BILL ANALYSIS Ó
AB 924
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Date of Hearing: April 20, 2015
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Philip Ting, Chair
AB 924
(Cooley) - As Amended April 13, 2015
Majority vote. Fiscal committee.
SUBJECT: Personal income tax: voluntary contributions: State
Children's Trust Fund
SUMMARY: Reauthorizes the addition of the State Children's
Trust 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)Provides that all money transferred to the Fund, upon
appropriation by the Legislature, shall be allocated as
follows:
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a) To the Franchise Tax Board (FTB) and the State
Controller for reimbursement of all costs incurred in
administering the VCF;
b) Up to 10% to the State Department of Social Services
(CDSS) to pursue public education about child abuse and
neglect prevention and early intervention in order to
encourage voluntary contributions to the Fund. The CDSS
may delegate these duties by entering into a contract with
a designated private entity that has demonstrated
experience in education and promotion; and,
c) The remainder to the CDSS for innovative child abuse and
neglect prevention and intervention programs operated by
private nonprofit organizations or public institutions of
higher education with recognized expertise in fields
related to child welfare and for evaluation, research, or
dissemination of information concerning existing program
models for the purpose of replication of successful models
as specified in Welfare and Institutions Code (WIC) Section
18965 et seq.
2)Provides that it is the Legislature's intent to create an
additional source of funding, and that moneys generated shall
not be used in place of funds from other sources that are
available to the Fund.
3)Provides for the Fund provisions' automatic sunset on January
1 of the fifth taxable year following the Fund's first
appearance on the PIT return.
4)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.
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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.
4)Establishes, pursuant to WIC Section 18969, the Fund in the
State Treasury. Money in the Fund, upon appropriation by the
Legislature, is allocated to the CDSS to fund child abuse and
neglect prevention and intervention programs.
5)Provides that the CDSS shall use no more than 5% of the funds
appropriated under WIC Section 18969 for administrative costs.
FISCAL EFFECT: The FTB estimates annual revenue losses of
roughly $8,000 for every $250,000 contributed to the Fund by
taxpayers who itemize.
COMMENTS:
1)The author has provided the following statement in support of
this bill:
Over the last five years, the Trust Fund received between
$305,000 and $760,000 from voluntary "check-off"
contributions annually. The contributions each year have
represented roughly 52 percent of the revenue deposited
into the fund, a critically important source of funding
activities. The loss of this funding stream is resulting
in fewer prevention programs that directly target child
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abuse and neglect receiving funds. To ensure these
programs remain supported, AB 924 reinstates [. . .] the
State Children's Trust Fund as a donation option for a
person to make in completing their taxes, if they expect a
refund.
2)Proponents of this bill note the following:
The State Children's Trust Fund has, until now, been one of
the twenty donation options on California Tax Forms. AB
924 would reinstate the State Children's Trust Fund,
ensuring that voluntary contributions to the Fund remain an
option on tax forms.
The loss of this funding stream is resulting in fewer
prevention programs that directly target child abuse and
neglect, a preventable tragedy that affects nearly half a
million California children each year.
3)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) The prior VCF : Prior law authorized individuals to
designate contributions in excess of tax liability to an
identically-named VCF. This VCF first appeared on the 1983
PIT return. In 2014, the VCF's inflation-adjusted minimum
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contribution threshold was $324,972. The VCF, however,
only received valid contributions totaling $303,159. Thus,
the VCF was not included on the 2014 PIT return filed in
2015.
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
contribution requirement." In addition, this Committee's
VCF policy states that, "Checkoffs that have failed to meet
their minimum contribution requirement will not be extended
or reauthorized." 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.
Moreover, the Committee may wish to consider whether it is
appropriate to effectively "re-set" this VCF's minimum
contribution threshold back to $250,000, as if it were a
completely new VCF.
d) A question of percentages : This bill would allow the
CDSS to spend up to 10% of Fund moneys to encourage
voluntary contributions to the Fund. Ostensibly, this is
being done to prevent the Fund from falling off the PIT
return in the future for failing to meet its minimum
contribution threshold. While it is not entirely clear
from this bill's language, Committee staff assumes that the
10% limit applies to the entire amount contributed to the
VCF, and not the remaining amount distributed to the CDSS
after reimbursing the FTB and the State Controller for
their administrative expenses. Thus, if the Fund were to
receive $250,000 through the VCF, up to $25,000 could be
spent to promote future donations. The CDSS could
apparently spend this money directly or contract promotion
services out to a private entity.
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It is not clear, however, how this limitation would
interact, if at all, with the existing limitation on
administrative expenses imposed by WIC Section 18969, which
established the Fund and specifies that the CDSS shall use
no more than 5% of the funds appropriated under WIC Section
18969 for administrative costs. Would this 5% limitation
also apply to moneys generated through the VCF? If so,
would this 5% cap for administrative costs be on top of the
10% available for VCF promotion? The author may wish to
clarify these issues through appropriate amendments.
REGISTERED SUPPORT / OPPOSITION:
Support
Child Abuse Prevention Council of Sacramento
Insights Counseling Group
Kern County Network for Children
KidsFirst
Plumas Crisis Intervention and Resource Center
Prevent Child Abuse California
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Opposition
None on file
Analysis Prepared by:M. David Ruff / REV. & TAX. / (916)
319-2098