BILL ANALYSIS Ó
SB 571
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Date of Hearing: August 13, 1013
ASSEMBLY COMMITTEE ON ARTS, ENTERTAINMENT, SPORTS, TOURISM, AND
INTERNET MEDIA
Ian C. Calderon, Chair
SB 571 (Liu) - As Amended: June 25, 2013
SENATE VOTE : 35-2
SUBJECT : Income taxes: voluntary contributions: Keep Arts in
Schools Fund
SUMMARY : Authorizes the addition of the Keep Arts in Schools
Fund (Fund) check off to the personal income tax (PIT) form.
Specifically, this bill :
1)Provides that all money transferred to the Fund, upon
appropriation by the Legislature, shall be allocated to the:
a) Franchise Tax Board (FTB) and the State Controller for
reimbursement of all costs incurred administering the Fund;
and,
b) California Arts Council (CAC), for allocation of grants
to individuals or organizations administering arts programs
for children in preschool through 12th grade.
2) Specifies that the Fund provisions shall remain in effect
only until January 1 of the fifth taxable year following the
Fund's first appearance on the PIT return. However, if the
FTB determines that the amount of contributions estimated to
be received during a calendar year will not meet a minimum
contribution threshold, the provisions shall be inoperative
with respect to taxable years beginning on or after January 1
of that calendar year.
EXISTING LAW :
1)Allows taxpayers to contribute to one or more of the 18
voluntary contribution funds (VCFs or check-offs) on the PIT
return. [Revenue & Taxation Code Section 18871(a).]
2)Provides a specific sunset date for each VCF, except for the
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California Seniors Special Fund and the State Parks Protection
Fund. [Revenue & Taxation Code Section 18871(b).]
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 for an Arts Council composed of 11 members. Among
other things, CAC is authorized to award prizes or direct
grants to individuals or organizations in accordance with
applicable regulations. [Government Code Sections 8751(a) and
8753(o).]
FISCAL EFFECT : The FTB estimates that this bill would result
in annual General Fund revenue losses of $10,000 beginning in
fiscal year 2014-15.
COMMENTS :
1)Author's Statement and Support :
Senate Bill 571 creates the "Keep Arts in Schools Fund" on the
tax form for the 2013 tax year filed on or after January 1,
2014. This bill was originally introduced by Senator Price,
and upon his election to the Los Angeles City Council and
subsequent resignation from the Senate, the measure is being
brought forward by Senator Liu.
According to the prior author, "SB 571 is necessary to allow
California taxpayers an opportunity to voluntarily contribute
funds to CAC for a state program that promotes and finances
art education programs in our public schools and communities
throughout the state. 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 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
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Teaching Artists and arts education programs in districts
where they are most needed."
The California Alliance for Arts Education adds the following
in support, "CAC would administer the resources collected in
this fund to help ensure that every student has access to the
benefits of quality arts education. We strongly support the
mission and commitment of CAC and are working closely with
them to build a broad base of support for arts education."
2)Background: Voluntary Tax Form Contributions and Prior Effort
to Support the Arts :
Existing state law allows taxpayers to contribute money to one
or more of 18 VCFs 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 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 VCFs, 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.
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.
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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 Arts Council Fund [SB 1076 (Price), Chapter 319, Statues
of 2010], first 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.
Senator Price commented about the prior effort, saying,
"Unfortunately, CAC was originally 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.
"I am confident that lessons have been learned. The fund will
be renamed for improved marketability. I have been ensured
that the CAC remains firmly committed to promoting the fund
and will follow through on a multi-pronged marketing
campaign."
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1)Prior Legislation : SB 1076 (Price), Chapter 319, Statues of
2010, established the Arts Council Fund and authorized
taxpayers to designate a contribution on their tax returns.
REGISTERED SUPPORT / OPPOSITION :
Support
California Arts Council (Sponsor)
American Federation of State, County and Municipal Employees,
AFL-CIO
California Alliance for Arts Education
California Catholic Conference
California State PTA
Opposition
None on file
Analysis Prepared by : Dana Mitchell / A.,E.,S.,T. & I.M. /
(916) 319-3450