BILL ANALYSIS Ó
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 782 HEARING: 1/15/14
AUTHOR: DeSaulnier FISCAL: Yes
VERSION: 1/6/14 TAX LEVY: No
CONSULTANT: Ewing
VOLUNTARY CONTRIBUTIONS:
CALIFORNIA SEXUAL VIOLENCE VICTIM SERVICES FUND
Creates the California Sexual Violence Victim Services Fund
tax check-off on the income tax form.
Background and Existing Law
Existing law allows taxpayers to contribute to one or more
of 20 voluntary contribution funds, known as VCFs or
check-offs, by checking a box on their state income tax
return. California law requires check-off contributions 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 in 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 either are
repealed by a sunset date or fail to meet a minimum
contribution amount. Minimum contribution amounts are
adjusted annually for inflation, with specific exceptions.
For most VCFs, the minimum contribution amount is $250,000,
beginning 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
estimate whether contributions to each fund meet that
amount. If the FTB estimates that a fund will fail to meet
its minimum contribution amount, that fund is repealed for
the following calendar year.
SB 782 -- 1/6/14 -- Page 2
The following check-offs do not have a minimum contribution
requirement:
California Firefighters' Memorial Foundation Fund,
California Peace Officer Memorial Foundation Fund,
and
California Seniors Special Fund.
Proceeds from tax check-offs are dedicated to a range of
programs. The following list provides information on
current tax check-offs and how contributions are
administered. This list does not reflect tax contributions
that have been repealed under the terms of their statutes.
------------------------------------------------------------
|Voluntary | 2013 | Contribution Allotment |
|Contribution Fund |Contribution| |
| | s | |
|---------------------+------------+-------------------------|
|Alzheimer's | $395,854 | As many as contract or |
|Disease/Related | | receive grants provided |
|Disorders Fund | | by the monies |
| | | contributed. |
|---------------------+------------+-------------------------|
|CA Breast Cancer | $362,308 | As many as apply and |
|Research Fund | | receive grants provided |
| | | from the monies |
| | | contributed. |
|---------------------+------------+-------------------------|
|CA Cancer Research | $384,308 | As many as apply and |
|Fund | | receive grants provided |
| | | from the monies |
| | | contributed. |
|---------------------+------------+-------------------------|
|CA Firefighters' | $123,414 | California Fire |
|Memorial Fund | | Foundation. |
|---------------------+------------+-------------------------|
|CA Fund for Senior | $228,965 | California Senior |
|Citizens | | Legislature. |
|---------------------+------------+-------------------------|
|CA Peace Officer | $125,889 | California Peace |
|Memorial Foundation | | Officer Memorial |
|Fund | | Commission. |
|---------------------+------------+-------------------------|
|CA Sea Otter Fund | $227,791 | Department of Fish and |
SB 782 -- 1/6/14 -- Page 3
| | | Wildlife, and as many |
| | | as apply for grants and |
| | | contracts provided for |
| | | by 50% of |
| | | contributions. |
|---------------------+------------+-------------------------|
|CA Seniors Special | $58,783 | The first $80K to the |
|Fund | | Area Agency on Aging |
| | | Advisory Council of |
| | | California and the rest |
| | | to area agencies as |
| | | allocated by the |
| | | California Department |
| | | of Aging. |
|---------------------+------------+-------------------------|
|CA YMCA Youth and | $70,298 | The first $300K to the |
|Government Fund | | CA YMCA Youth and |
| | | Government Program. |
| | | The rest is allocated |
| | | in $10K annual grants |
| | | to the: African |
| | | American Leaders for |
| | | Tomorrow Program, Asian |
| | | Pacific Youth |
| | | Leadership Project, |
| | | Chicano Latino Youth |
| | | Leadership Project. |
| | | Remaining funds |
| | | allocated to the CA |
| | | YMCA Youth and |
| | | Government Program, |
| | | whose board may award |
| | | additional $10K annual |
| | | grants to additional |
| | | nonprofit civic youth |
| | | organizations. |
|---------------------+------------+-------------------------|
|CA Youth Leadership | $54,210 | To the Department of |
|Fund | | Education to provide |
| | | for the CA Youth |
| | | Leadership Project. |
|---------------------+------------+-------------------------|
|Child Victims of | $214,985 | As many counseling and |
|Human Trafficking | | prevention centers that |
|Fund | | apply and receive |
| | | grants provided from |
SB 782 -- 1/6/14 -- Page 4
| | | monies contributed. |
|---------------------+------------+-------------------------|
|Emergency Food for | $420,719 | To the Department of |
|Families Fund | | Social Services for the |
| | | Emergency Food |
| | | Assistance Program. |
|---------------------+------------+-------------------------|
|Municipal Shelter | $212,657 | As many as apply and |
|Spay-Neuter Fund | | receive grants provided |
| | | from the monies |
| | | contributed. |
|---------------------+------------+-------------------------|
