BILL ANALYSIS                                                                                                                                                                                                    �




                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de Le�n, Chair


          SB 116 (Liu) - Personal Income Taxes: Contributions: Emergency  
          Food Assistance Program
          
          Amended: April 16, 2013         Policy Vote: G&F 7-0
          Urgency: No                     Mandate: No
          Hearing Date: May 6, 2013       Consultant: Robert Ingenito
          
          This bill does not meet the criteria for referral to the  
          Suspense File.

          Bill Summary: SB 116 would eliminate the sunset provision on the  
          Emergency Food Assistance Program (EFAP) Fund as a voluntary  
          contribution fund on the personal income tax form.

          Fiscal Impact: The Franchise Tax Board (FTB) estimates that this  
          measure would result in an annual revenue loss of $10,000  
          (General Fund) beginning in 2015-16. FTB indicates that its own  
          costs would not be impacted because the check-off box is  
          currently on the tax form.

          Background: Current law allows taxpayers to contribute money to  
          one or more of 18 voluntary contribution funds during the  
          process of filing their state income tax return (tax check-off).  
           These contributions are made from taxpayers' own resources, not  
          from their tax liability (as is possible on federal tax  
          returns).  Check-off amounts are deductible as charitable  
          contributions on taxpayers' returns during the subsequent tax  
          year.

          With several exceptions, each existing voluntary contribution  
          fund has a sunset date and is required to meet a minimum  
          contribution amount of $250,000, adjusted annually for  
          inflation.  The EFAP tax check-off was established by AB 2366  
          (Cedillo, Chapter 818, Statutes of 1998, and was extended first  
          by SB 43 (Cedillo, Chapter 317, Statutes of 2003), and again by  
          SB 1101 (Cedillo, Chapter 223, Statutes of 2008).  This program  
          is currently scheduled to sunset on January 1, 2014, and the  
          fund needs to receive a minimum of $347,554 from returns filed  
          in 2012 to remain on the tax form the following year.

          Staff Comments: This tax check-off's funds are used to  
          supplement the existing EFAP program, which is administered by  








          SB 116 (Liu)
          Page 1


          the Department of Social Services (DSS) to provide United States  
          Department of Agriculture commodities, as well as surplus fresh  
          foods donated by farmers and businesses, to local food banks for  
          distribution to the working poor, low-income, unemployed, and  
          homeless persons.  The EFAP tax check-off provided an annual  
          average of $533,664 for the program between 2008 and 2012.  
          According to DSS, there are no staff specifically dedicated to  
          the administration of the revenues generated by the check-off  
          because these contributions are a small part of the program as a  
          whole. Staff notes that when the check-off was last extended in  
          2008, FTB projected an annual revenue loss of roughly $25,000.  
          Its lowered current revenue estimate results from a subsequent  
          examination of taxpayer data. Specifically, FTB's data analysis  
          indicates that roughly half of taxpayers who use check-offs do  
          not itemize their deductions. The contributions from these  
          taxpayers do not lead to revenue losses.