BILL ANALYSIS Ó
REVISED
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 233 HEARING: 7/3/12
AUTHOR: Hall FISCAL: Yes
VERSION: 6/29/11 TAX LEVY: No
CONSULTANT: Miller
YMCA VOLUNTARY CONTRIBUTIONS
Creates the California YMCA Youth and Government Fund
(income tax check off).
Background and Existing Law
Existing state law allows taxpayers to contribute money to
one or more of 15 voluntary contribution funds (VCFs or
check-offs) 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 and 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.
The Franchise Tax Board (FTB) designs 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. With a few
exceptions, VCFs remain on the return until they are either
repealed or fail to meet their minimum contribution amount.
The minimum contribution amounts are adjusted annually for
inflation. For most VCFs, the minimum contribution amount
is $250,000 in the fund's second year. By September 1st of
each year, the FTB must determine the minimum contribution
amount required for each fund to remain on the form for the
following calendar year and whether estimated contributions
to each fund will be less than the minimum contribution
amount for that calendar year. If the FTB estimates that a
fund will fail to meet the minimum contribution amount,
that fund is repealed effective for taxable years beginning
on or after January 1st of the following calendar year.
AB 233 -- 6/29/11 -- Page 2
Except for the California Senior Legislature (which is
fully funded by the check off and operates in concert with
the Legislature), the proceeds from the check-offs either
go to quasi-government organizations or to non-profits as a
competitive grant. The following list provides the current
information on all the check offs as well as how many
groups are eligible to receive the funds.
------------------------------------------------------------
|Check Off |Amount |Number of Groups that |
| |Earned |receive funds |
|---------------------+------------+-------------------------|
|ALS/Lou Gehrig's |Initial Tax |As many as apply and |
|Disease Research |Return 2011 |receive grants that are |
|Fund | |provided for by the |
| | |monies contributed. |
|---------------------+------------+-------------------------|
|Alzheimer's |$462,357 |As many as contract or |
|Disease/Related | |receive grants provided |
|Disorders Fund | |by the monies |
| | |contributed. |
|---------------------+------------+-------------------------|
|Arts Council Fund |$164,298 |As many as apply and |
| | |receive grants provided |
| | |by the monies |
| | |contributed. |
|---------------------+------------+-------------------------|
|CA Breast Cancer |$459,694 |As many as apply and |
|Research Fund | |receive grants provided |
| | |from the monies |
| | |contributed. |
|---------------------+------------+-------------------------|
|CA Cancer Research |$451,042 |As many as apply and |
|Fund | |receive grants provided |
| | |from the monies |
| | |contributed |
|---------------------+------------+-------------------------|
|CA Firefighters' |$157,166 |1 Group: California Fire |
|Memorial Fund | |Foundation |
|---------------------+------------+-------------------------|
|CA Fund for Senior |$308,763 |1 Group: California |
|Citizens | |Senior Legislature |
|---------------------+------------+-------------------------|
|CA Peace Officer |$137,782 |1 Group: California |
|Memorial Foundation | |Peace Officer Memorial |
AB 233 -- 6/29/11 -- Page 3
|Fund | |Commission |
|---------------------+------------+-------------------------|
|CA Police Activities |$69,431 |The state CALPAL and |
|League (CALPAL) Fund | |county CALPAL chapters |
|---------------------+------------+-------------------------|
|CA Sea Otter Fund |$359,699 |Department of Fish and |
| | |Game, and as many that |
| | |apply for grants and |
| | |contracts provided for |
| | |by 50% of the monies |
| | |contributed. |
|---------------------+------------+-------------------------|
|CA Seniors Special |$53,813 |The first $80K to the |
|Fund | |Area Agency on Aging |
| | |Advisory Council of |
| | |California and the rest |
| | |to as many area agencies |
| | |that the California |
| | |Department of Aging |
| | |allocates available |
| | |contributed monies to. |
|---------------------+------------+-------------------------|
|CA Veterans Homes |$211,089 |The number of |
|Fund | |established veteran's |
| | |homes (I think 6 or 7). |
|---------------------+------------+-------------------------|
|Child Victims of |Initial Tax |As many counseling and |
|Human Trafficking |Return 2011 |prevention centers that |
|Fund | |apply and receive grants |
| | |provided from monies |
| | |contributed. |
|---------------------+------------+-------------------------|
|Emergency Food for |$598,157 |1 group: Department of |
|Families Fund | |social services for the |
| | |Emergency Food |
| | |Assistance Program. |
|---------------------+------------+-------------------------|
|Municipal Shelter |Initial tax |As many shelters as |
|Spay-Neuter Fund |Return 2011 |apply and receive grants |
