BILL ANALYSIS Ó
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THIRD READING
Bill No: SB 284
Author: De León (D)
Amended: 4/30/13
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 7-0, 4/24/13
AYES: Wolk, Knight, Beall, DeSaulnier, Emmerson, Hernandez, Liu
SENATE APPROPRIATIONS COMMITTEE : 7-0, 5/23/13
AYES: De León, Walters, Gaines, Hill, Lara, Padilla, Steinberg
SUBJECT : Income taxes: credits: contributions to education
funds
SOURCE : Author
DIGEST : This bill, for taxable years beginning on or after
January 1, 2014, and before January 1, 2017, allows taxpayers,
upon receipt of the California Educational Facilities Authority
(CEFA) certification, to receive an income or franchise tax
credit for a specified percentage of cash contributions made to
the College Access Tax Fund (Fund). Unused credits may be used
for six subsequent years.
ANALYSIS : Existing state and federal laws provide various tax
credits designed to provide tax relief for taxpayers who incur
certain expenses (child adoption, for example) or to influence
behavior, including business practices and decisions (research
credits or economic development area hiring credits, for
example). These credits are designed to provide incentives for
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taxpayers to perform various actions or activities that they may
not otherwise undertake. Currently, neither federal nor state
law provides a credit for contributions to a special education
fund.
Existing federal and state laws allow individuals to deduct
certain expenses, such as medical expense, charitable
contributions, interest, and taxes, as itemized deduction.
Existing federal and state law allows a corporation and
S-corporation to deduct charitable contributions up to 10% of
its net income. Contributions in excess of 10% may be carried
over to five succeeding taxable years.
Existing state law creates CEFA within the State Treasurer's
office for the purpose of administering programs that provide
tax-exempt, low-cost financing to private, non-profit higher
education facilities.
This bill, for taxable years beginning on or after January 1,
2014, and before January 1, 2017, allows taxpayers, upon receipt
of CEFA certification, to receive an income or franchise tax
credit for a specified percentage of cash contributions made to
the Fund. Unused credits may be used for six subsequent years.
The maximum aggregate amount of credit that could be allocated
and certified by CEFA for any calendar year will be $500
million.
The specified percentage used to calculate the credit will be:
60% of the amount contributed during the 2014 taxable year.
55% of the amount contributed during the 2015 taxable year.
50% of the amount contributed during the 2016 taxable year.
CEFA is required to do all of the following:
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Allocate and certify the income tax credit to personal and
corporate taxpayers from January 1, 2014 to December 31, 2016.
Establish a procedure for taxpayers to contribute to the Fund
and obtain certification for the credit. Requires CEFA to
certify the contribution amount eligible for credit within 45
days following receipt of the contribution.
Provide to the Franchise Tax Board (FTB) a copy of each credit
certificate issued by March 1st of the calendar year
immediately following the year of issue.
This bill precludes any deductions for amounts taken into
account in the calculation of the credit.
The credit will be repealed by its own terms as of December 1,
2017.
Amounts contributed to the Fund will be allocated as follows:
(1) to the General Fund in an amount equal to the amount of
certified credits allowed for the taxable year; and (2) revenues
shall be allocated, upon appropriation by the Legislature:
To the FTB, CEFA, the State Controller, and California Student
Aid Commission (CSAC) for reimbursement of all administrative
costs incurred by these agencies in connection with their
duties.
To CSAC for purposes of awarding Cal Grants to students.
The funds will be used for Cal Grant B programs if SB 285 (De
León) passes. This bill is contingent upon the passage of SB
285.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
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According to the Senate Appropriations Committee:
Estimated revenue losses of $190 million in 2013-14, $360
million in 2014-15, and $330 million in 2015-16 (General
Fund).
Estimated revenue gains of $750 million in 2014, $700
million in 2015, and $600 million in 2016 (deposited in the
Fund).
Costs to CEFA in the range of $900,000 to $1.6 million over
three to administer the certification of tax credits for
contributions.
Unknown administrative costs to FTB related to changes in
tax forms and instructions. Specifically, this bill impacts
the department's printing, processing and storage costs for
tax returns. The amount of the increase likely exceeds
$50,000 (General Fund).
The net gain from the above four factors, in the hundreds of
millions of dollars, will be applied to Cal Grants.
SUPPORT : (Verified 5/23/13)
AFSCME
Associated Students of UC Davis
Association of Independent California Colleges and Universities
California Catholic Conference
California Community College Association of Student Trustees
California Competes
California State Student Association
California Student Aid Commission
Los Angeles Area Chamber of Commerce
Los Angeles Community College District
NAACP California
NAACP Los Angeles
National Council of La Raza
Public Advocates
Southern California College Access Network
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Student Senate for California Community Colleges
The Campaign for College Opportunity
The Education Trust - West
The Institute for College Access and Success
University of California Student Association
Young Invincibles
ARGUMENTS IN SUPPORT : According to the author this bill seeks
to, "Increase Cal Grant B Access Award amounts for California's
lowest income students to improve academic achievement and
graduation rates through $500 Million in available tax credits
in the College Access Tax Credit Fund by leveraging federal tax
deductions for charitable contributions.
California is a so-called donor state, only receiving around
78-cents for every dollar state taxpayers send to Washington.
It's time to leverage Federal dollars to help offset
skyrocketing college costs. To further help our neediest
students complete college we need to be creative."
AB:d 5/25/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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