BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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          |SENATE RULES COMMITTEE            |                        AB 511|
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                                    THIRD READING


          Bill No:  AB 511
          Author:   Pan (D)
          Amended:  6/19/13 in Senate
          Vote:     21


           SENATE GOVERNANCE & FINANCE COMMITTEE  :  7-0, 6/26/13
          AYES:  Wolk, Knight, Beall, DeSaulnier, Emmerson, Hernandez, Liu

           SENATE APPROPRIATIONS COMMITTEE  :  5-0, 8/12/13
          AYES:  De León, Gaines, Hill, Lara, Steinberg
          NO VOTE RECORDED:  Walters, Padilla

           ASSEMBLY FLOOR  :  76-0, 4/25/13 (Consent) - See last page for  
            vote


           SUBJECT  :    Income taxes:  voluntary contributions:  American  
          Red Cross,                                                   
          California

          SOURCE  :     California Chapters of the American Red Cross


           DIGEST :    This bill creates the "American Red Cross, California  
          Chapters Fund" and adds it to the state personal income tax  
          return as a voluntary contribution fund.  The Office of  
          Emergency Services will distribute the funds to the American Red  
          Cross, California Chapters for disaster relief in California.

           ANALYSIS  :    Existing law allows taxpayers to contribute to one  
          or more of 18 voluntary contribution funds, known as VCFs or  
          check-offs, by checking a box on their state income tax return.   
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          California law requires check-off contributions 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 in  
          the subsequent year.

          This bill creates the "American Red Cross, California Chapters  
          Fund" check-off on the personal income tax form, when space is  
          available, to support disaster relief efforts in California.   
          This bill maintains all existing requirements for the program,  
          including the annual reporting by September 1st of each year to  
          determine eligibility for the following year, and the $250,000  
          minimum contribution requirements, beginning in the second year,  
          with annual adjustment for inflation and an automatic repeal  
          after five years.

           Background
           
          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 by a sunset date, or  
          if they fail to meet a minimum contribution amount.  Minimum  
          contribution amounts are adjusted annually for inflation, with  
          specific exceptions.  For most VCFs, the minimum contribution  
          amount is $250,000, beginning 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 estimate whether  
          contributions to each fund meet that amount.  If the FTB  
          estimates that a fund will fail to meet its minimum contribution  
          amount, that fund is repealed for the following calendar year.

          The following check-offs do not have a minimum contribution  
          requirement:

          1.California Firefighters' Memorial Foundation Fund.
          2.California Peace Officer Memorial Foundation Fund.
          3.California Seniors Special Fund.

          Proceeds from tax check-offs are dedicated to a range of  
          programs.  The following list provides information on all the  

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          check-offs and how many groups are eligible to receive funding.   
          Some of the funds have been repealed under the terms of their  
          statutes.

            ---------------------------------------------------------------- 
           |Voluntary           |2012 Contribution    |Contribution         |
           |Contribution  Fund  |Totals               |Allotment            |
           |--------------------+---------------------+---------------------|
           |ALS/Lou Gehrig's    |$137,290             |As many as apply and |
           |Disease Research    |                     |receive grants       |
           |Fund                |                     |provided for by the  |
           |                    |                     |monies contributed.  |
           |--------------------+---------------------+---------------------|
           |Alzheimer's         |$466,485             |                     |
           |Disease/Related     |                     |                     |
           |Disorders Fund      |                     |                     |
           |--------------------+---------------------+---------------------|
           |                    |As many as contract  |                     |
           |                    |or receive grants    |                     |
           |                    |provided by the      |                     |
           |                    |monies contributed.  |                     |
           |--------------------+---------------------+---------------------|
           |Arts Council Fund   |$165,647             |As many as apply and |
           |                    |                     |receive grants       |
           |                    |                     |provided by the      |
           |                    |                     |monies contributed.  |
           |--------------------+---------------------+---------------------|
           |CA Breast Cancer    |$440,771             |As many as apply and |
           |Research Fund       |                     |receive grants       |
           |                    |                     |provided from the    |
           |                    |                     |monies contributed.  |
           |--------------------+---------------------+---------------------|
           |CA Cancer Research  |$432,355             |As many as apply and |
           |Fund                |                     |receive grants       |
           |                    |                     |provided from the    |
           |                    |                     |monies contributed.  |
           |--------------------+---------------------+---------------------|
           |CA Firefighters'    |$152,004             |1 Group: California  |
           |Memorial Fund       |                     |Fire Foundation.     |
           |--------------------+---------------------+---------------------|
           |CA Fund for Senior  |$272,742             |1 Group: California  |
           |Citizens            |                     |Senior Legislature.  |
           |--------------------+---------------------+---------------------|
           |CA Peace Officer    |$136,172             |1 Group:  California |

