BILL ANALYSIS Ó
AB 1765
Page 1
Date of Hearing: March 24, 2014
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Raul Bocanegra, Chair
AB 1765 (Jones-Sawyer) - As Introduced: February 14, 2014
Majority vote. Fiscal committee.
SUBJECT : Personal income taxes: voluntary contributions:
Habitat for Humanity Fund
SUMMARY : Authorizes the addition of a Habitat for Humanity Fund
(Fund) checkoff to the personal income tax (PIT) return upon the
removal of another voluntary contribution fund (VCF) from the
return. Specifically, this bill :
1)Establishes the Fund in the State Treasury.
2)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
VCF; and,
b) Department of Housing and Community Development for
grant distribution to Habitat for Humanity affiliates in
California that are in active status, as specified, and
that are exempt from federal income taxation under Internal
Revenue Code Section 501(c)(3). These grants shall be used
solely to build affordable housing in California.
3)Provides for the Fund provisions' automatic sunset on either
January 1 of the fifth taxable year following the Fund's first
appearance on the 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 contribute to one or more of 20 VCFs on
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the 2013 PIT return.
2)Provides a specific sunset date for each VCF, except for the
California Seniors Special Fund and the State Parks Protection
Fund.
3)Requires each VCF to meet an annual minimum contribution
amount to remain in effect, except for the California
Firefighters' Memorial Fund, the California Peace Officer
Memorial Foundation Fund, and the California Seniors Special
Fund.
FISCAL EFFECT : The FTB estimates annual revenue losses of
roughly $10,000 beginning in Fiscal Year 2015-16 resulting from
itemized deductions.
COMMENTS :
1)The author has provided the following statement in support of
this bill:
With bond funding exhausted and redevelopment funds
eliminated, California is facing virtually no state
investment in affordable housing. At the same time,
Habitat for Humanity, a faith-based nonprofit organization
dedicated to building affordable homes for families with
limited incomes, has built, rehabilitated, repaired or
improved more than [800,000] houses worldwide, providing
simple, decent and affordable shelter for more than [4]
million people. However, redevelopment's [dissolution] in
2011 greatly impacted Habitat's ability to fulfill its
mission. Allowing individuals to donate via their income
tax [?] return can raise hundreds of thousands of dollars
for Habitat for Humanity. This money will be used for the
sole purpose of building affordable housing throughout
California. In Louisiana, the only other state that has a
voluntary income tax check off, the affordable housing fund
raises an average of $5 million annually.
2)This bill is sponsored by Habitat for Humanity California,
which notes:
Founded in 1976, Habitat is a nonprofit affordable housing
organization, eliminating poverty housing from the world
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and making decent shelter a matter of conscience and
action. Specifically, through volunteer labor and
donations of money and materials, Habitat for Humanity
builds, repairs and renovates homes alongside our homeowner
(partner) families. Therefore we believe the additional
funds generated by AB 1765 will assist in our efforts to
finance additional homeownership opportunities in
California for working families living on fixed incomes and
modest budgets.
3)Committee Staff Comments:
a) Habitat for Humanity : According to its Web site,
Habitat for Humanity is a nonprofit, ecumenical Christian
ministry "founded on the conviction that every man, woman
and child should have a decent, safe and affordable place
to live." The organization has more than 1,500 local
affiliates in the United States and more than 70 national
organizations around the world. Habitat for Humanity
estimates that it has helped to build or repair more than
800,000 houses worldwide.
b) Habitat for Humanity affiliates : As noted above, this
bill directs the Department of Housing and Community
Development to distribute Fund moneys through grants to
active Habitat for Humanity affiliates in California.
Affiliates, in turn, are community-level Habitat for
Humanity offices that serve a specific area in partnership
with and on behalf of Habitat for Humanity International.
Each affiliate coordinates all aspects of home building in
a local area, from fundraising and building site selection,
to house construction and mortgage servicing. Affiliates
operate within the framework of a "Habitat Affiliate
Covenant" but remain independently run, nonprofit
organizations. All affiliates are asked to tithe a
percentage of their contributions to fund house-building
work in other nations.
c) Drilling down into the nitty-gritty : A search of the
Secretary of State's business database shows 51 active
Habitat for Humanity entities in California. Habitat for
Humanity's Web site, in turn, lists 47 separate affiliates
in California. Irrespective of the exact number of
affiliates, this bill does not specify whether Fund moneys
would be divided among all California-based affiliates, or
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whether the grant program would operate in a competitive
fashion resulting in only some affiliates receiving
funding. Assuming the Fund were to net $250,000 annually
(after accounting for the administrative expenses of the
FTB and State Controller), an equal allocation to 50
California-based affiliates amounts to $5,000 in each
instance. Alternatively, if the author envisions a
competitive grant process where available funds can be
targeted to specific affiliates, it may be useful to take
amendments clarifying this intent. In addition, the author
may wish to amend the bill to set forth the general
criteria to be used in awarding competitive grants.
In addition, this bill specifies that grants shall be used
solely for "building affordable housing in California."
The precise scope of this limitation, however, is not
readily apparent to Committee staff. It would appear that
such a limitation would prevent Fund moneys from being used
to cover an affiliate's administrative expenses, but would
it also prevent Fund moneys from being used to support an
affiliate's fundraising and site selection activities?
Moreover, would affiliates be precluded from tithing a
percentage of grant moneys to fund building houses in other
countries? The author may wish to amend this bill to
clarify the intended scope of this limitation.
d) 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 PIT return. At the same time, space
on the return is limited. Thus, it could be argued that
the current system for adding VCFs to the return is
inherently subjective and essentially rewards causes that
are able to convince the Legislature to include their fund
on the return.
REGISTERED SUPPORT / OPPOSITION :
Support
Habitat for Humanity California (Sponsor)
Habitat for Humanity of the Coachella Valley, Inc.
Habitat for Humanity East Bay/Silicon Valley
Habitat for Humanity of Orange County
Habitat for Humanity Riverside, Inc.
Habitat for Humanity of Tulare County
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Pomona Valley Habitat for Humanity
Opposition
None on file
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098