BILL ANALYSIS                                                                                                                                                                                                    



                                                                     AB 485


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          Date of Hearing:  April 20, 2015





                     ASSEMBLY COMMITTEE ON REVENUE AND TAXATION


                                 Philip Ting, Chair





          AB 485  
          (Williams) - As Amended March 26, 2015





          Majority vote.  Fiscal committee.  


          SUBJECT:  Personal income taxes:  voluntary contributions:   
          Prevention of Animal Homelessness and Cruelty Fund


          SUMMARY:  Authorizes the addition of the Prevention of Animal  
          Homelessness and Cruelty Fund (Fund) checkoff to the personal  
          income tax (PIT) return upon the removal of another voluntary  
          contribution fund (VCF) from the return, or as soon as space is  
          available.    Specifically, this bill:  


          1)Establishes the Fund in the State Treasury.  

          2)Provides that all money transferred to the Fund, upon  








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            appropriation by the Legislature, shall be allocated to the:

             a)   Franchise Tax Board (FTB) and the State Controller for  
               reimbursement of all costs incurred in administering the  
               VCF; and, 

             b)   Department of Food and Agriculture for the distribution  
               of grants to a city or county animal control agency or  
               shelter that is current on its reporting requirements to  
               the State Department of Public Health, Veterinary Public  
               Health Section.    

          3)Provides that funds obtained by a municipality under a grant  
            from the Fund may be used to pay for the following:

             a)   Programs designed to prevent and eliminate cat and dog  
               homelessness;

             b)   Research that explores novel approaches to preventing  
               and eliminating pet homelessness; and, 

             c)   Prevention, investigation, and prosecution of animal  
               cruelty and neglect.

          4)Provides that distributed grants may be paid to outside  
            agencies that are under contract or in a demonstrated  
            partnership with the municipality to conduct these activities.

          5)Requires the Department of Food and Agriculture to award  
            grants through a competitive, project-specific grant process  
            and to oversee the grant program.  

          6)Specifies that a grantee shall not use a grant award for  
            administrative expenses or for any purpose outside of  
            California.  

          7)Provides for the Fund provisions' automatic sunset on either  
            January 1 of the fifth taxable year following the Fund's first  
            appearance on the PIT return or January 1, 2022, whichever  








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            occurs first.

          8)Requires the Fund to meet a minimum contribution threshold of  
            $250,000 indexed for inflation.  

          EXISTING LAW:  


          1)Allows taxpayers to contribute to one or more of 18 VCFs on  
            the 2014 PIT return.

          2)Provides a specific sunset date for each VCF, except for the  
            California Seniors Special Fund and the State Parks Protection  
            Fund.

          3)Requires each VCF to meet an annual minimum contribution  
            amount to remain in effect, except for the California  
            Firefighters' Memorial Fund, the California Peace Officer  
            Memorial Foundation Fund, and the California Seniors Special  
            Fund.

          FISCAL EFFECT:  The FTB estimates annual revenue losses of  
          roughly $8,000 beginning in Fiscal Year 2016-17 resulting from  
          itemized deductions.  


          COMMENTS:


          1)The author has provided the following statement in support of  
            this bill:


               The goal of the new fund proposed in AB 485 is to appeal to  
               a wider selection of contributors by expanding the use of  
               fund dollars to include animal cruelty prevention and  
               investigation.  In the face of recent animal cruelty cases  
               here in Sacramento and the resounding public outcry, there  
               is increased confidence that adding cruelty funding and  








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               response to the voluntary check off will draw new donors.  


          2)Committee Staff Comments


              a)   So many causes, so little space  :  There are countless  
               worthy causes that would benefit from the inclusion of a  
               VCF on the state's income tax returns.  At the same time,  
               space on the returns is limited.  Thus, it could be argued  
               that the current system for adding VCFs to the form is  
               subjective and essentially rewards organizations that can  
               convince the Legislature to include their fund on the form.

              b)   Legislative history  :  AB 2291 (Mendoza), Chapter 328,  
               Statutes of 2008, authorized the addition of the Municipal  
               Shelter Spay-Neuter Fund to the PIT return.  This VCF  
               appeared on the 2008 and 2009 tax returns in calendar years  
               2009 and 2010 respectively.  This VCF received $210,029 in  
               2009 and $194,462 in 2010.  In 2010, the VCF needed to meet  
               a minimum contribution threshold of $250,000 but failed to  
               do so; and, as a result, the VCF ceased to be operative.
                
                In 2011, the Legislature once again authorized the addition  
               of an identically named Municipal Shelter Spay-Neuter Fund  
               checkoff [AB 564 (Smyth), Chapter 549, Statutes of 2011].   
               Once again, this VCF was designed to provide funds for  
               low-cost or free spay-neuter services associated with  
               municipal shelters in California.  Unfortunately, however,  
               this VCF fared little better than its predecessor.   
               Specifically, the VCF received $244,701 in 2012, $217,883  
               in 2013, and only $217,549 in 2014.  Thus, the VCF once  
               again fell off the return for failing to meet its minimum  
               contribution threshold.  

              c)   VCF policy  :  This Committee's VCF policy provides that  
               "[A]ll proponents seeking authorization for a new or  
               reauthorized checkoff shall provide information justifying  
               their expectation that the checkoff will meet its minimum  








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               contribution requirement."  In addition, this Committee's  
               VCF policy states that "[C]heckoffs that have failed to  
               meet their minimum contribution requirement will not be  
               extended or reauthorized."  


               Given that two separate municipal shelter VCFs failed to  
               meet their minimum contribution thresholds within the last  
               few years, it is an open question whether this Fund will  
               fare any better.  To this end, Committee staff questions  
               the precedent of simply re-establishing past VCFs when they  
               fail to garner sufficient support to remain on the form.   
               The author, however, notes that the previous VCFs were  
               exclusively focused on animal overpopulation, while this  
               Fund additionally authorizes grant moneys to be spent on  
               the prevention, investigation, and prosecution of cruelty  
               to animals.  The author's office believes that, "there is  
               increased confidence that adding cruelty funding and  
               response to the voluntary check off will draw new donors."


              d)   Technical considerations  :


               i)     This bill provides that grant moneys shall be  
                 distributed to city or county animal control agencies or  
                 shelters (emphasis added).  In the remainder of this  
                 bill, however, the language refers exclusively to  
                 "municipalities" (e.g., funds obtained by a  
                 "municipality" may be used for certain specified  
                 purposes).  The term "municipality", in turn, could be  
                 read to apply only to cities and not counties.  If the  
                 intention is to allow grant moneys to be distributed to  
                 counties as well as cities, technical amendments should  
                 be adopted to make this intention clear. 


               ii)    The reference to "initial return" on page 2, line  
                 16, should be replaced with "original return".       








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               iii)   The FTB has also suggested a set of technical  
                 amendments in its staff analysis of this bill.


          REGISTERED SUPPORT / OPPOSITION:




          Support


          None on file




          Opposition


          None on file




          Analysis Prepared by:M. David Ruff / REV. & TAX. / (916)  
          319-2098


















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