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           |Memorial Foundation |                     |Peace Officer        |
           |Fund                |                     |Memorial Commission. |
           |--------------------+---------------------+---------------------|
           |CA Police           |$67,202              |The state CALPAL and |
           |Activities League   |                     |county CALPAL        |
           |(CALPAL) Fund       |                     |chapters.            |
           |--------------------+---------------------+---------------------|
           |CA Sea Otter Fund   |$351,037             |Department of Fish   |
           |                    |                     |and Wildlife, and as |
           |                    |                     |many as apply for    |
           |                    |                     |grants and contracts |
           |                    |                     |provided for by 50%  |
           |                    |                     |of contributions.    |
           |--------------------+---------------------+---------------------|
           |CA Seniors Special  |$61,315              |The first $80K to    |
           |Fund                |                     |the Area Agency on   |
           |                    |                     |Aging Advisory       |
           |                    |                     |Council of           |
           |                    |                     |California and the   |
           |                    |                     |rest to area         |
           |                    |                     |agencies as          |
           |                    |                     |allocated by the     |
           |                    |                     |California           |
           |                    |                     |Department of Aging. |
           |--------------------+---------------------+---------------------|
           |CA YMCA Youth and   |Initial Tax Return   |The first $300K to   |
           |Government Fund     |2012                 |the CA YMCA Youth    |
           |                    |                     |and Government       |
           |                    |                     |Program.  The rest   |
           |                    |                     |is allocated in $10K |
           |                    |                     |annual grants to     |
           |                    |                     |the: African         |
           |                    |                     |American Leaders for |
           |                    |                     |Tomorrow Program,    |
           |                    |                     |Asian Pacific Youth  |
           |                    |                     |Leadership Project,  |
           |                    |                     |Chicano Latino Youth |
           |                    |                     |Leadership Project.  |
           |                    |                     |The money is to be   |
           |                    |                     |used to support      |
           |                    |                     |program              |
           |                    |                     |participation.       |
           |                    |                     |Remaining funds      |
           |                    |                     |allocated to the CA  |

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           |                    |                     |YMCA Youth and       |
           |                    |                     |Government Program,  |
           |                    |                     |whose board may      |
           |                    |                     |award additional     |
           |                    |                     |$10K annual grants   |
           |                    |                     |to additional        |
           |                    |                     |nonprofit civic      |
           |                    |                     |youth organizations. |
           |                    |                     |The funds            |
           |                    |                     |distributed to the   |
           |                    |                     |CA YMCA Youth and    |
           |                    |                     |Government Program   |
           |                    |                     |are to be used for   |
           |                    |                     |program-related      |
           |                    |                     |expenses.            |
           |--------------------+---------------------+---------------------|
           |CA Youth Leadership |Initial Tax Return   |1 group: Department  |
           |Fund                |2012                 |of Education to      |
           |                    |                     |provide for the CA   |
           |                    |                     |Youth Leadership     |
           |                    |                     |Project.             |
           |--------------------+---------------------+---------------------|
           |CA Veterans Homes   |$210,078             |The number of        |
           |Fund                |                     |established          |
           |                    |                     |veteran's homes (7). |
           |--------------------+---------------------+---------------------|
           |Child Victims of    |$35,317              |As many counseling   |
           |Human Trafficking   |                     |and prevention       |
           |Fund                |                     |centers that apply   |
           |                    |                     |and receive grants   |
           |                    |                     |provided from monies |
           |                    |                     |contributed.         |
           |--------------------+---------------------+---------------------|
           |Emergency Food for  |$551,515             |1 group: Department  |
           |Families Fund       |                     |of Social Services   |
           |                    |                     |for the Emergency    |
           |                    |                     |Food Assistance      |
           |                    |                     |Program.             |
           |--------------------+---------------------+---------------------|
           |Municipal Shelter   |$244,701             |As many as apply and |
           |Spay-Neuter Fund    |                     |receive grants       |
           |                    |                     |provided from the    |
           |                    |                     |monies contributed.  |
           |--------------------+---------------------+---------------------|

