BILL ANALYSIS Ó
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 564 HEARING: 6/29/11
AUTHOR: Smyth FISCAL: Yes
VERSION: 4/6/11 TAX LEVY: No
CONSULTANT: Faulkner
MUNICIPAL SHELTER SPAY-NEUTER CHECK OFF
Reestablishes the Municipal Shelter Spay-Neuter Fund
check-off.
Background and Existing Law
Existing state law allows taxpayers to contribute money to
one or more of 15 voluntary contribution funds (VCFs) 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repealed or fail to meet their minimum contribution amount.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that fund is repealed effective for taxable years beginning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.
The Municipal Shelter Spay-Neuter Fund first appeared on
the 2008 personal income tax return but was removed from
AB 564 -- 4/6/11 -- Page 2
the 2010 return for failing to meet its minimum
contribution requirement amount of $250,000 in the second
year of its existence. Contributions of $210,029 and
$194,462 were made to the fund in calendar years 2009 and
2010, respectively. The fund's original repeal date was
January 1, 2013.
Proposed Law
Assembly Bill 564 reestablishes the Municipal Shelter
Spay-Neuter Fund. The fund will be added to the tax form
when another VCF is removed and shall remain on the form
for five years unless it is repealed earlier for failing to
meet the minimum contribution amount.
AB 564 defines "eligible municipal shelter" and authorizes
the Department of Food and Agriculture to distribute grants
to eligible municipal shelters for the purposes of
providing low cost or free spay-neuter services and
programs for dogs and cats owned by individual members of
the public. The grants are on a first-come-first-served
basis and allocated based on the number of cats and dogs
the eligible municipal shelter processes each year. The
grant funds cannot be used to spay or neuter any animal
that is impounded.
AB 564 also encourages all persons who prepare state income
tax returns to inform their clients, in writing prior to
completion of the return, that they may make a contribution
to any voluntary contribution check-off on the return.
State Revenue Impact
The FTB estimates this bill will result in a revenue loss
of $20,000 each fiscal year the Fund is in place.
Comments
1. Purpose of the bill . The author states, "Voluntary
spay and neuter programs hosted by shelters throughout the
state are crucial to limiting the number of unwanted and
abandoned pets. More than 830,000 dogs and cats entered
animal shelters in California in 2009. The staggering
AB 564 -- 4/6/11 -- Page 3
amount of animals in need of support from California
shelters places a significant financial burden on local
facilities, costing them an estimated quarter of a billion
dollars annually. Many municipally-run shelters rely on
donations to support program including voluntary spay and
neuter efforts. By placing the Municipal Shelter
Spay-Neuter Fund on the tax form, Californians will be
given an opportunity to support the needs of shelters by
making voluntary contributions to this new fund."
2. Many worthy causes . 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.
3. Rerun . This fund recently appeared on the return but
was repealed for failing to meet its minimum contribution
requirement. Should the fund be given a second chance so
soon after it failed? The Committee may wish to consider
the precedent of reestablishing past VCFs that have failed
to garner sufficient support.
4. Public vs. private . The State Humane Association of
California reports that many public shelters contract with
private shelters for spay-neuter services. For example,
the East Bay SPCA in Oakland performs 10,500 spay-neuter
surgeries annually, which includes surgeries for Oakland
and Alameda. They charge $100 for dogs and $60 for cats.
Rescue groups and municipal agencies receive a further
discount. The East Bay SPCA also provides low-income and
free spay-neuter services. All pit bulls and pit-bull
mixes are free. Only approximately 30% of the surgeries
are full price. If the Committee wishes to reestablish
this fund, the Committee may wish to consider including
private shelters that perform a certain amount of
spay-neuter surgeries for an eligible municipal shelter.
