BILL ANALYSIS Ó AB 1765 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 1765 (Jones-Sawyer) As Amended August 14, 2014 Majority vote ----------------------------------------------------------------- |ASSEMBLY: |74-0 |(April 24, |SENATE: |33-0 |(August 19, | | | |2014) | | |2014) | ----------------------------------------------------------------- Original Committee Reference: REV. & TAX. 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. The Senate amendments : 1)Provide that if a contribution is specified, but a designee is not specified, the contribution shall be transferred to the General Fund (GF) after reimbursement of the direct actual costs of the Franchise Tax Board (FTB) for the collection and administration of funds. 2)Specify that the Department of Housing and Community Development (HCD) shall be responsible for overseeing the VCF's grant program. 3)Modify this bill's sunset provisions to provide that, except as otherwise specified, the VCF provisions shall remain in effect only until January 1 of the fifth taxable year following the Fund's first appearance on the PIT return, or January 1, 2021, whichever occurs first. 4)Provides that HCD shall be reimbursed for its administrative costs. 5)Make technical corrections. 6)Add coauthors. EXISTING LAW : 1)Allows taxpayers to contribute to one or more of 20 VCFs on AB 1765 Page 2 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. AS PASSED BY THE ASSEMBLY , this bill: 1)Established the Fund in the State Treasury. 2)Provided that all money transferred to the Fund, upon appropriation by the Legislature, shall be allocated to the: a) FTB and the State Controller for reimbursement of all costs incurred in administering the VCF; and, b) HCD 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 awarded through a competitive, project-specific grant process. Moreover, affiliates shall be precluded from using grant awards for administrative expenses or for any purposes outside California. 3)Provided 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. FISCAL EFFECT : According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs. COMMENTS : The author has provided the following statement in support of this bill: With bond funding exhausted and redevelopment funds AB 1765 Page 3 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. Assembly Revenue and Taxation Committee comments: 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. Habitat for Humanity affiliates: As noted above, this bill directs HCD 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. So many causes, so little space: There are countless worthy AB 1765 Page 4 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. Analysis Prepared by : M. David Ruff / REV. & TAX. / (916) 319-2098 FN: 0004891