| | |provided from the monies |
| | |contributed. |
|---------------------+------------+-------------------------|
|Rare & Endangered |$605,220 |1 group: Department of |
|Species Preservation | |Fish and Game endangered |
|Program | |conservation programs. |
|---------------------+------------+-------------------------|
AB 233 -- 6/29/11 -- Page 4
|Safely Surrendered |$184,866 |1 group: Department of |
|Baby Fund | |Social Services for |
| | |Safely Surrender Baby |
| | |Law awareness programs. |
|---------------------+------------+-------------------------|
|State Children's |$409,043 |1 group: Department of |
|Trust for the | |Social Services for |
|Prevention of Child | |prevention and |
|Abuse | |intervention programs. |
------------------------------------------------------------
Proposed Law
Assembly Bill 233 creates the California YMCA Youth and
Government Fund. The fund will be added to the personal
income tax form when another VCF is removed and remain on
the form until January 1st of the 5th taxable year
following its first appearance or on January 1st of an
earlier year if the FTB estimates the fund will not meet
the annually required minimum contribution amount. All
monies transferred to the fund are allocated to the FTB and
Controller for reimbursement of their costs and the balance
goes to the State Department of Education for distribution
to the California YMCA Youth and Government Program (YMCA
Y&GP) for its ongoing activities on behalf of youth.
AB 233 stipulates that if the fund collects less than
$300,000 in donations, all available monies are distributed
to the YMCA Y&GP. If donations exceed $300,000, the
balance of the fund is distributed to provide annual grants
of $10,000 each to the African American Leaders for
Tomorrow Project, the Asian Pacific Youth Leadership
Project, and the Chicano Latino Youth Leadership Project.
The YMCA Y&GP Board of Directors may award additional
non-profit civic youth organizations a grant of up to
$10,000 each in order to operate civic education and mock
legislative programs. All remaining funds are distributed
to the YMCA Y&GP.
State Revenue Impact
The FTB estimates this bill will result in a revenue loss
of $15,000 each fiscal year the fund is in place.
AB 233 -- 6/29/11 -- Page 5
Comments
1. Purpose of the bill . The author states, "The
California YMCA Youth & Government Program is a statewide
youth educational program annually involving more than 2200
high school students in a yearlong "hands on" civic
experience. Since its inception 63 years ago, the program
has successfully used a variety of activities to encourage
high school youth become involved, responsible and
respected citizens. As part of the YMCA Y&GP, regional
student delegations discuss public policy issues facing the
state as well as ways to implement their solutions through
the legislative and judicial processes. Teen delegates
draft legislation, prepare issue briefs, select
governmental positions to role-play, attend statewide
training and election conferences and run for various
offices and leadership positions. The program concludes
with a Model Legislature each February at the State
Capitol.
Unfortunately, in recent years, costs to operate this
program and participant demand for financial assistance has
greatly increased making it difficult to maintain and
expand this important program for California youth. AB 233
would allow state taxpayers to voluntarily contribute to
the California YMCA Youth & Government Fund through a tax
check-off donation on their state tax return. Donations
would be used to help finance the YMCA Youth & Government
Program and its ongoing activities on behalf of youth.
Consistent with current efforts to support the California
Senior Legislature, this measure will allow California
taxpayers to empower young people through an important
program that motivates and inspires youth to become active
citizens in our state".
2. One isn't enough . The Committee on Governance &
Finance has expressed concerns over a single non-profit
entity receiving funds from a check off. As noted in the
background section of this analysis, check off funds that
are dedicated to a single entity are generally
quasi-government entities such as the police. AB 233
provides the YMCA with the first $300,000 from the check
off and then gives subsequent funds to three other groups;
given the recent returns on check offs, this bill focuses
AB 233 -- 6/29/11 -- Page 6
on one organization (the YMCA) and then specifically lays
out three others for the funds. In order to mitigate
concerns about a single non-profit entity receiving these
funds, the Committee may wish to consider amendments that
create a competitive grant program for "the youth
leadership and government fund" for non-profits throughout
the state that provide services for youth and government
programs..
3. Is there a better way ? Countless worthy causes may be
funded by tax check-offs. The current system remains
subjective and is limited to those organizations that can
convince the Legislature to include them on the form.
