BILL ANALYSIS Ó
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 583 HEARING: April 27,
2011
AUTHOR: Vargas FISCAL: Yes
VERSION: 2/17/11 TAX LEVY: No
CONSULTANT: Faulkner
VOLUNTARY CONTRIBUTIONS: ALS/LOU GEHRIG'S DISEASE RESEARCH
FUND
Repeals and reenacts provisions of the ALS/Lou Gehrig's
Disease Research Fund.
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.
Existing law allows the Franchise Tax Board (FTB) to design
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are either repealed or fail to meet their minimum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. Generally, the minimum contribution
amount is $250,000 annually. The minimum contribution
amounts are adjusted annually for inflation and typically
take effect in the fund's second year. The FTB must
determine, by September 1st of each year, 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contribution amount, that fund is repealed effective for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
SB 583 -- 02/17/11 -- Page 2
following calendar year.
The ALS/Lou Gehrig's Disease Research Fund first appeared
on the 2008 personal income tax return but was removed from
the 2010 return for failing to meet its minimum
contribution requirement amount of $250,000 in the second
year of its existence. Contributions of $220,401 and
$114,051 were made to the fund in calendar years 2009 and
2010, respectively. The fund's original repeal date was
January 1, 2013.
SB 583 -- 02/17/11 -- Page 3
Proposed Law
This bill extends the ALS/Lou Gehrig's Disease Research
Fund to January 1, 2016, reduces the minimum contribution
amount to $200,000, and increases the number of years, from
two to three, to meet the minimum contribution threshold.
The fund will be added to the tax return when another VCF
is removed.
State Revenue Impact
The FTB estimates this bill will result in a revenue loss
of $20,000 each fiscal year the ALS/Lou Gehrig's Disease
Research Fund is in place.
Comments
1. Purpose of the bill. The author states, "Amyotrophic
Lateral Sclerosis (ALS) is a progressive neurodegenerative
disease that affects motor neurons in the brain and the
spinal cord. It is fatal to all who are diagnosed with the
disease. Approximately every 90 minutes, someone is
diagnosed with ALS, and every 90 minutes someone else dies
from ALS. For unknown reasons, veterans are 50% more
likely to be diagnosed than the average population. Most
people who develop ALS are between the ages of 40 and 70,
with an average age in the mid-50s at the time of
diagnosis, without regard to race, residence or background.
Since ALS was identified by the scientific community nearly
150 years ago, little advancements have been made. There
is no known cause, no known prevention, no diagnostic test,
no long-term treatment, and no known cure. The need for
research is extraordinary. SB 583 creates an opportunity
to generate research dollars in the hopes of changing the
prospects of those diagnosed with the disease."
2. Many worthy causes. In the recent past, the Committee
has expressed concern that 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. The
Committee may wish to consider whether the state should use
the tax code to encourage contributions to certain
charitable organizations. In short, should the state have
a role in collecting money for charity?
SB 583 -- 02/17/11 -- Page 4
Additionally, this fund recently appeared on the return but
was repealed for failing to meet its minimum requirement in
the first year the requirement became effective. Will
reducing its requirements keep the fund afloat? Should the
fund be given a second chance? Is this fund receiving
special preference?
SB 583 -- 02/17/11 -- Page 5
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 |
|------------------------------+------------------------------|
|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 seven
VCF-related bills making their way through the Legislature.
With an estimated cost of $16,000 per bill to go through
SB 583 -- 02/17/11 -- Page 6
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 bill
was placed on suspense file in Senate Appropriations on
April 11th.
SB 803 (DeSaulnier) creates a VCF designation on the
personal income tax form for taxpayers to contribute to
California Youth Leadership Project. The bill is scheduled
to be heard in Committee on April 27th.
AB 152 (Fuentes), in original form, required that
contributions received under the Emergency Food for
Families Fund were used for the purchase, storage, and
transportation of food grown and produced in California.
The bill was amended on March 15th and language relating to
the Fund was struck.
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 bill was
referred to the Assembly Appropriations' suspense file on
April 6th.
AB 564 (Smyth) creates a VCF designation on the personal
income tax form for taxpayers to contribute to the
Municipal Shelter Spay-Neuter Fund. The bill passed the
Assembly Revenue and Taxation Committee on April 4th (9-0)
as amended. The amendments included striking the
requirement that a tax preparer inform the taxpayer of
existing voluntary contribution funds. The bill was
re-referred to Assembly Appropriations on April 7th.
AB 764 (Swanson) creates a VCF designation on the personal
income tax form for taxpayers to contribute to the
Victim-Witness Assistance Fund for community-based
organization that serve minor victims of human trafficking.
The bill passed the Assembly Revenue and Taxation
SB 583 -- 02/17/11 -- Page 7
Committee (9-0), as amended, on April 4th and was
re-referred to Assembly Appropriations.
AB 971 (Monning) extends the repeal date of the California
Sea Otter Fund by five years. The bill was set to be heard
in the Assembly Revenue and Taxation Committee on April 4th
but was cancelled at the author's request. The bill was
amended and re-referred to the Revenue and Taxation
Committee on April 5th.
5. Technical amendment. Currently, there is space on the
tax return for additional check-offs. However, as written,
if this bill is enacted the ALS/Lou Gehrig's Disease
Research 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 15, after "return" add "or as soon as
space is available on the tax return".
Support and Opposition (4/21/11)
Support : The California ALS Advocacy Committee; The
Pacific ALS Consortium; Orange County Chapter of the ALS
Association; Greater Sacramento Chapter of the ALS
Association; Lockton Insurance Brokers, LLC; Greater San
Diego Chapter of the ALS Association; ten letters from
citizens.
Opposition : Unknown.