BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 485 (Williams) - Personal income taxes: voluntary  
          contributions: Prevention of Animal Homelessness and Cruelty  
          Fund.
          
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          |Version: June 19, 2015          |Policy Vote: GOV. & F. 7 - 0    |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: August 17, 2015   |Consultant: Robert Ingenito     |
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          This bill meets the criteria for referral to the Suspense File.




          


          Bill  
          Summary: AB 485 would authorize the addition of the Prevention  
          of Animal Homelessness and Cruelty Fund (Fund) check-off to the  
          personal income tax return.    


          Fiscal  
          Impact: 
           The Franchise Tax Board (FTB) estimates that this bill would  
            result in an annual General Fund revenue loss of about $8,000.

           The State Controller's Office (SCO) and FTB and would be  
            reimbursed from the Fund for related administrative costs.







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           The California Department of Food and Agriculture (CDFA) would  
            incur first-year General Fund costs of $66,000, and ongoing  
            annual costs of $125,000. The specific timing of these  
            expenses would depend on when the check-off were to appear on  
            the tax form.
           


          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 the case with federal tax returns.  
          Check-off amounts are deductible as charitable contributions on  
          taxpayers' returns during the subsequent tax year. With some  
          exceptions, each voluntary contribution fund has a sunset date  
          and is required to meet a minimum contribution amount of  
          $250,000, adjusted annually for inflation.


          Proposed Law:  
          This bill would (1) add the Prevention of Animal Homelessness  
          and Cruelty Fund (Fund), and (2) allow 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 would require the Fund to meet a minimum  
          contribution threshold of $250,000, indexed yearly for  
          inflation. All money transferred to the Fund, upon appropriation  
          by the Legislature, would be allocated as follows:
                 To FTB and SCO for reimbursement of administrative  
               costs.


                 The first $250,000 would be distributed by CDFA to a  
               city, county, or city and county animal control agency or  
               for the sole purpose of supporting spay and neuter  
               activities to prevent and eliminate cat and dog  
               homelessness.


                 Any amount collected over $250,000 would be distributed  
               by CDFA to be used by programs designed to prevent and  








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               eliminate cat and dog homelessness or programs for the  
               prevention, investigation, and prosecution of animal  
               cruelty and neglect. 





          The bill would automatically sunset 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.




          Staff  
          Comments:  FTB data indicate that roughly one-half of taxpayers  
          who contribute to the Fund itemize their deductions. The average  
          tax rate for these taxpayers is about six percent, which  
          produces the $9,000 annual revenue loss. In 2012, about 89,000  
          out of 15 million taxpayers (or less than one percent) utilized  
          one or more of the 18 check-offs; aggregate contributions  
          totaled $4.8 million.
          A similar tax checkoff, 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.


          CDFA's costs would result from the bill's workload requirements  
          that kick in once the Fund contributions exceed $250,000. These  
          costs would not occur until threshold is exceeded; thus, until  
          the Fund reaches $250,000, the bill would not have a fiscal  
          impact to CDFA. At that time, however, the Department would be  
          required to establish a new competitive grant program, evaluate  
          grant applications and distribute grant funds to eligible  
          municipal shelters. The workload to implement the competitive  
          grant program would be dependent on the number of grants and the  
          overall size of the program. CDFA estimates it would require one  
          position and basic operating expenses at a total annual cost of  
          $125,000.









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