BILL ANALYSIS Ó SB 583 Page 1 Date of Hearing: July 6, 2011 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair SB 583 (Vargas) - As Amended: May 11, 2011 Policy Committee: Revenue and Taxation Vote: 7-0 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill reauthorizes the ALS/Lou Gehrig's Disease Research Fund check-off on the personal income tax form upon the removal of another voluntary contribution fund from the form. Specifically, this bill: 1)Re-establishes the research fund in the State Treasury and provides that all money transferred to the fund, upon appropriation by the Legislature, shall be allocated to the: a) Franchise Tax Board (FTB) and the State Controller for reimbursement of all costs incurred in administering the check-off. b) State Department of Public Health, for allocation to the Amyotrophic Lateral Sclerosis (ALS) Association, to provide research grants to develop and advance the understanding, techniques and modalities effective in the prevention, treatment and cure of ALS. 1)Specifies that moneys raised by this check-off shall only be used to provide grants and may not be used by the ALS Association for administrative purposes or for any other purpose relating to its own operations. 2)Provides for the automatic repeal of the check-off on January 1, 2016, or on an earlier date if the check-off fails to meet a minimum contribution amount initially set at $250,000 and adjusted for inflation thereafter. FISCAL EFFECT SB 583 Page 2 FTB estimates this bill will cost the state about $20,000 per year. This estimate assumes the check-off is added in the 2012-13 fiscal year, donations meet the average amount for the other tax check-offs, and these donations are subsequently claimed as charitable deductions by taxpayers. Revenue losses would be similar in subsequent years, assuming there is no significant change in the amount of donations. COMMENTS 1)Purpose . ALS, commonly known as Lou Gehrig's disease, is a degenerative disease of the motor nerves that causes progressive weakness of all voluntary muscles. People with ALS become unable to move, swallow, speak, and breathe without assistance. This is a fatal disease that kills patients usually within two to five years of diagnosis. It has been almost 150 years since ALS was identified by the scientific community and since that time, little has been accomplished in terms of treatment. 2)Voluntary Contribution Funds. California taxpayers can make voluntary contributions to any of 15 funds listed on the state personal income tax return. The contributions are in addition to tax liabilities so they do not directly reduce the amount of state taxes. As charitable contributions, the taxpayer may deduct the amount of the check-off on the subsequent year's income tax return. These voluntary contributions support various purposes, including cancer research, endangered species preservation and emergency food assistance. Contributions have historically ranged from $300,000 to $800,000 per year. Except for the California Seniors Special Fund, all have sunset dates, and most must meet a minimum annual contribution to remain on the return. 3)Second time around . The ALS check-off was on the 2008 and 2009 income tax returns. The annual contributions for calendar year 2009 (when most people were filing 2008 returns) was $220,041 and for calendar year 2010 (for 2009 returns) was $114,051. 2009 was the last year the check-off appeared on the income tax return because the FTB estimated that the fund would not meet the required $250,000 minimum contribution amount for the 2010 calendar year. By law, the provision creating the check-off was repealed effective January 1, 2010. SB 583 Page 3 4)Related legislation . The following related bills address personal income tax check-offs and have been introduced in the current legislative session: a) AB 233 (Hall) would authorize the addition of the California YMCA Youth and Government Fund check-off to the personal income tax form upon the removal of another voluntary contribution fund from the form. b) AB 564 (Smyth) would, among other things, add the Municipal Shelter Spay-Neuter Fund to the form. c) AB 764 (Swanson) would add the Child Victim of Human Trafficking Fund to the form. d) SB 164 (Simitian) would extend the repeal dates of the State Children's Trust Fund for the Prevention of Child Abuse and the Rare and Endangered Species Preservation Program to January 1, 2018. 5)Previous legislation . SB 1502 (Steinberg, Stats. 2008, Ch. 354) added the Amyotrophic Lateral Sclerosis/Lou Gehrig's Disease Research Fund to the personal income tax return as a voluntary contribution fund. Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081