BILL ANALYSIS Ó
AB 564
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Date of Hearing: April 4, 2011
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Henry T. Perea, Chair
AB 564 (Smyth) - As Introduced: February 16, 2011
Majority vote. Fiscal committee.
SUBJECT : Income taxes: voluntary contributions: Municipal
Shelter Spay-Neuter Fund
SUMMARY : Reauthorizes the addition of the Municipal Shelter
Spay-Neuter Fund (Fund) checkoff to the personal income tax
(PIT) form upon the removal of another voluntary contribution
fund (VCF) from the form. Specifically, this bill :
1)Establishes the Fund in the State Treasury.
2)Provides that all moneys transferred to the Fund, upon
appropriation by the Legislature, shall be allocated as
follows:
a) To the Franchise Tax Board (FTB) and the State
Controller for reimbursement of all costs incurred in
administering the checkoff; and,
b) To the California Department of Food and Agriculture
(CDFA) for distribution of grants to "eligible municipal
shelters."
3)Defines an "eligible municipal shelter" as a city or county
animal control agency or shelter that is current on its
reporting requirements to the State Department of Public
Health (DPH), Veterinary Public Health Section, and offers
spay and neuter services for dogs and cats owned by individual
members of the public.
4)Provides that grants shall be made available to provide spay
and neuter services and programs for dogs and cats.
5)Provides that no grant shall be made, and no grant funds shall
be used, to spay or neuter any animal that is impounded by an
eligible municipal shelter. Further, if CDFA determines that
an eligible municipal shelter has misused its grant funds,
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that shelter shall no longer be eligible for grants.
6)Provides that CDFA shall do all of the following:
a) Accept grant applications from eligible municipal
shelters;
b) Process and approve, or reject all applications on a
first-come-first-served basis, in the following manner:
i) Eligible municipal shelters processing fewer than
5,000 dogs and cats each year shall receive up to $7,500;
ii) Eligible municipal shelters processing between 5,000
and 25,000 dogs and cats each year shall receive up to
$15,000; and,
iii) Eligible municipal shelters processing more than
25,000 dogs and cats shall receive up to $22,500.
c) Make applications available to eligible municipal
shelters on the first day of the second calendar year after
the Fund first appears on the form.
7)Provides that any grants distributed create an additional
funding source for spay and neuter services for eligible
municipal shelters and shall be used to supplement, not
supplant, other funding sources.
8)Requires DPH, upon the written request of CDFA, to make
available information regarding whether a city or county
animal control agency or shelter is current on its reporting
requirements.
9)Provides for the VCF's automatic repeal on either January 1 of
the fifth taxable year following the VCF's first appearance on
the PIT 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 taxable
years.
10)Requires income tax preparers to inform taxpayers of all
existing VCFs to which contributions may be made.
EXISTING LAW :
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1)Allows taxpayers to designate on their PIT returns a
contribution to any of 15 VCFs.
2)Provides a specific sunset date for each VCF, except for the
California Seniors Special Fund.
3)Provides that each VCF must meet a minimum annual contribution
amount to remain in effect, except for the California Seniors
Special Fund, the California Firefighters' Memorial Fund, and
the California Peace Officer Memorial Foundation Fund.
FISCAL EFFECT : The FTB estimates revenue losses, resulting from
contribution deductions, to be around $20,000 annually.
COMMENTS :
1)The author has provided the following statement in support of
this bill:
Voluntary spay and neuter programs hosted by shelters
throughout the state are crucial to limiting the number of
unwanted and abandoned pets. Sheltering pets is a huge
financial burden to local governments, costing them an
estimated quarter of a billion dollars every year.
Unfortunately, shelters struggle to financially meet
current needs. By placing the Municipal Shelter
Spay-Neuter Fund on tax forms, Californians will be given
an opportunity to support the needs of shelters by making
voluntary contributions to this new fund. In addition, all
voluntary contribution funds currently listed on the tax
form will benefit from the provision in this bill that will
require tax preparers to notify clients of the opportunity
to donate to funds listed on the tax form.
