BILL ANALYSIS Ó
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 571 HEARING: 5/1/13
AUTHOR: Price FISCAL: Yes
VERSION: 2/22/13 TAX LEVY: No
CONSULTANT: Miller
INCOME TAXES: VOLUNTARY CONTRIBUTIONS: ARTS FOR KIDS FUND.
Creates the Arts for Kids tax check off on the income tax
form
Background and Existing Law
Existing state law allows taxpayers to contribute money to
one or more of 18 voluntary contribution funds (fund or
check-off) by checking a box on their state income tax
return. California law requires contributions made through
check-offs to be made from taxpayers' own resources and not
from their tax liability, as is possible on federal tax
returns. Check-off amounts may be claimed as charitable
contributions on taxpayers' tax returns during the
subsequent year.
The Franchise Tax Board (FTB) designs tax returns to
provide for the designation of contributions to specified
funds either on the return itself or on a separate schedule
that must be attached to the return. With a few
exceptions, VCFs remain on the return until they are either
repealed or fail to meet their minimum contribution amount.
The minimum contribution amounts are adjusted annually for
inflation. For most check offs, the minimum contribution
amount is $250,000 in the fund's second year. By September
1st of each year, the FTB must determine the minimum
contribution amount required for each fund to remain on the
form for the following calendar year and whether estimated
contributions to each fund will be less than the minimum
contribution amount for that calendar year. If the FTB
estimates that a fund will fail to meet the minimum
contribution amount, that fund is repealed effective for
taxable years beginning on or after January 1st of the
following calendar year.
The Arts Council Fund (SB 1076, Price, 2010), first
SB 571 -- 2/22/13 -- Page 2
appeared on the 2010 return and last appeared on the 2011
return because the FTB estimated that contributions to the
Arts Council Fund would fall below the required $250,000
minimum contribution amount for the 2012 calendar year. By
operation of law, the provision creating the Arts Council
Fund was repealed effective January 1, 2012, and this fund
was removed from the 2012 income tax return.
Except for the California Senior Legislature (which is
fully funded by the check off and operates in concert with
the Legislature), the proceeds from the check-offs either
go to quasi-government organizations or to non-profits as a
competitive grant.
All funds must meet the same criteria with the following
exceptions:
The California Seniors Special Fund, which has no
sunset date, each fund has a specific sunset date.
The California Seniors Special Fund, California
Firefighters Memorial Fund, the California Peace
Officer Memorial Foundation Fund, the California YMCA
Youth and Government Fund, the California Youth
Leadership Fund, the State Parks Protection Fund, and
the School Supplies for Homeless Children Fund, are
not required to meet an initial minimum contribution
amount of $250,000.
The California Fund for Senior Citizens, is not
adjusted annually for inflation.
The following list provides the current information on all
the check offs as well as how many groups are eligible to
receive the funds.
------------------------------------------------------------
|Voluntary | 2012 | Contribution Allotment |
|Contribution Fund |Contribution| |
| | Totals | |
|---------------------+------------+-------------------------|
|ALS/Lou Gehrig's |$137,290 |As many as apply and |
|Disease Research | |receive grants that are |
|Fund | |provided for by the |
| | |monies contributed. |
|---------------------+------------+-------------------------|
SB 571 -- 2/22/13 -- Page 3
|Alzheimer's |$466,485 |As many as contract or |
|Disease/Related | |receive grants provided |
|Disorders Fund | |by the monies |
| | |contributed. |
|---------------------+------------+-------------------------|
|Arts Council Fund |$165,647 |As many as apply and |
| | |receive grants provided |
| | |by the monies |
| | |contributed. |
|---------------------+------------+-------------------------|
|CA Breast Cancer |$440,771 |As many as apply and |
|Research Fund | |receive grants provided |
| | |from the monies |
| | |contributed. |
|---------------------+------------+-------------------------|
|CA Cancer Research |$432,355 |As many as apply and |
|Fund | |receive grants provided |
| | |from the monies |
| | |contributed |
|---------------------+------------+-------------------------|
|CA Firefighters' |$152,004 |1 Group: California Fire |
|Memorial Fund | |Foundation |
|---------------------+------------+-------------------------|
|CA Fund for Senior |$272,742 |1 Group: California |
|Citizens | |Senior Legislature |
