BILL ANALYSIS                                                                                                                                                                                                    Ó




                     SENATE GOVERNANCE & FINANCE COMMITTEE
                            Senator Lois Wolk, Chair
          

          BILL NO:  AB 971                      HEARING:  6/29/11
          AUTHOR:  Monning                      FISCAL:  Yes
          VERSION: 4/25/11                      TAX LEVY: No
          CONSULTANT:  Faulkner                 

                CALIFORNIA SEA OTTER VOLUNTARY CONTRIBUTION FUND
          

          Reenacts the California Sea Otter check-off for five years.


                           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          repealed or fail to meet their minimum contribution amount.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          contribution amount, that fund is repealed effective for 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 California Sea Otter Fund first appeared on the 2006 
          personal income tax return and was automatically repealed 




          AB 971 -- 4/25/11 -- Page 2



          on January 1, 2011 pursuant to the original legislation (AB 
          2485, Jones, 2006).  To date, the fund has raised over $1.3 
          million and additional contributions continue to be 
          received with 2010 returns.



                                         
                                  Proposed Law  

          Assembly Bill 971 reenacts the California Sea Otter Fund 
          that was repealed on January 1, 2011.  The check-off will 
          be repealed on January 1, 2016 or on January 1st of an 
          earlier year if the FTB estimates the fund will not meet 
          the annually specified minimum contribution amount.   The 
          2011 minimum contribution amount is $260,890.   
          
          AB 971 requires money into the fund, upon appropriation by 
          the Legislature, be allocated to the Department of Fish and 
          Game for the purposes of establishing a sea otter fund and 
          to the California Coastal Conservancy for competitive 
          grants and contracts for research, projects, and programs 
          related to the Federal Sea Otter Recovery Plan or improving 
          the nearshore ocean ecosystem. 
          

                               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.  


                                     Comments  

          1.   Purpose of the bill  .  The author states, "The 
          California Sea Otter Fund supports researchers and managers 
          in their efforts to study and protect the threatened 
          population of sea otters in California, which were 
          decimated by the early 1900s.  Today, fewer than 3,000 sea 
          otters exist along the state's coastline - one-fifth of the 
          historic population - and we do not yet know why the 
          population is recovering so slowly.  The California Sea 
          Otter Fund is a primary source of funding for sea otter 
          field research.

          To date, the California Sea Otter Fund has supported the 





          AB 971 -- 4/25/11 -- Page 3



          advancement of a long-term study to identify impacts to sea 
          otter health, including chemical and pathogen pollution 
          that is prominent off the developed areas of the California 
          coast.  Findings from this study will help inform 
          government agencies, scientists, and other sea otter 
          supporters on how best to protect the sea otter and the 
          health of our coast."

          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 
          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                       |
          |------------------------------+------------------------------|





          AB 971 -- 4/25/11 -- Page 4



          |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 
          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 





          AB 971 -- 4/25/11 -- Page 5



          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 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.  


                                 Assembly Actions
           
          Assembly Revenue and Taxation Committee  6-0
          Assembly Appropriations Committee:17-0
          Assembly Floor                72-3


                         Support and Opposition  (6/23/11)

           Support  :  Defenders of Wildlife (Co-sponsor); Monterey Bay 
          Aquarium (Co-sponsor); Aquarium of the Pacific; Cal Coast; 
          California Coastkeeper Alliance; Environmental Defense 
          Fund; Friends of the Sea Otter; Heal the Bay; NRDC; Oceana; 
          Paw PAC; Planning and Conservation League; Robert Down 
          Elementary School Fifth Graders in Pacific Grove, 
          California; Save Our Shores; Seventh Generation Advisors; 
          Sierra Club California; Temple Beth El Second Graders in 
          Aptos, California; The Otter Project; 
          WILDCOAST/COASTASALVAJE; two individuals.    

           Opposition  :  Unknown.