BILL ANALYSIS                                                                                                                                                                                                    Ó




                     SENATE GOVERNANCE & FINANCE COMMITTEE
                            Senator Lois Wolk, Chair
          

          BILL NO:  AB 764                      HEARING:  6/29/11
          AUTHOR:  Swanson                      FISCAL:  Yes
          VERSION: 5/27/11                      TAX LEVY: No
          CONSULTANT:  Faulkner                 

             CHILD VICTIMS OF HUMAN TRAFFICKING VOLUNTARY CHECK OFF
                                        

           Creates the Child Victims of Human Trafficking 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          repealed or fail to meet their minimum contribution amount.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          contribution amount, that fund is repealed effective for 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. 







          AB 764 -- 5/27/11 -- Page 2



                                   Proposed Law  

          Assembly Bill 764 creates the Child Victims of Human 
          Trafficking Fund.  The California Emergency Management 
          Agency will administer the fund monies granted to 
          community-based organizations that agree to serve minor 
          victims of human trafficking.  

          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. 
          

                               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, "Nearly 
          300,000 American children and youth are estimated to be at 
          risk of child sexual exploitation each year.  There are 
          many organizations throughout the state that help to 
          provide support services to young men and woman who have 
          been victimized by sexual exploitation.  This bill will 
          facilitate these important treatment services by providing 
          a funding mechanism to support organizations that serve 
          sexually exploited minors.  AB 764 authorizes individual 
          taxpayers to contribute amounts in excess of their tax 
          liability to the Child Victims of Human Trafficking Fund to 
          be allocated to community-based organizations that serve 
          minor victims of human trafficking."

          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.   2011 check-offs  .  Following is a list of 2011 





          AB 764 -- 5/27/11 -- Page 3



          check-offs and contribution amounts received in 2010:

           ------------------------------------------------------------- 
          |Alzheimer's Disease/Related   |$426,417                      |
          |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 |                              |
           ------------------------------------------------------------- 

          4.   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 





          AB 764 -- 5/27/11 -- Page 4



          omnibus VCF bill could prove time and cost effective.  

          In addition to this bill, the following bills have been 
          introduced this year:

          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 will 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 564 (Smyth) reestablishes the Municipal Shelter 
          Spay-Neuter Fund and encourages all persons who prepare 
          state income tax returns to inform their clients in writing 
          that they may contribute to any voluntary contribution 
          check-off on the return.  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.  

          5.   Technical amendments  .  Currently, there is space on the 
          tax return for additional check-offs.  However, as written, 
          if this bill is enacted the Child Victims of Human 
          Trafficking 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 





          AB 764 -- 5/27/11 -- Page 5



          of the VCF to the tax return in the event this bill is 
          enacted:
               
               On page 2, line 29, after "return" add "or as soon as 
          space is available".

          Additionally, on page 3, line 23, strike "Victim-Witness 
          Assistance Fund" and replace it with "Child Victims of 
          Human Trafficking Fund".


                                 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  :  County of Alameda (Sponsor); District Attorney of 
          Alameda County (Sponsor); American Federation of State, 
          County and Municipal Employees, AFL-CIO; California 
          Catholic Conference; California Police Chiefs Association; 
          Children's Advocacy Institute; Junior Leagues of California 
          State Public Affairs Committee; Kriss Worthington, 
          Councilmember, City of Berkeley, District 7.

           Opposition  :  Unknown.