|---------------------+------------+-------------------------|
|CA Peace Officer |$136,172 |1 Group: California |
|Memorial Foundation | |Peace Officer Memorial |
|Fund | |Commission |
|---------------------+------------+-------------------------|
|CA Police Activities |$67,202 |The state CALPAL and |
|League (CALPAL) Fund | |county CALPAL chapters |
|---------------------+------------+-------------------------|
|CA Sea Otter Fund |$351,037 |Department of Fish and |
| | |Wildlife, and as many |
| | |that apply for grants |
| | |and contracts provided |
| | |for by 50% of the monies |
| | |contributed. |
|---------------------+------------+-------------------------|
|CA Seniors Special |$61,315 |The first $80K to the |
|Fund | |Area Agency on Aging |
| | |Advisory Council of |
| | |California and the rest |
| | |to as many area agencies |
| | |that the California |
SB 571 -- 2/22/13 -- Page 4
| | |Department of Aging |
| | |allocates available |
| | |contributed monies to. |
|---------------------+------------+-------------------------|
|CA YMCA Youth and |Initial Tax |The first $300K to the |
|Government Fund |Return 2012 |CA YMCA Youth and |
| | |Government Program and |
| | |the rest of the monies |
| | |allocated in $10K annual |
| | |grants as follows: |
| | |African American Leaders |
| | |for Tomorrow Program, |
| | |Asian Pacific Youth |
| | |Leadership Project, |
| | |Chicano Latino Youth |
| | |Leadership Project; the |
| | |money is to be used to |
| | |support program |
| | |participation. Any |
| | |remaining funds will be |
| | |allocated to the CA YMCA |
| | |Youth and Government |
| | |Program. The Board of |
| | |Directors for the CA |
| | |YMCA Youth and |
| | |Government Program may |
| | |award additional $10K |
| | |annual grants to |
| | |additional nonprofit |
| | |civic youth |
| | |organizations. The funds |
| | |distributed to the CA |
| | |YMCA Youth and |
| | |Government Program are |
| | |to be used for |
| | |program-related |
| | |expenses. |
|---------------------+------------+-------------------------|
|CA Youth Leadership |Initial Tax |1 group: Department of |
|Fund |Return 2012 |Education to provide for |
| | |the CA Youth Leadership |
| | |Project. |
|---------------------+------------+-------------------------|
|CA Veterans Homes |$210,078 |The number of |
|Fund | |established veteran's |
| | |homes (7). |
SB 571 -- 2/22/13 -- Page 5
|---------------------+------------+-------------------------|
|Child Victims of |$35,317 |As many counseling and |
|Human Trafficking | |prevention centers that |
|Fund | |apply and receive grants |
| | |provided from monies |
| | |contributed. |
|---------------------+------------+-------------------------|
|Emergency Food for |$551,515 |1 group: Department of |
|Families Fund | |social services for the |
| | |Emergency Food |
| | |Assistance Program. |
|---------------------+------------+-------------------------|
|Municipal Shelter |$244,701 |As many shelters as |
|Spay-Neuter Fund | |apply and receive grants |
| | |provided from the monies |
| | |contributed. |
|---------------------+------------+-------------------------|
|Rare & Endangered |$558,681 |1 group: Department of |
|Species Preservation | |Fish and Wildlife |
|Program | |endangered conservation |
| | |programs. |
|---------------------+------------+-------------------------|
|Safely Surrendered |$158,645 |1 group: Department of |
|Baby Fund | |Social Services for |
| | |Safely Surrender Baby |
| | |Law awareness programs. |
|---------------------+------------+-------------------------|
|School Supplies for |Initial Tax |As many as apply and |
|Homeless Children |Return 2012 |receive grants that are |
|Fund | |provided for by the |
| | |monies contributed. |
|---------------------+------------+-------------------------|
|State Children's |$376,243 |1 group: Department of |
|Trust for the | |Social Services for |
|Prevention of Child | |prevention and |
|Abuse | |intervention programs. |
|---------------------+------------+-------------------------|
|State Parks |Initial Tax |As many as purchase a |
|Protection |Return 2012 |parks pass that are |
|Fund/Parks Pass | |provided for by the |
|Purchase | |monies contributed. |
------------------------------------------------------------
Proposed Law
SB 571 -- 2/22/13 -- Page 6
Senate Bill 116 creates the Art for Kids Fund on the tax
form for the 2013 tax year filed on or after January 1,
2014. The bill maintains all the existing requirements for
the program including the annual reporting by September 1st
of each year to determine eligibility for the following
year, and the minimum contribution requirements ($250,000
in the second year) adjusted for inflation annually.
