BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
SB 571 (Price) - Personal Income Taxes: Contributions: Keep Arts
in Schools Fund
Amended: May 14, 2013 Policy Vote: G&F 6-1
Urgency: No Mandate: No
Hearing Date: May 20, 2013 Consultant: Robert Ingenito
This bill does not meet the criteria for referral to the
Suspense File.
Bill Summary: SB 571 would create the Keep Arts in Schools Fund
(Fund) as a voluntary contribution fund on the personal income
tax form.
Fiscal Impact: The Franchise Tax Board (FTB) estimates that this
measure would result in an annual revenue loss of $10,000
(General Fund) beginning in 2014-15. FTB indicates that the bill
would not significantly impact its own costs.
Background: Current law allows taxpayers to contribute money to
one or more of 18 voluntary contribution funds during the
process of filing their state income tax return (tax check-off).
These contributions are made from taxpayers' own resources, not
from their tax liability (as is possible on federal tax
returns). Thus, they do not directly reduce state taxes
otherwise available to support state-funded programs in the year
in which they are made. However, the amounts are allowed as an
itemized deduction for charitable contributions on the
subsequent year's income tax return. These voluntary
contributions support various purposes, including cancer
research, endangered species preservation, and emergency food
assistance.
Contributions to tax check-offs have historically ranged from
$250,000 to as high $800,000 per year. All but one (the
California Seniors Special Fund) have sunset dates, and most
must meet a minimum annual contribution to remain on the return.
SB 1076 (Price, Chapter 319, Statutes of 2010) established the
Arts Council Fund that appeared on the 2010 and 2011returns as a
voluntary contribution check-off. The Arts Council Fund, the
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predecessor to the Fund, first appeared on the 2010 return and
last appeared on the 2011 return because 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Arts Council Fund was repealed effective January 1, 2012, and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.
Proposed Law: This bill would require FTB to revise the tax
return to include a designation space for the Fund beginning
with the first taxable year that another voluntary contribution
fund is removed or as soon as space is available. This
designation could be added to the 2013 tax return filed on or
after January 1, 2014.
For the second taxable year the Fund is on the return, this bill
would require the Fund to meet the $250,000 minimum contribution
test. FTB would be required to estimate by September 1 of any
calendar year after the first taxable year the Fund appears on
tax returns that contributions made under this bill would be
less than $250,000 (as indexed for inflation).
Beginning with the third calendar year after the Fund appears on
the return, the FTB would adjust the minimum contribution amount
for the Fund by September 1, of that year. The law authorizing
designations for this Fund would be inoperative on or after
January 1 of that calendar year and repealed on December 1 of
that calendar year if the Fund's estimated contributions would
be less than the minimum contribution amount.
This bill would allow the voluntary contribution designation to
remain on the tax return for five years unless a later enacted
statute deletes or extends that date.
This bill would specify that if payments and credits reported on
the return do not exceed the taxpayer's liability, then the
taxpayer's return shall be treated as if no designation has been
made. If no designee is specified, a designated contribution
amount would be transferred to the General Fund.
Staff Comments: This tax check-off's funds would be allocated to
the Arts Council, which would in turn allocate grants to
individuals or organizations administering arts programs.
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