible for awarding prizes and direct grants to individuals and organizations. The counsel currently receives revenues from the special license plate program, the national endowment for the arts, and the GF. Contributions from the GF fund have fallen sharply over the past decade, dropping from $30 million in 2000-01 to $1 million in 2009-10. 4)Related legislation . This is one of several bills before the Legislature adding voluntary contributions to the personal income tax return. Other measures include SB 516 (DeSaulnier) and AB 2017 (Hall) related to contributions for youth programs, AB 1088 (Fletcher) relating to the California Veterans Homes Fund, and AB 1983 (Torrico) relating to the Safely Surrendered Baby Fund. Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081