2)The Humane Society of the United States (Humane Society) is
sponsoring this bill. The Humane Society notes:
During 2009 and 2010 when the Municipal Spay/Neuter Fund
(established by enactment of AB 2291 in 2008) appeared on
personal income tax forms, more than $400,000 was collected
from roughly 40,000 tax filers. Unfortunately, the
economic downturn conspired against the new and fledgling
fund - causing it to fall short of the required $250,000
minimum contribution requirement in its second year. At a
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time when local animal protection agencies - non-profit and
public - are struggling to meet operational obligations,
preventive spay/neuter services like those funded through
voluntary contribution funds are essential. We are
committed to helping promote the fund to taxpayers to help
ensure future thresholds are met.
3)Proponents state:
California's economic downturn has resulted in a dramatic
influx of animals into local animal shelters. In 2009 more
than 830,000 dogs and cats entered animal shelters. The
demand for care far outweighs the resources and staff
available to provide this care. Accordingly, the
unfortunate reality of this situation is that many
sheltered animals are euthanized instead of being placed in
loving homes.
4)Committee Staff Comments:
a) So Many Causes, So Little Space : There are countless
worthy causes that would benefit from the inclusion of a
new VCF on the state's income tax returns. At the same
time, space on the returns is limited. Thus, it could be
argued that the current system for adding VCFs to the form
is subjective and essentially rewards organizations that
can convince the Legislature to include their fund on the
form.
b) Legislative History : AB 2291 (Mendoza), Chapter 328,
Statutes of 2008, authorized the addition of an identical
VCF with the same name. This VCF appeared on the 2008 and
2009 tax returns in calendar years 2009 and 2010
respectively. The prior VCF received $210,029 in 2009 and
$194,462 in 2010. In 2010, the VCF needed to meet a
minimum contribution threshold of $250,000 but failed to do
so, and as a result, the VCF ceased to be operative.
c) VCF Policy : This Committee's VCF policy provides that,
"All proponents seeking authorization for a new or
reauthorized checkoff shall provide information justifying
their expectation that the checkoff will meet its
contribution minimum." Given that an identically named VCF
failed to meet its minimum contribution threshold only a
few years ago, it is an open question whether this Fund
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will fare any better. The Humane Society, which is
sponsoring this bill, states that "We are committed to
helping promote the fund to taxpayers to help ensure future
thresholds are met." Nevertheless, Committee staff
questions the precedent of simply re-establishing past VCFs
when they fail to garner sufficient support to remain on
the form.
d) Notification Requirement : In addition to its standard
VCF provisions, this bill would also require income tax
preparers to inform clients of all existing VCFs to which
contributions can be made. No penalties are imposed for
noncompliance however. Thus, while this provision
establishes an affirmative duty on the part of tax
preparers, it would operate in a more advisory fashion.
Committee staff questions whether this provision is
necessary, given that existing law already contains intent
language, in Business and Professions Code Section 22252.5,
encouraging "all persons who prepare state income tax
returns, including tax preparers, to inform their clients
in writing . . . that they may make a contribution to any
ÝVCF] if they so choose."
e) Related Legislation : The following related bills have
been introduced in the current Legislative Session:
i) AB 233 (Hall) would add the California YMCA Youth
and Government Fund to the form;
ii) AB 764 (Swanson) would add the Victim-Witness
Assistance Fund to the form; and,
iii) AB 971 (Monning) would extend the current repeal
date for the current California Sea Otter Fund.
f) Late Breaking News : The author has recently indicated
his desire to take amendments in Committee to do the
following:
i) Delete the bill's notification provisions; and,
ii) Replace these provisions with legislative intent
language encouraging tax preparers to inform their
clients in writing that they may make a contribution to
any VCF on the state income tax return.
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REGISTERED SUPPORT / OPPOSITION :
Support
Humane Society of the United States (sponsor)
Laborers' International Union of North America Locals 777 and
792
1 individual
Opposition
None on file
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098