BILL ANALYSIS Ó AB 394 Page 1 Date of Hearing: April 1, 2013 ASSEMBLY COMMITTEE ON REVENUE AND TAXATION Raul Bocanegra, Chair AB 394 (Yamada and Grove) - As Introduced: February 15, 2013 Majority vote. Fiscal committee. SUBJECT : Personal income tax: voluntary contributions: Alzheimer's disease SUMMARY : Extends the repeal date of the California Alzheimer's Disease and Related Disorders Research Fund (Fund) from January 1, 2015, to December 1, 2020. Specifically, this bill allows the Fund to remain on the state personal income tax return through the 2019 taxable year, subject to contributions meeting the annual minimum contribution amount. EXISTING LAW : 1)Allows taxpayers to contribute their own funds (and not tax liability) to any of the 18 voluntary contribution funds (VCFs) listed on the 2012 state personal income tax return. One such VCF is the Fund. 2)Provides that the Fund shall remain on the state personal income tax return until it sunsets or the Franchise Tax Board (FTB) projects the Fund will fail to meet its minimum annual contribution amount. The Fund's current sunset date is January 1, 2015, and the minimum contribution amount for the 2012 calendar year is $335,154. The minimum contribution amount adjusts annually for inflation, based on the percentage change in the California Consumer Price Index. 3)Provides that all money transferred to the Fund, upon appropriation by the Legislature, goes to the: a) FTB and the State Controller for reimbursement of all costs incurred in administering the Fund; and, AB 394 Page 2 b) Appropriate state department as established by the Secretary of California Health and Human Services in consultation with the Department of Aging. These funds are to be expended for the purpose of conducting research relating to the care, treatment, and the cure of Alzheimer's disease through contracts or grants. 4)Allows individual taxpayers to deduct charitable contributions for the taxable year in which the contribution was made. For example, in 2013 a taxpayer designates a contribution to the Fund on her 2012 tax return. The taxpayer may take an itemized deduction on her 2013 tax return, which she must file in 2014. FISCAL EFFECT : The FTB staff estimates annual revenue losses of roughly $10,000 resulting from itemized charitable deductions, beginning in the 2016-17 fiscal year. COMMENTS : 1)The author has provided the following statement in support of this bill: 588,208 Californians 55 and over [live] with Alzheimer's disease[,] which is one-tenth of the nation's Alzheimer's patients. Among California's baby boomers aged 65 and over, one in eight will develop Alzheimer's disease, and half of people 85 or older will have the disease. By 2030, this number will nearly double in California; rising to over 1.1 million. Alzheimer's disease is now the sixth leading cause of death in California and is the only leading cause of death that lacks a means of prevention or reversal. 2)Proponents State: According to our recently released Alzheimer's Association 2013 Alzheimer's Disease Facts and Figures, Alzheimer's disease is now the 5th leading cause of death in California, and is the only leading cause of death that does not have a means to prevent or reverse the progression AB 394 Page 3 of the disease. With an aging population, projections estimate the number of Californians living with Alzheimer's will grow to more than 660,000 by 2025, as increased age is the primary risk factor for developing the disease. It is therefore imperative that California continue to fund research that can slow or reverse the progression of this memory-robbing disease. General Fund support for Alzheimer's research was eliminated in 2009, when the Legislature reduced funding for the California Alzheimer's Disease Centers by 50%. Since it first appeared on the tax return in 1987, this fund has collected more than $11.3 million in donations and funded 122 research studies. By extending this tax check-off fund, we can ensure that funds are available to investigate the causes of and treatments for this disease. 3)Committee Staff Comments: a) So Many Causes, So Little Space : There are countless worthy causes that would benefit from the inclusion of a VCF on the state's income tax returns. At the same time, space on the returns is limited. Thus, it could be argued that the current system for adding and keeping VCFs on the form is subjective and essentially rewards causes whose proponents can convince the Legislature to include their fund on the form. b) Related Legislation : The following related bills were introduced in previous Legislative Sessions: i) 2009: AB 292 (Yamada) extended the Fund's sunset to January 1, 2015. ii) 2004: AB 1799 (Mullin) extended the Fund's sunset to January 1, 2010. iii) 1999: AB 160 (Alquist) extended the Fund's sunset to January 1, 2005. iv) 1996: SB 1447 (Mello) extended the Fund's sunset to January 1, 2000. AB 394 Page 4 The following related bills have been introduced in the current Legislative Session: i) AB 247 (Wagner) would extend the repeal date of the California Fund for Senior Citizens until December 1, 2020. AB 247 has been referred to this Committee. ii) AB 511 (Pan) would establish and allow taxpayers to make voluntary contributions to the American Red Cross, California Chapters Fund. AB 511 has been referred to this Committee. iii) AB 754 (Muratsuchi) would establish and allow taxpayers to make voluntary contributions to the California Beach and Coastal Enhancement Account. AB 754 has been referred to this Committee. iv) AB 1286 (Skinner) would suspend the annual adjustment of the minimum contribution amount threshold for the California Breast Cancer Research Fund. AB 1286 has been referred to this Committee. v) SB 116 (Liu) would extend the repeal date of the Emergency Food for Families Fund from January 1, 2014, to January 1, 2019. SB 116 has been referred to the Senate Committee on Governance and Finance. vi) SB 571 (Price) would establish and allow taxpayers to make voluntary contributions to the Arts for Kids Fund on their state personal income tax returns. SB 571 has been referred to the Senate Committee on Governance and Finance. REGISTERED SUPPORT / OPPOSITION : Support Alzheimer's Association (sponsor) California Assisted Living Association California Association of Area Agencies on Aging California Association for Health Services at Home AB 394 Page 5 Leading Age California Opposition None on file Analysis Prepared by : Edward Beeby and M. David Ruff/ REV. & TAX. / (916) 319-2098