BILL ANALYSIS                                                                                                                                                                                                    



                                                                     AB 485


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          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          485 (Williams)


          As Amended  September 4, 2015


          Majority vote


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          |ASSEMBLY:  | 77-0 |(May 7, 2015)  |SENATE: | 39-0 |(September 9,    |
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          Original Committee Reference:  REV. & TAX.


          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.    


          The Senate amendments:


          1)Modify the distribution of Fund moneys.  Specifically, the  
            Department of Food and Agriculture is directed to allocate  
            moneys as follows:


             a)   Up to 5% shall be used for the development of a  
               mechanism to provide ongoing public awareness through  
               activities that will promote the charitable tax deduction  








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               for the Fund and seek continued contributions, as  
               specified; 


             b)   Up to $250,000 shall be distributed to a city, county,  
               or city and county animal control agency or shelter that is  
               current on its reporting requirements to the State  
               Department of Public Health, Veterinary Public Health  
               Section for the sole purpose of supporting spay and neuter  
               activities by that entity to prevent and eliminate cat and  
               dog homelessness; and, 


             c)   The remaining moneys, if any, shall 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.  The grants are  
               to be distributed to a city, county, or city and county  
               animal control agency or shelter that is current on its  
               reporting requirements, a society for the prevention of  
               cruelty to animals affiliate, or a humane society  
               affiliate.  A society for the prevention of cruelty to  
               animals affiliate or a humane society affiliate shall be a  
               California corporation, duly incorporated in the state of  
               California, in active status, as described on the business  
               search page of the Secretary of State's Internet Web site,  
               and exempt from federal income taxation as an organization  
               described in Internal Revenue Code Section 501(c)(3).  


          2)Specify that the Department of Food and Agriculture may  
            consult with the State Department of Public Health to develop  
            the grant process and the oversight of the grant program.  


          3)Provide that no Fund money shall be used to supplant state  
            General Fund money for any purpose.  


          EXISTING LAW:  










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          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.


          AS PASSED BY THE ASSEMBLY, this bill:  


          1)Established the Fund in the State Treasury.  
          2)Provided that all money transferred to the Fund, upon  
            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)Provided 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.








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


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


          7)Provided 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  
            occurs first.


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


          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee:


          1)The 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 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  
            costs of $125,000.  The specific timing of these expenses  
            would depend on when the check-off were to appear on the tax  
            form.








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          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  
               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  








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               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:  The Committee on Revenue and Taxation'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 contribution requirement."   
               In addition, the 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."


          Analysis Prepared by:                                             
                          M. David  Ruff / REV. & TAX. / (916) 319-2098     
                                                                  FN:  
          0002230











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