BILL ANALYSIS Ó AB 924 Page 1 Date of Hearing: May 13, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair AB 924 (Cooley) - As Amended April 29, 2015 ----------------------------------------------------------------- |Policy |Revenue and Taxation |Vote:|7 - 0 | |Committee: | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill reauthorizes the addition of the State Children's Trust 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 checkoff for charitable fund contribution has been removed. Funds raised would, upon appropriation by the Legislature, be allocated to the Department of Social Services (DSS), up to 10% of which may be used for public education about child abuse and neglect prevention and early intervention, and the remainder of which may be used for innovative child abuse and neglect AB 924 Page 2 prevention and intervention programs operated by nonprofit organizations and public institutions of higher education. The bill requires the Fund to meet the minimum annual contribution threshold of $250,000, indexed for inflation, and would require the Fund's provisions to automatically sunset on January 1 of the fifth taxable year following the Fund's first appearance on the personal income tax return. FISCAL EFFECT: 1)Minor and absorbable costs to the DSS to administer program and grants, funded by up to 5% of the contributions to the Fund; insignificant administrative costs to the Franchise Tax Board (FTB), reimbursed from contributions to the Fund. 2)Estimated GF revenue decreases of approximately $8,000 in each year the voluntary contribution fund remains on the personal income tax return. COMMENTS: 1)Purpose. According to the author, the State Children's Trust Fund received between $305,00- and $760,000 annually over the past 5 years from the voluntary checkoff program, representing half of the revenue deposited in the Fund. The author claims the loss of this funding has resulted in fewer prevention AB 924 Page 3 programs that directly target child abuse and neglect. AB 924 reinstates the State Children's Trust Fund as a donation option on the tax form, restoring that source of potential funding. 2)Worthy Cause, Modest Support. 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, indexed for inflation. If FTB estimates a contribution fund is likely to fail to meet the minimum contribution amount, that fund is repealed effective January 1 of that calendar year. An identically-named voluntary contribution fund first appeared on the 1983 personal income tax return. By 2014, the inflation-adjusted minimum contribution threshold was $324,972, but the fund only received contributions of approximately $303,000. As a result, the fund was not included on the 2014 personal income tax return (which is filed in 2015) and discontinued. Reauthorizing the Fund effectively resets the minimum contribution to $250,000 in contravention of the general policy for voluntary contribution funds. 3)Spend Money to Make Money. This bill allows DSS to spend up to 10% of Fund moneys to encourage additional contributions to the Fund, presumably to prevent the Fund from being removed again for failing to meet its minimum contribution threshold. With limited space for voluntary contribution funds and increasing competition among charitable causes for inclusion, this evolutionary mechanism may help funds better defend their position on the Darwinian voluntary checkoff page of the personal income tax return. AB 924 Page 4 Analysis Prepared by:Joel Tashjian / APPR. / (916) 319-2081