|Rare & Endangered | $441,809 | Department of Fish and |
|Species Preservation | | Wildlife endangered |
|Program | | conservation programs. |
|---------------------+------------+-------------------------|
|School Supplies for | $360,676 | As many as apply and |
|Homeless Children | | receive grants provided |
|Fund | | for by the monies |
| | | contributed. |
|---------------------+------------+-------------------------|
|State Children's | $297,668 | To the Department of |
|Trust for the | | Social Services for |
|Prevention of Child | | prevention and |
|Abuse | |intervention programs. |
|---------------------+------------+-------------------------|
|State Parks |$366,504 | As many as purchase a |
|Protection | | parks pass that can be |
|Fund/Parks Pass | | provided from the |
|Purchase | |monies contributed. |
|---------------------+------------+-------------------------|
|Keep Arts in Schools |Initial Tax | To the Arts Council for |
|Fund | Return | grants to organizations |
| | 2013 | providing parts |
| | | programs in schools. |
|---------------------+------------+-------------------------|
|Protect Our Coast |Initial Tax | To the California |
|and Oceans Fund | Return | Coastal Commission to |
| | 2013 | provide grants to |
| | | organizations in |
| | | support of coastal |
| | | resource programs and |
| | | related educational |
| | | activities. |
|---------------------+------------+-------------------------|
|American Red Cross, |Initial Tax | To the Office of |
SB 782 -- 1/6/14 -- Page 5
|California Chapter | Return | Emergency Services for |
| | 2013 | distribution to the |
| | | American Red Cross. |
| | | |
------------------------------------------------------------
Proposed Law
Senate Bill 782 adds the "California Sexual Violence Victim
Services Fund" on the tax form for voluntary contributions,
when space is available. Contributions received through
the fund would be distributed to the EpiCenter of the Safe
and Active Communities Branch of the State Department of
Public Health for allocation to the California Coalition
Against Sexual Assault (CALCASA) for the awarding of grants
to support CALCASA rape crisis programs for victims of rape
and sexual assault. The bill maintains existing
requirements for the program, including the annual
reporting by September 1st of each year by the Franchise
Tax Board to determine eligibility for the following year,
and the $250,000 minimum contribution requirements,
beginning in the second year, with annual adjustment for
inflation and an automatic repeal after five years.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . Senate Bill 782 would establish a
tax check-off program, consistent with existing tax
check-off programs, to support programs for victims of rape
and sexual assault. Including this fund on state tax forms
will increase awareness of the significance of rape and
sexual assault programs as well as enhance charitable
giving for these essential programs.
2. Trying again . In 2005 the Legislature enacted
legislation to establish the California Sexual Violence
Victims Services Fund (AB 190, Negrete McLeod). The fund
was added to the tax form in 2006 and received $199,900 in
contributions. In 2007, the fund received $184,980 in
SB 782 -- 1/6/14 -- Page 6
taxpayer contributions. The enacting statute required the
fund to meet a minimum contribution level of $250,000 or it
would be repealed. The fund did not meet the required
threshold and the fund was removed from the tax form. The
Committee may wish to consider whether the same check-off
will be successful when it failed to meet statutory
requirements in the past.
3. Is there a better way ? Each year, the Committee
considers several bills relating to tax check-offs.
Previous committee analyses expressed concern over
establishing new tax check-offs or adopting special
legislation for a specific charity or program. The
Legislature has chosen to encourage charitable giving by
allowing organizations to receive funding through
check-offs and taxpayers to receive a deduction for
charitable giving on their tax return. However, the
current design and administration of the existing tax
check-off program raises a number of concerns that suggest
the need for a different approach to tax check-offs.
The current program generates a relatively small
share of statewide contributions.
The Franchise Tax Board reports that in 2012, 89,335
taxpayers contributed around $4.7 million to
California's tax check-off programs. Out of
approximately 15 million tax filers, less than 1% of
Californians are utilizing the tax check-off program
to make donations to charitable organizations. Data
from 2008, as analyzed by the Chronicle of
Philanthropy, indicate that in that year Californians
donated more than $17 billion to charities, ranking
the state first in the nation for sources of
charitable contributions and accounting for $1 in
every $8 donated in the U.S. In light of the low
participation rate among tax filers, and relatively
small level of funds contributed through tax
check-offs, it is not clear that the tax check-off
program is an efficient and effective strategy to
connect donors with charitable organizations.
