BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 485| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 485 Author: Williams (D), et al. Amended: 6/19/15 in Senate Vote: 21 SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 7/1/15 AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach, Pavley SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/27/15 AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen ASSEMBLY FLOOR: 77-0, 5/7/15 - See last page for vote SUBJECT: Personal income taxes: voluntary contributions: Prevention of Animal Homelessness and Cruelty Fund SOURCE: Author DIGEST: This bill authorizes the addition of the Prevention of Animal Homelessness and Cruelty Fund (Fund) check-off to the personal income tax return. ANALYSIS: Existing law: 1)Allows taxpayers to contribute money to voluntary contribution funds (check-offs) by checking a box on their state income tax returns. 2)Requires contributions made through check-offs to be made from AB 485 Page 2 taxpayers' own resources and not from their tax liability, as is possible on federal tax returns. 3)Allows taxpayers to claim check-off amounts as charitable contributions on taxpayers' tax returns in the subsequent year. This bill: 1)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. 2)Requires the Fund to meet a minimum contribution threshold of $250,000, indexed yearly for inflation. 3)Provides that all money transferred to the Fund, upon appropriation by the Legislature, be allocated as follows: To the Franchise Tax Board (FTB) and the State Controller for reimbursement of all costs incurred in administering the check-off, 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. 1)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. Background The legislature adds individual check-offs yearly. With a few exceptions, check-offs remain on the return until they are AB 485 Page 3 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 check-offs, 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: 1)California Firefighters' Memorial Foundation Fund, 2)California Peace Officer Memorial Foundation Fund, and 3)California Seniors Special Fund. When a taxpayer contributes to check-offs, FTB deposits the total of all contributions into the fund created as part of the check-offs legislative authorization. For some check-offs, 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 check-off authorizing statutes direct administrative agencies to allocate donations to a private organization. For example, the Office of Emergency Services passes check-offs 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 check-off 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 check-offs. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No According to the Senate Appropriations Committee: 1)FTB estimates that this bill would result in an annual General Fund revenue loss of about $8,000. 2)The State Controller's Office and FTB and would be reimbursed from the Fund for related administrative costs. 3)The California Department of Food and Agriculture would incur first-year General Fund costs of $66,000, and ongoing annual AB 485 Page 4 costs of $125,000. The specific timing of these expenses would depend on when the check-off were to appear on the tax form. SUPPORT: (Verified8/27/15) American Society for the Prevention of Cruelty to Animals Humane Society of the United States State Humane Association of California OPPOSITION: (Verified8/27/15) California Department of Finance ARGUMENTS IN SUPPORT: The supporters of this bill argue that this bill will provide much needed funding to California's animal shelters to improve animal welfare. Specifically, the bill will ensure over 200,000 animals undergo the necessary spay/neuter procedure for every $1 million dollars collected. This will decrease the number of homeless pets in California. ARGUMENTS IN OPPOSITION: The opponent of this bill argues that this bill could result in a loss to the General Fund and is of limited value. ASSEMBLY FLOOR: 77-0, 5/7/15 AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins NO VOTE RECORDED: Campos, Roger Hernández, Steinorth AB 485 Page 5 Prepared by:Myriam Bouaziz / GOV. & F. / (916) 651-4119 8/30/15 19:12:42 **** END ****