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;  








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               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.  









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               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.
                








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                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
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           Analysis Prepared by  :  M. David Ruff / REV. & TAX. / (916)  
          319-2098