Increasing demand from charitable organizations
that want to participate in the program may soon
generate significant costs.
SB 782 -- 1/6/14 -- Page 7
Prior to a redesign of tax forms, and movement toward
greater use of electronic filings, there were more tax
check-off programs than could be accommodated on the
tax forms. While changes to the tax forms has
accommodated more tax check-offs, the FTB reports that
it can accommodate 12-15 additional tax check-offs
before its information technology system will need to
be redesigned, at a cost of between $800,000 and $1
million. Depending on the number of additional tax
check-offs approved by the Legislature each year, it
could be between two and five years before the FTB's
systems must be upgraded.
The current tax check-off program lacks monitoring
to ensure that charities comply with state
requirements.
In authorizing tax check-offs, with some exceptions,
the Legislature has required that check-offs must
generate contributions that exceed a specified minimum
to remain on the tax form. This policy decision was
largely driven by competition for limited space on the
tax form. Other than the requirements to meet the
minimum contribution threshold, there are no specific
requirements in the tax code that govern participation
in a tax check-off program. For instance, charitable
organizations are required to meet numerous reporting
and filing requirements consistent with their
charitable status. SB 1262 (Sher, 2004) established
requirements for charitable organizations making
contracts for fundraising, including requirements for
those charities to register with the Office of the
Attorney General. There is no requirement under the
tax check-off statutes that the FTB or other agencies
administering tax check-off funds confirm that
recipient charities comply with these and other state
rules and regulations.
The Committee may wish to consider revising the design and
administration of the tax check-off program to:
Continue to encourage charitable giving,
Expand access to a tax check-off to all eligible
charities,
Streamline the process for charitable organizations
and donors,
Establish clear and consistent standards for tax
SB 782 -- 1/6/14 -- Page 8
check-offs,
Designate an administering agency to implement the
program, enforce standards, and monitor program
effectiveness.
4. Let's be clear . Funds received through California's
various tax check-off funds are administered in a range of
ways. Some, such as the Protect Our Coast and Oceans Fund
(AB 754, Muratsuchi, 2013) are allocated to a state
department for use in a state-administered grant program.
Others, such as the American Red Cross, California Chapters
Fund (AB 511, Pan, 2013), are allocated to a state agency
for distribution to a non-profit organization, with a
requirement that the recipient organization submit to the
state a plan for the use of the contribution and that the
state agency conduct oversight. Further, it is not clear
how the state agency would respond should the organization
specific in the bill not be able to receive the funds, due
to dissolution, a name change or other factors. The
Committee may wish to consider amending the bill to require
CALCASA to:
Submit a plan for use of the contributions it
receives,
Require the administering agency to conduct
oversight of the funds it distributes,
Provide the administering agency flexibility to
hold or direct the funds to other recipients providing
rape and sexual abuse crises services if CALCASA is
unable to receive the funds.
5. Technical amendment . SB 782 specifies that the
California Sexual Violence Victim Services Fund shall not
be added to the tax form until another voluntary
contribution designation is removed. Recent revisions to
the tax form may result in sufficient space to add funds to
the tax form without first removing an existing fund. The
Committee may wish to consider amending SB 782 to permit
the fund to be added when another fund is removed or as
soon as space is available.
6. Related legislation . SB 782 is not the only bill
dealing with tax check-offs this legislative session:
Assembly Bill 247 (Wagner, Chapter 670, 2013) extends the
repeal date from 2015 to 2020 for the California Fund for
Senior Citizens tax check-off on the tax form.
SB 782 -- 1/6/14 -- Page 9
Assembly Bill 394 (Yamada, Chapter 671, 2013) extends the
repeal date of the California Alzheimer's Disease and
Related Disorders Research Fund tax check-off on the tax
form from 2015 to 2020.
Assembly Bill 511 (Pan, Chapter 451, 2013) creates the
American Red Cross, California Chapters Fund check-off on
the tax form.
Assembly Bill 1286 (Skinner, Chapter 664, 2013)
temporarily suspends the annual inflation adjustment for
minimum contribution levels for the California Breast
Cancer Research Fund check-off on the tax form.
Senate Bill 116 (Liu, Chapter 222, 2013) extends the
repeal date from 2014 to 2019 for the Emergency Food
Assistance Program check off on the tax form.
Senate Bill 571 (Liu, Chapter 430, 2013) creates the Art
for Kids Fund check-off on the tax form.
Senate Bill 761 (DeSaulnier, 2014) would modify state
administration of funds received through the School
Supplies for Homeless Children Fund.
Support and Opposition (1/9/14)
Support : Unknown.
Opposition : Unknown.