BILL ANALYSIS Ó SB 116 Page 1 Date of Hearing: June 10, 2013 ASSEMBLY COMMITTEE ON REVENUE AND TAXATION Raul Bocanegra, Chair SB 116 (Liu) - As Amended: April 16, 2013 Majority vote. Fiscal committee. SENATE VOTE : 34-0 SUBJECT : Personal income taxes: contributions: Emergency Food Assistance Program SUMMARY : Eliminates the sunset date and the minimum contribution requirement for the Emergency Food for Families Fund (Fund). Specifically, this bill : 1)Deletes the Fund's sunset date, thereby allowing the Fund to remain indefinitely as a voluntary contribution fund (VCF) on the state's personal income tax (PIT) return. 2)Eliminates the Fund's minimum contribution requirements, thereby allowing the Fund to remain on the PIT return irrespective of annual contributions received. EXISTING LAW : 1)Allows taxpayers to contribute to one or more of the 18 VCFs on the 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 Seniors Special Fund, the California Firefighters' Memorial Fund, and the California Peace Officer Memorial Foundation Fund. 4)Provides that all money transferred to the Fund, upon legislative appropriation, shall be allocated to the: a) Franchise Tax Board (FTB) and the State Controller for reimbursement of all costs incurred administering the Fund; SB 116 Page 2 and, b) State Department of Social Services for allocation to the Emergency Food Assistance Program (Program). 5)Provides that the Fund's statutory provisions shall automatically sunset on January 1, 2014, absent an extension. 6)Requires the Fund to meet a minimum contribution amount, which is adjusted annually for inflation based on the percentage change in the California Consumer Price Index. The Fund's minimum contribution amount for 2013 is $354,158. COMMITTEE RULES provide that "[e]xisting checkoffs for which reauthorization is sought shall have sunset dates and be required to comply with an inflation-adjusted $250,000 minimum contribution requirement." FISCAL EFFECT : The FTB estimates that this bill would reduce General Fund revenues by $10,000 in fiscal year (FY) 2015-16, and by the same amount in FY 2016-17. COMMENTS : 1)The author has provided the following statement in support of this bill: SB 116 removes the sunset and minimum contribution requirements for the Emergency Food for Families "check-off" fund from statute, extending it indefinitely. It allows Californians to continue fighting hunger by contributing to the fund with a check-off on their state income tax returns. 2)Proponents of this bill note the following: Food banks across the state have seen an unprecedented increase in requests for assistance since 2008, and the food lines are not getting any shorter. The first line of defense against hunger is CalFresh (formerly known as food stamps), but unfortunately California has the worst participation rate in the country, which places a greater burden on food banks already struggling to keep up with the need. SB 116 Page 3 Food banks and charitable agencies play an increasingly important role in fighting hunger in the current context of very high food hardship, low CalFresh participation, and recent cuts to safety net programs at the state and federal level. Unfortunately, California provides no public funding for this emergency food network. In tight budget times, the Emergency Food for Families Fund represents an easy way for the state to encourage private contributions to help food banks keep up with growing requests for assistance. 3)The Department of Finance opposes this bill in its current amended form. 4)Committee Staff Comments: a) Fund background : Fund moneys are allocated to the State Department of Social Services to support the Program. The Program, in turn, provides United States Department of Agriculture commodities to a network of food banks for distribution to eligible individuals and households. The California Association of Food Banks notes that in 2012, over $550,000 in Fund contributions enabled food banks to provide over 1.6 million pounds of food - or roughly 1.3 million meals - for people in need. The Fund first appeared on the 1998 PIT return. Since 2008, the Fund has received the following total annual contributions: ----------------------------------------------------------- | 2008 | 2009 | 2010 | 2011 | 2012 | |-----------+-----------+-----------+-----------+-----------| | $438,582 | $592,733 | $487,333 | $598,157 |$551,515 | ----------------------------------------------------------- b) A questionable precedent : As originally introduced, this bill simply extended the Fund's sunset date from January 1, 2014, to January 1, 2019. On April 16, 2013, this bill was amended to instead delete the Fund's sunset date outright, along with the Fund's minimum contribution requirement, thereby bringing this Fund out of conformity with the vast majority of VCFs on the PIT return. SB 116 Page 4 Indeed, this Committee's own rules require that all reauthorized VCFs include both a sunset date and an inflation-adjusted minimum contribution requirement. This policy was originally adopted in response to the proliferation of VCF legislation, and in recognition of the fact that space on the PIT return is limited. Were this Committee to make an exception for this Fund, it would open the door to the supporters of every other VCF advocating for an elimination of minimum contribution amounts and sunset dates. c) Amendments agreed to by author : To address the concerns outlined above, and those raised by the Department of Finance, the author has agreed to take amendments in this Committee to revert this bill to its original form, with one additional purely technical amendment. With these amendments, this bill will allow the Fund to remain on PIT returns through the 2018 taxable year, provided the minimum contribution amount is met. REGISTERED SUPPORT / OPPOSITION : Support California Association of Food Banks (sponsor) Alameda County Community Food Bank American Federation of State, County and Municipal Employees, AFL-CIO California Catholic Conference, Inc. California Food Policy Advocates County Welfare Directors Association of California Feeding America San Diego Food Bank of Yolo County Food for People, Inc. Hunger Advocacy Network Jacobs & Cushman San Diego Food Bank Los Angeles Regional Food Bank Marin Food Bank San Diego Hunger Coalition San Francisco Food Bank Opposition Department of Finance SB 116 Page 5 Analysis Prepared by : M. David Ruff / REV. & TAX. / (916) 319-2098