5. 2011 check-offs . Following is a list of 2011
check-offs and contribution amounts received in 2010:
-------------------------------------------------------------
|Alzheimer's Disease/Related |$426,417 |
AB 564 -- 4/6/11 -- Page 4
|Disorders Fund | |
|------------------------------+------------------------------|
|Arts Council Fund |Initial Tax Return 2010 |
|------------------------------+------------------------------|
|CA Breast Cancer Research |$519,728 |
|Fund | |
|------------------------------+------------------------------|
|CA Cancer Research Fund |$275,587 |
|------------------------------+------------------------------|
|CA Firefighters' Memorial |$207,455 |
|Fund | |
|------------------------------+------------------------------|
|CA Fund for Senior Citizens |$296,144 |
|------------------------------+------------------------------|
|CA Peace Officer Memorial |$135,250 |
|Foundation Fund | |
|------------------------------+------------------------------|
|CA Police Activities League |Initial Tax Return 2010 |
|(CALPAL) Fund | |
|------------------------------+------------------------------|
|CA Sea Otter Fund |$263,543 |
|------------------------------+------------------------------|
|CA Seniors Special Fund |$59,192 |
|------------------------------+------------------------------|
|CA Veterans Homes Fund |Initial Tax Return 2010 |
|------------------------------+------------------------------|
|Emergency Food for Families |$487,333 |
|Fund | |
|------------------------------+------------------------------|
|Rare & Endangered Species |$578,215 |
|Preservation Program | |
|------------------------------+------------------------------|
|Safely Surrendered Baby Fund |Initial Tax Return 2010 |
|------------------------------+------------------------------|
|State Children's Trust for |$448,081 |
|the Prevention of Child Abuse | |
-------------------------------------------------------------
6. Can we all get along ? There are currently eight VCF
bills making their way through the Legislature. With an
estimated cost of $16,000 per bill to go through the
legislative process, combining future VCF proposals into an
omnibus VCF bill could prove time and cost effective.
In addition to this bill, the following bills have been
introduced this year:
AB 564 -- 4/6/11 -- Page 5
SB 164 (Simitian) extends the repeal dates of both the
State Children's Trust Fund for the Prevention of Child
Abuse and the Rare and Endangered Species Preservation
Program from January 1, 2013 to January 1, 2018. The
Assembly Revenue and Taxation Committee with hear the bill
on June 27th.
SB 583 (Vargas) reestablishes the ALS/Lou Gehrig's Disease
Research Fund. The bill is in the Assembly Appropriations
Committee.
SB 803 (DeSaulnier) creates a VCF designation on the
personal income tax form for taxpayers to contribute to
California Youth Leadership Project. The bill remains in
the Senate Appropriations Committee.
SBX1 3 (LaMalfa) creates a VCF designation on the personal
income tax form, the Help Our State Fund, for taxpayers to
contribute to the General Fund. The Committee will hear
the bill on July 29th.
AB 233 (Hall) creates a VCF designation on the personal
income tax form for taxpayers to contribute to the
California YMCA Youth and Government Fund. The Committee
will hear the bill on July 29th.
AB 764 (Swanson) creates a VCF designation on the personal
income tax form for taxpayers to contribute to the Child
Victims of Human Trafficking Fund. The Committee will hear
the bill on July 29th.
AB 971 (Monning) reestablishes the California Sea Otter
Fund. The Committee will hear the bill on July 29th.
7. Technical amendment . Currently, there is space on the
tax return for additional check-offs. However, as written,
if this bill is enacted the Municipal Shelter Spay-Neuter
Fund would be added when another VCF is removed. The
Committee staff suggests the following language be included
in the bill to expedite the addition of the VCF to the tax
return in the event this bill is enacted:
On page 3, line 32, after "return" add "or as soon as
space is available".
AB 564 -- 4/6/11 -- Page 6
Assembly Actions
Assembly Revenue and Taxation Committee: 9-0
Assembly Appropriations Committee:17-0
Assembly Floor: 74-2
Support and Opposition (6/23/11)
Support : Concerned Dog Owners of California (Co-sponsor);
Humane Society of the United States (Co-sponsor); Laborers'
International Union of North America Locals 777 and 792;
Paw PAC; San Lorenzo Dog Training Club; Seventh Generation
Advisors; State Human Association of California (if
amended).
Opposition : Unknown.