State Revenue Impact
The FTB estimates that this bill will result in about
$10,000 in lost revenue annually.
Comments
1. Purpose of the bill . The author's office provided the
following statement for the bill: "SB 571 is necessary to
allow California taxpayers an opportunity to voluntarily
contribute funds to a state program that promotes and
finances art education programs in our public schools and
communities throughout the state.
Unfortunately, the CAC was added to the tax form at a time
the state was still experiencing an economic recession and
when overall charitable giving was significantly down.
Given these major obstacles, the CAC did exceedingly well
for a new "check off" on the income tax form. Other
challenges the organization experienced included: 1)
unfamiliarity by many tax payers with "Arts Council Fund"
and the CA Arts Council; 2) leadership changes; and 3)
competition from better known groups, all very worthy, some
of whom have established themselves on the tax form for
many years.
The CAC compared contribution trends for the other
designated organizations listed on the income tax form
during its second and most critical year. Their research
showed that many of the other organizations saw a decrease
in their "check off" contributions as well. In other
words, taxpayers were still feeling squeezed by the economy
and pulled back on their philanthropic contributions.
I am confident that lessons have been learned. The fund
will be renamed for improved marketability. Instead of
SB 571 -- 2/22/13 -- Page 7
"Arts Council Fund" the name will better reflect the funds
purpose -- "Arts for Kids" fund or "CA Fund for Arts
Education". I have been ensured that the CAC remains
firmly committed to promoting the fund and will follow
through on a multi-pronged marketing campaign.
SB 571 would enable the CAC to raise additional funds so
that they can, in turn, support more of our constituents,
communities, non-profit organizations, and most
importantly, kids and schools throughout the state.
Although Visual and Performing Arts (VAPA) are embodied in
California's Education code in a comprehensive way, schools
are struggling financially and arts programs are among the
first curriculum-based subjects to lose funding. Funding
generated pursuant to SB 571 will help to bring equity into
classrooms around the state by funding programs such as
Teaching Artists and arts education programs in districts
where they are most needed.
The highly acclaimed Poetry Out Loud program is another
example of a CAC program that inspires and engages
students."
2. Is there a better way ? Committee analyses previously
expressed concern over adding a page to the tax form to
accommodate the check-offs. Since that time, the tax form
has grown by a page so every tax check off proposed last
year was included in the booklet for the 2012 tax year (see
chart above). With the proliferation of these bills, the
Committee may wish to consider a different tax check-off
system all together. For example, any group that would
like the opportunity for check off proceeds and any group
currently on the form could apply to the FTB and be listed
in the pages of the FTB tax booklet with an associated
number. The tax form could include 10 lines for taxpayers
to indicate the number from the form and then those groups
would receive the funds. For example, if the Emergency
Food for Families was number 1234 in the booklet, the
taxpayer would indicate that he or she wanted $10 to go to
"1234" on the form. This way, the Legislature would no
longer have to choose groups for the form and all
non-profits and quasi-government organizations would be
similarly situated for a tax check off.
3. Charity & government . Countless worthy causes may be
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funded by tax check-offs. The current system remains
subjective and is limited to those organizations that can
convince the Legislature to include them on the form.
These check-offs give the state a role in collecting money
for charity in addition to the role the tax system plays in
allowing deductions for charitable contributions. The
Committee may wish to consider whether the state should use
the tax code to encourage contributions to certain
charitable organizations.
4. A rose by any other name . This fund simply renames a
fund that was previously removed from the income tax form.
The Committee may wish to consider if a new name will
produce different results and make this fund more appealing
to taxpayers.
5. Related legislation . This committee passed out SB 116
(Liu) which extends the Emergency Food for Families fund
indefinitely with no sunset, as amended out of committee on
April 10th 2013. This fund is one of the two most
successful funds on the tax form.
Support and Opposition (4/24/13)
Support : California Arts Council (Sponsor); California
Alliance for Arts Education; California Parent Teacher
Association.
Opposition : None Received.