BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |AB 485 |Hearing | 7/1/15 |
| | |Date: | |
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|Author: |Williams |Tax Levy: |No |
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|Version: |6/19/15 |Fiscal: |Yes |
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|Consultant|Bouaziz |
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PERSONAL INCOME TAXES: VOLUNTARY CONTRIBUTIONS: PREVENTION
OF ANIMAL HOMELESSNESS AND CRUELTY FUND
Authorizes the addition of the Prevention of Animal Homelessness
and Cruelty Fund (Fund) check-off to the personal income tax
return.
Background and Existing Law
Existing state law allows taxpayers to contribute money to
voluntary contribution funds (VCFs) by checking a box on their
state income tax returns. California law requires contributions
made through so-called "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 in the
subsequent year.
The legislature adds individual VCF's yearly. With a few
exceptions, VCFs remain on the return until they are repealed by
a sunset date or fail to generate a minimum contribution amount.
In general, the minimum contribution amounts are adjusted
annually for inflation. For most VCFs, the minimum contribution
amount is $250,000, beginning in the fund's second year. The
following check-offs do not have a minimum contribution
requirement:
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California Firefighters' Memorial Foundation Fund,
California Peace Officer Memorial Foundation Fund, and
California Seniors Special Fund.
When a taxpayer contributes to VCFs, the Franchise Tax Board
(FTB) deposits the total of all contributions into the fund
created as part of the VCF's legislative authorization. For
some VCFs, such as the Protect Our Coast and Ocean Fund,
taxpayers' contributions are allocated to a state agency for use
in a state administered grant program. Other VCFs' authorizing
statutes direct administrative agencies to allocate donations to
a private organization. For example, the Office of Emergency
Services passes VCF funds to the American Red Cross. Other
funds require the State Controller to send the funds directly to
private organizations without passing through an administrative
agency, such as the California Fire Foundation. FTB, the
Controller, and an administrative agency may deduct from the
amount of donations each VCFs receives for direct costs of
administering a fund.
There are currently 18 check-offs listed on the tax return form.
The tax check-off program collects approximately $5 million in
annual contributions for all VCFs.
Proposed Law
Assembly Bill 485 adds the Prevention of Animal Homelessness and
Cruelty Fund (Fund), and allows a taxpayer to make a voluntary
contribution to the Fund on the state personal income tax
return, beginning once an existing check-off for charitable fund
contribution has been removed, or as soon as space is available.
The bill requires the Fund to meet a minimum contribution
threshold of $250,000, indexed yearly for inflation.
Additionally, the bill provides that all money transferred to
the Fund, upon appropriation by the Legislature, be allocated as
follows:
AB 485 (Williams) 6/19/15 Page 3
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To FTB and the State Controller for reimbursement of all
costs incurred in administering the VCF,
The first $250,000, shall be distributed by the
Department of Food and Agriculture, to a city, county, or
city and county animal control agency or for the sole
purpose of supporting spay and neuter activities by that
entity to prevent and eliminate cat and dog homelessness.
Any amount collected over $250,000, shall be distributed
by the Department of Food and Agriculture, to be used by
programs designed to prevent and eliminate cat and dog
homelessness or programs for the prevention, investigation,
and prosecution of animal cruelty and neglect.
AB 485 provides that the bill automatically sunsets on January 1
of the fifth taxable year following the Fund's first appearance
on the personal income tax form, or January 1, 2022, whichever
occurs first.
State Revenue Impact
FTB estimates annual revenue losses of roughly $8,000 for every
$250,000 contributed to the Fund by taxpayers who itemize.
Comments
1. Purpose of the bill. According to the author, "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 response to the voluntary check off
will draw new donors."
2. New check-off? With few exceptions, voluntary contribution
funds remain on the personal income tax return until they are
either repealed or fail to meet their minimum contribution
amount, typically $250,000. If FTB estimates a contribution
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fund is likely to fail to meet the minimum contribution amount,
that fund is repealed effective January 1 of that calendar year.
A similar VCF, the Municipal Shelter Spay-Neuter Fund, appeared
on the 2008 and 2009 tax returns. This fund received $210,029
in 2009 and $194,462 in 2010. Because the fund failed to meet
the minimum contribution threshold in 2010, FTB removed the fund
from the income tax return form.
3. Is there a better way? The current tax check-off program
generates a relatively small share of statewide contributions to
charitable causes. In 2008, Californians donated more than $17
billion to charities. However, less than 1% of Californians use
the tax check-off program to make donations to charitable
organizations. FTB reports that in 2012, 89,335 out of 15
million taxpayers contributed a total of $4.8 million to 18
check-offs. Last year, SB 1207 (Wolk) attempted to address this
issue and help grow charitable giving by establishing the
California Voluntary Contribution Program to promote charitable
giving and collect donations. This would have allowed many more
charities to participate in the program, would have screened
potential participants before adding them onto the form, and
eliminated the need for each organization to go through the
Legislative process. Under SB 1207, charities would instead
apply to the office of California Volunteers for placement on
the income tax form. However, SB 1207 (Wolk) was held on
suspense in Assembly Appropriations.
4. Bills, bills, bills. Currently, tax check-offs must be added
by the Legislature. In 2008, 11 VCFs appeared on the personal
income tax return. Today, the return contains 18. With
legislation introduced every year to add new VCFs, there is
little reason to expect this number to stop growing. The
growing number results in significant costs to the Franchise Tax
Board (FTB). It is estimated that FTB can only handle 12-15
more check-offs before it has to redesign its information
technology system, at a cost of $800,000 to $1 million.
Assembly Actions
Assembly Revenue and Taxation 7-0
Assembly Appropriations 17-0
Assembly Floor 77-0
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Support and
Opposition (6/25/15)
Support : American Society for the Prevention of Cruelty to
Animals; Humane Society of the United States; State Humane
Association of California.
Opposition : California Department of Finance.
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