BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 511| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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. CONTINUED AB 511 Page 2 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 With a few exceptions, VCFs remain on the return until they are either repealed by a sunset date, or if they fail to meet a minimum contribution amount.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 CONTINUED AB 511 Page 3 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 | CONTINUED AB 511 Page 4 |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 | CONTINUED AB 511 Page 5 | | |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. | |--------------------+---------------------+---------------------| CONTINUED AB 511 Page 6 |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. | | | | | ---------------------------------------------------------------- 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 CONTINUED AB 511 Page 7 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 CONTINUED AB 511 Page 8 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, CONTINUED AB 511 Page 9 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 **** END **** CONTINUED