These check-offs give the state a role in collecting money
for charity. The Committee may wish to consider whether
the state should use the tax code to encourage
contributions to certain charitable organizations. The
Committee may further wish to consider a different tax
check-off system all together. For example, any group that
would like the opportunity for check off proceeds and any
group currently on the form could apply to the FTB and be
listed in the pages of the FTB tax booklet with an
associated number. The tax form could include 10 lines for
taxpayers to indicate the number from the form and then
those groups would receive the funds. For example, if the
YMCA was number 1234 in the booklet, the taxpayer would
indicate that he or she wanted $10 to go to "1234" on the
form. This way, the Legislature would no longer have to
choose groups for the form and all non-profits and
quasi-government organizations would be similarly situated
for a tax check off.
4. Rerun . This bill is similar to two bills that were
previously vetoed: AB 2017 (Hall, 2010) and SB 516
(DeSaulnier, 2010). The two bills were contingent on one
another's passage and established the California Youth
Leadership Fund to provide equal funding for the California
YMCA Youth and Government Program and the California Youth
Legislature. AB 2017 also provided grants to the
African-American Youth Leadership Program, the
Asian-Pacific Youth Leadership Project, and the
Chicano-Latino Youth Leadership Project if the amount of
monies received by the fund exceeded $250,000.
In his veto message of AB 2017 (Hall, 2010), the Governor
stated, "This bill is contingent on the enactment of Senate
AB 233 -- 6/29/11 -- Page 7
Bill 516, which I cannot support. I would ask that the
authors of these bills reconcile their efforts to support
greater youth involvement in public policy without creating
additional organizations when there are numerous
organizations and entities already dedicate to working with
youth from all backgrounds."
In his veto message of SB 516 (DeSaulnier, 2010), Governor
Schwarzenegger stated, "This bill is similar to a measure I
vetoed in 2008. I still encourage California youth to
engage in the public policy issues that directly impact
their lives such as education, employment, foster care,
homelessness, and more. However, as most parents and
adults can attest, I would also argue that youth do not
need statutory authorization to have their voices and
opinions heard. There are numerous organizations, entities
and communications in which youth can be engaged in our
legislative process."
AB 233 is similar to AB 2017 while SB 803 (DeSaulnier)
creates the California Youth Leadership Fund for the
California Youth Leadership Project which the bill creates
under the Department of Education to fund civic engagement
for the state's youth. SB 803 is set for hearing in the
Assembly Revenue & Taxation Committee on July 2nd.
5. Where does the money go ? This bill gives broad
authority to the California YMCA Youth and Government Board
of Directors to develop criteria, evaluate applications,
and award and administer grants to eligible organizations.
The funds will be used to support program participation by
underserved students and for direct program-related
expenses. The Committee may wish to amend AB 233 so that
(1) the State Board of Education has more responsibilities
to determine the uses for the funds and (2) ensure funds
are not used for administrative costs.
6. Taxpayer Funds . The opposition expressed concerns that
this bill will result in codifying a program sponsored by
the YMCA, a religious-based organization and using
publicly-funded tax returns to facilitate contributions. A
Legislative Counsel opinion that specifically states that
this bill does not violate the separation of church and
state because the money used is from individual tax payers.
7. Technical amendment . Currently, there is space on the
AB 233 -- 6/29/11 -- Page 8
tax return for additional check-offs. However, as written,
if this bill is enacted the California YMCA Youth and
Government Fund would be added when another VCF is removed.
The Committee staff suggests the following amendments to
expedite the addition of the VCF to the tax return in the
event the bill is enacted:
On page 3, line 7, delete "not".
On page 3, line 7, replace "until" with "when".
On page 3, line 8, after "removed" add "or as soon as
space is available".
Assembly Actions
Assembly Revenue and Taxation Committee: 9-0
Assembly Appropriations Committee:17-0
Assembly Floor: 78-1
Support and Opposition (7/2/12)
Support : American Federation of State, County and
Municipal Employees, AFL-CIO; California State Alliance of
YMCAs; California YMCA Youth & Government; Channel Islands
YMCA; Corona Norco Family YMCA; Envision Schools; Magdalena
Ecke Family YMCA; Miller Family YMCA; Montecito Family
YMCA; Santa Monica Family YMCA; Simi Valley Family YMCA;
South Valley YMCA Family Delegation; YMCA of Burbank
California; YMCA of Orange County; YMCA of Superior
California; fifteen members of the Magdalena Ecke Family
YMCA Youth and Government Delegation; thirty-two
individuals.
Opposition : Unknown.