BILL ANALYSIS Ó
AB 511
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Date of Hearing: April 1, 2013
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Raul Bocanegra, Chair
AB 511 (Pan) - As Amended: March 18, 2013
Majority vote. Fiscal committee.
SUBJECT : Income taxes: voluntary contributions: American Red
Cross, California Chapters Fund.
SUMMARY : Establishes the American Red Cross, California
Chapters Fund (Fund) and allows taxpayers to contribute their
own funds to the Fund on through a designation on the state
personal income tax (PIT) return. Specifically, this bill :
1)Establishes the Fund in the State Treasury.
2)Provides that all moneys transferred to the Fund, upon
appropriation by the Legislature, shall be allocated as
follows:
a) To the Franchise Tax Board (FTB) and the State
Controller for reimbursement of all costs incurred in
administering the Fund; and,
b) To the American Red Cross, California Chapters, to plan
to implement programs to assist in disaster preparedness
and response throughout the state.
3)Provides for the Fund provisions' automatic repeal on either
January 1 of the fifth taxable year following the Fund's first
appearance on the state PIT return or on January 1 of an
earlier year, if the FTB estimates that the annual
contribution amount will be less than $250,000, or an adjusted
amount for subsequent years.
EXISTING LAW :
1)Allows taxpayers to designate on their PIT returns a
contribution to any of 18 voluntary contribution funds (VCFs).
2)Provides a specific sunset date for each VCF, except for the
California Seniors Special Fund.
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3)Provides that each VCF must meet a minimum annual contribution
amount to remain in effect, except for the California Seniors
Special Fund, the California Firefighters' Memorial Fund, and
the California Peace Officer Memorial Foundation Fund.
FISCAL EFFECT : The FTB staff estimates annual revenue losses of
roughly $10,000 resulting from itemized charitable deductions
beginning in fiscal year 2014-15.
COMMENTS :
1)The author has provided the following statement in support of
this bill:
This bill is necessary [because] the American Red Cross is
typically the Non-Governmental Organization first on the
scene of a declared disaster providing relief and immediate
assistance to victims.
The American Red Cross is also usually the last to leave in
the aftermath, as the organization and its volunteers
strive to assist the families and businesses ravaged by the
disaster.
Californians unfortunately experience wild fires,
earthquakes, flooding and other natural disasters on a
too-frequent basis. However, home fires are the biggest
disaster threat to people in this state. This bill would
ensure that adequate funds are available when the American
Red Cross is called to respond to a declared disaster.
2)Proponents state:
Californians unfortunately experience wild fires,
earthquakes, flooding and other natural disasters on a
too-frequent basis. However, home fires are the biggest
disaster threat to people in this state. The [American Red
Cross] responded to 2,728 local disaster incidents in
California during 2012. A total of 6,342 California
families received disaster assistance following local
disasters in 2012. California is fortunate to have 32
[c]hapters within our state; in 2012, we had a total of
27,602 California-based volunteers and 872 California-based
employees.
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States such as New Jersey, Colorado, Idaho and Louisiana
have each enacted laws in recent years encouraging
voluntary contributions for the American Red Cross on their
respective income tax forms. Other states are also
pursuing measures of this type.
3)The FTB notes the following implementation concern in its
staff analysis of this bill:
This bill would allow the Legislature to allocate funds
directly to a non-governmental entity. Typically voluntary
contribution fund monies are allocated to a state agency
for purposes of overseeing the expenditure of the funds.
Without an allocation to a state agency, there may be
obstacles that prevent the funds from reaching the
designated recipient. The author may wish to add language
that would allocate the funds to a state agency that would
be responsible for administering the funds for emergency
assistance and disaster relief, such as the California
Emergency Management Agency.
4)Committee Staff Comments:
a) So Many Causes, So Little Space : There are countless
worthy causes that would benefit from the inclusion of a
new 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 retaining
VCFs on the form is subjective and essentially rewards
causes whose proponents can convince the Legislature to
include their fund on the form. Specifically, non-profits
expend their limited time, money, and energy lobbying to
add their chosen VCF to the form. At the same time, often
taxpayers could donate to such causes directly, rather than
through a VCF. Thus, the current VCF system arguably
encourages well-connected organizations to expend limited
resources to create a VCF to get funding their cause may
have gotten anyway. Moreover, such organizations could put
those limited resources to better use advancing the causes
for which they exist. Lastly, the current VCF system
consumes scarce legislative attention and political capital
administering a system that is questionably useful.
b) Suggested Amendments : Committee staff suggests amending
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this bill to:
i) First allocate Fund moneys to an appropriate state
agency to ensure effective oversight, such as the
California Emergency Management Agency;
ii) Limit the degree to which Fund moneys may be used by
the Red Cross for administrative expenses; and,
iii) Clarify that Fund moneys may be used for emergency
preparedness and disaster relief in California.
c) Related Legislation : 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 394 (Yamada) would extend the repeal date of the
California Alzheimer's Disease and Related Disorders
Research Fund from January 1, 2015, to December 1, 2020.
AB 394 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.
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REGISTERED SUPPORT / OPPOSITION :
Support
The American Red Cross
Opposition
None on file
Analysis Prepared by : Edward Beeby & M. David Ruff / REV. &
TAX. / (916) 319-2098