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. ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: April 29, 2015 |Policy Vote: GOV. & F. 7 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: June 29, 2015 |Consultant: Robert Ingenito | | | | ----------------------------------------------------------------- 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 AB 924 (Cooley) Page 1 of ? 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 AB 924 (Cooley) Page 2 of ? 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. -- END --