BILL ANALYSIS Ó
SB 284
Page 1
SENATE THIRD READING
SB 284 (De León)
As Amended August 13, 2013
Majority vote
SENATE VOTE :39-0
REVENUE & TAXATION 9-0 APPROPRIATIONS 16-1
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|Ayes:|Bocanegra, Dahle, Gordon, |Ayes:|Gatto, Harkey, Bigelow, |
| |Harkey, Mullin, Nestande, | |Bocanegra, Bradford, Ian |
| |Pan, | |Calderon, Campos, Eggman, |
| |V. Manuel Pérez, Ting | |Gomez, Hall, Holden, |
| | | |Linder, Pan, Quirk, |
| | | |Wagner, Weber |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Donnelly |
| | | | |
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SUMMARY : Allows a credit, for taxable years beginning on or
after January 1, 2014, and before January 1, 2017, based on the
taxpayer's contribution to a newly established College Access
Tax Credit Fund (Fund), as specified. Specifically, this bill :
1)Provides that the credit shall be equal to the following:
a) For taxable years beginning on and after January 1,
2014, and before January 1, 2015, 60% of the amount
contributed by the taxpayer for the 2014 taxable year to
the Fund, as allocated and certified by the California
Educational Facilities Authority (CEF Authority);
b) For taxable years beginning on and after January 1,
2015, and before January 1, 2016, 55% of the amount
contributed by the taxpayer for the 2015 taxable year to
the Fund, as allocated and certified by the CEF Authority;
and,
c) For taxable years beginning on and after January 1,
2016, and before January 1, 2017, 50% of the amount
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contributed by the taxpayer for the 2016 taxable year to
the Fund, as allocated and certified by the CEF Authority.
2)Specifies that contributions shall be made only in cash.
3)Provides that the aggregate amount of credit that may be
allocated and certified shall equal:
a) $500 million in credits for the 2014 calendar year and
each calendar year thereafter; and,
b) The amount of previously unallocated and uncertified
credits.
4)Requires the CEF Authority to do all of the following:
a) On or after January 1, 2014, and before January 1, 2017,
allocate and certify tax credits to taxpayers;
b) Establish a procedure for taxpayers to contribute to the
Fund and to obtain from the CEF Authority a certification
for the credit; and,
c) Provide to the Franchise Tax Board (FTB) a copy of each
credit certificate issued for the calendar year by March 1
of the calendar year immediately following the year in
which those certificates are issued.
5)Directs the CEF Authority to adopt any necessary implementing
regulations. Specifies that the Administrative Procedures Act
shall not apply to such regulations.
6)Provides that, in cases where the credit amount exceeds the
tax owed, the excess credit amount may be carried over to
reduce the tax liability in the following year, and the
succeeding five years if necessary, until the credit is
exhausted.
7)Prohibits a deduction for amounts taken into account in
calculating the credit.
8)Establishes the Fund in the State Treasury.
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9)Provides that all revenue in this Fund shall be allocated as
follows:
a) First, to the General Fund (GF) in an amount equal to
the aggregate amount of certified credits allowed for the
taxable year;
b) Second, upon appropriation by the Legislature, to the:
i) FTB, the CEF Authority, the State Controller, and
the Student Aid Commission for reimbursement of all
administrative costs incurred in connection with their
duties under this bill, and Education Code Section
69432.7 (relating to the Cal Grant Program); and,
ii) To the Student Aid Commission for purposes of
awarding Cal Grants to students pursuant to Education
Code Section 69432.7.
10)Becomes operative only if SB 285 (De León) of the 2013-14
legislative session is enacted and takes effect on or before
January 1, 2014.
11)Sunsets the credit provisions on December 1, 2017.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1) The State Treasurer's Office (STO) estimates costs of
approximately $400,000 to $500,000 annually to administer
the program. STO costs will vary depending on the number of
taxpayers who apply for the credit.
2) In the first year, if $833 million is donated, the $500
million in available tax credit would be exhausted. After
administrative costs are deducted and the General Fund (GF)
is reimbursed, there would be $300 million available for
transfer to the Student Aid Commission for Cal Grants to
students. The available funds will increase in the two
subsequent years as the amount of donations will have to
increase to exhaust the available credit.
3) To the extent, this bill leads donors to switch their
charitable donations without an increase in overall
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charitable giving, there would proportional savings to the
GF from reduced deductions for such donations.
COMMENTS :
What would this bill do? : For taxable years beginning on or
after January 1, 2014, and before January 1, 2017, this bill
would allow taxpayers, upon certification by the CEF Authority,
to receive a credit for contributions made to the Fund. This
bill caps the aggregate amount of credit that may be allocated
and certified at $500 million for each calendar year. The
specified percentage used to calculate the credit would be 60%
of the amount contributed during the 2014 taxable year, 55% of
the amount contributed during the 2015 taxable year, and 50% of
the amount contributed during the 2016 taxable year.
Amounts contributed to the Fund would be allocated first to the
GF in an amount equal to the certified credits this bill would
allow, and then, upon legislative appropriation, to the:
1)FTB, the CEF Authority, the State Controller, and the Student
Aid Commission for reimbursement of administrative costs; and,
2)To the Student Aid Commission for the awarding of Cal Grants
to eligible students.
The CEF Authority : The CEF Authority was established in 1973,
and operates pursuant to the California Education Facilities
Authority Act. According to its Web site:
[The CEF Authority] was created for the purpose of
issuing revenue bonds to assist private non-profit
institutions of higher learning, in the expansion and
construction of educational facilities. Because it is
authorized to issue tax-exempt bonds, the [CEF
Authority] may provide more favorable financing to
such private institutions than might otherwise be
obtainable.
Financing proceeds may be used for specified project-related
costs, including construction, remodeling, land acquisition, and
the refinancing or refunding of prior debt.
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Contingencies : As noted above, this bill would become operative
only if SB 285 (De León), of the current legislative session, is
also enacted. SB 285 would provide a mechanism for the
distribution of Fund moneys to students to supplement Cal Grant
B access cost awards, as specified.
Related legislation : SB 1356 (De León), of the 2011-12
legislative session, would have allowed a credit for taxable
years beginning on or after January 1, 2013, and before January
1, 2016, based on a taxpayer's contribution to a newly
established Higher Education Investment Tax Credit Program
Special Fund, as specified. SB 1356 was held in the Assembly
Appropriations Committee.
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098 FN:
0002156