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           |Rare & Endangered   |$558,681             |1 group: Department  |
           |Species             |                     |of Fish and Wildlife |
           |Preservation        |                     |endangered           |
           |Program             |                     |conservation         |
           |                    |                     |programs.            |
           |--------------------+---------------------+---------------------|
           |Safely Surrendered  |$158,645             |1 group: Department  |
           |Baby Fund           |                     |of Social Services   |
           |                    |                     |for Safely Surrender |
           |                    |                     |Baby Law awareness   |
           |                    |                     |programs.            |
           |--------------------+---------------------+---------------------|
           |School Supplies for |Initial Tax Return   |As many as apply and |
           |Homeless Children   |2012                 |receive grants       |
           |Fund                |                     |provided for by the  |
           |                    |                     |monies contributed.  |
           |--------------------+---------------------+---------------------|
           |State Children's    |$376,243             |1 group: Department  |
           |Trust for the       |                     |of Social Services   |
           |Prevention of Child |                     |for prevention and   |
           |Abuse               |                     |intervention         |
           |                    |                     |programs.            |
           |--------------------+---------------------+---------------------|
           |State Parks         |Initial Tax Return   |As many as purchase  |
           |Protection          |2012                 |a parks pass that    |
           |Fund/Parks Pass     |                     |can be provided from |
           |Purchase            |                     |the monies           |
           |                    |                     |contributed.         |
           |                    |                     |                     |
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          This bill establishes a tax check-off program, consistent with  
          existing tax check-off programs, to support the disaster related  
          work of the American Red Cross in California.  The American Red  
          Cross is consistently the non-governmental organization on the  
          scene for state and locally declared disasters, as well as  
          smaller incidents experienced by individual families and  
          households, such as home fires.  Establishing a tax check-off  
          program in support of the disaster-related work of the American  
          Red Cross will facilitate increased charitable giving for these  
          essential services.

           Related Legislation  


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          AB 511 is not the only bill dealing with tax check-offs this  
          legislative session:

          Assembly Bill 247 (Wagner) extends the repeal date from 2015 to  
          2020 for the "California Fund for Senior Citizens" tax check-off  
          on the tax form.

          Assembly Bill 394 (Yamada) extends the repeal date from 2015 to  
          2020 for the "California Alzheimer's Disease and Related  
          Disorders Research Fund" tax check-off on the tax form.

          Assembly Bill 754 (Muratsuchi) creates the "Protect Our Coast  
          and Oceans Fund" check-off on the tax form. 

          Assembly Bill 1286 (Skinner) temporarily suspends the annual  
          inflation adjustment for minimum contribution levels for the  
          "California Breast Cancer Research Fund" check-off on the tax  
          form.

          Senate Bill 116 (Liu) extends the repeal date from 2014 to 2019  
          for the "Emergency Food Assistance Program" check off on the tax  
          form.

          Senate Bill 571 (Price) creates the "Art for Kids Fund"  
          check-off on the tax form.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

          According to the Senate Appropriations Committee, the FTB  
          estimates that this bill will result in an annual revenue loss  
          of $10,000 (General Fund) beginning in 2016-17.  The FTB, the  
          State Controller's Office, and the OES would be reimbursed for  
          related administrative costs.

           SUPPORT  :   (Verified  8/14/13)

          California Chapters of the American Red Cross (source)
          California Association of Nonprofits
          California Fire Chiefs Association

           OPPOSITION  :    (Verified  8/14/13)

          Department of Finance

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                                                                     AB 511
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           ARGUMENTS IN SUPPORT  :    According to the author's office, AB  
          511 recognizes that 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.  The ARC 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 Chapters  
          within our state; in 2012, we had a total of 27,602  
          California-based volunteers and 872 California-based employees.

          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.

           ARGUMENTS IN OPPOSITION  :    The Department of Finance argues  
          that "This bill is of limited value as there is nothing  
          currently preventing California taxpayers from contributing  
          directly to this cause if they so choose.  It is not clear that  
          a special preference should be given to the organizations  
          receiving the grant supported by this tax check-off, as compared  
          to other organizations also dedicated to providing disaster  
          relief in California.  This bill could result in a $10,000  
          annual General Fund revenue loss beginning in 2014-15."  
           
           ASSEMBLY FLOOR  :  76-0, 4/25/13
          AYES:  Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,  
            Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,  
            Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway,  
            Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier,  
            Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell, Gray,  
            Grove, Hagman, Hall, Harkey, Roger Hernández, Holden, Jones,  
            Jones-Sawyer, Levine, Linder, Logue, Maienschein, Mansoor,  
            Medina, Melendez, Mitchell, Morrell, Mullin, Muratsuchi,  
            Nestande, Olsen, Pan, Patterson, Perea, V. Manuel Pérez,  

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                                                                     AB 511
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            Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone, Ting,  
            Torres, Wagner, Waldron, Weber, Wieckowski, Wilk, Williams,  
            Yamada, John A. Pérez
          NO VOTE RECORDED:  Cooley, Lowenthal, Nazarian, Vacancy


          AB:ej  8/14/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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