BILL ANALYSIS                                                                                                                                                                                                    Ó



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

          AB 924 (Cooley) - Personal income tax: voluntary contributions:  
          State Children's Trust Fund.
          
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          |Version: April 29, 2015         |Policy Vote: GOV. & F. 7 - 0    |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: June 29, 2015     |Consultant: Robert Ingenito     |
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          This bill does not meet the criteria for referral to the  
          Suspense File.


          Bill Summary: AB 924 would reauthorize the addition of the State  
          Children's Trust 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 revenue loss of $8,000 (General  
               Fund) for every $250,000 contributed by itemizing  
               taxpayers.

                 The Department of Social Services (DSS) would incur  
               minor and absorbable costs to administer the program and  
               provide grants.

                 The State Controller's Office, DSS, and FTB and would be  
               reimbursed for related administrative costs.


          Background: Current law allows taxpayers to contribute money to  







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          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.

          The State Children's Trust Fund (Fund) first appeared on the  
          personal income tax return in 1983. By 2014, the  
          inflation-adjusted minimum contribution threshold was $324,972,  
          but that year the Fund only received contributions of about  
          $303,000.  Consequently, it was omitted from personal income tax  
          return beginning taxable year 2014. 

          Proposed Law: This bill would reauthorize the addition of the  
          State Children's Trust Fund), and thereby permit a taxpayer to  
          make a voluntary contribution to the Fund on the state personal  
          income tax return, beginning (1) when an existing checkoff for a  
          charitable fund contribution has been removed, or (2) as soon as  
          space is available. The Fund would be required to meet the  
          minimum annual contribution threshold of $250,000, indexed for  
          inflation, and its provisions would automatically sunset on  
          January 1 of the fifth taxable year following the Fund's first  
          appearance on the personal income tax return.

             
          Upon appropriation by the Legislature, funds raised would be  
          allocated to DSS, up to 10 percent 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 prevention and intervention  
          programs operated by nonprofit organizations and public  
          institutions of higher education.

          Related Legislation: SB 164 (Simitian, Chapter 669, Statutes of  
          2011) extended the repeal date of the Fund's voluntary  
          contribution check-off from January 1, 2013, to January 1, 2018,  
          subject to meeting the annual minimum contribution requirement.   

          
          Staff Comments: FTB data indicate that roughly one-half of  








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          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.

          Reauthorizing the Fund would effectively reset its annual  
          minimum contribution to $250,000.


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