BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |AB 1399 |Hearing |6/8/16 |
| | |Date: | |
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|Author: |Baker |Tax Levy: |No |
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|Version: |2/10/16 |Fiscal: |Yes |
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|Consultant|Bouaziz |
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Income taxes: voluntary contributions: California Domestic
Violence Fund
Authorizes the addition of the California Domestic Violence Fund
(Fund) check-off to the personal income tax return.
Background
Existing state law allows taxpayers to contribute money to
voluntary contribution funds (VCFs), by checking a box on their
state income tax returns. California law requires contributions
made through so-called "check-offs" to be made from taxpayers'
own resources and not from their tax liability, as is possible
on federal tax returns. Check-off amounts may be claimed as
charitable contributions on taxpayers' tax returns in the
subsequent year.
Each VCF is individually added to the tax return by legislation.
With a few exceptions, VCFs remain on the return until they are
repealed by a sunset date or fail to generate a minimum
contribution amount. In general, the minimum contribution
amount is $250,000, beginning in the fund's second year, and is
adjusted yearly for inflation thereafter. The following
check-offs do not have a minimum contribution requirement:
California Firefighters' Memorial Foundation Fund,
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California Peace Officer Memorial Foundation Fund, and
California Seniors Special Fund.
When a taxpayer contributes to VCFs, the Franchise Tax Board
(FTB) deposits the total of all contributions, less an
administrative fee, into the fund created as part of the VCF's
legislative authorization. For some VCFs, such as the Protect
Our Coast and Ocean Fund, taxpayers' contributions are allocated
to a state agency for use in a state administered grant program.
Other VCFs' authorizing statutes direct administrative agencies
to allocate donations to a private organization. For example,
the Office of Emergency Services passes VCF funds to the
American Red Cross. Other funds require the State Controller to
send the funds directly to private organizations without passing
through an administrative agency, such as the California Fire
Foundation. The Controller and administrative agencies may
deduct administrations fees from the amount of donations each
VCF receives.
There are currently 19 check-offs listed on the tax return form.
The tax check-off program typically collects $4-5 million in
annual contributions for all VCFs.
Proposed Law
Assembly Bill 1399 adds the California Domestic Violence 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 check-off for charitable fund contribution has
been removed, or as soon as space is available. The bill
requires the Fund to meet a minimum contribution threshold of
$250,000 in the second calendar year the Fund appears on the tax
form, and the amount is indexed yearly for inflation.
Additionally, the bill provides that all money transferred to
the Fund, upon appropriation by the Legislature, be allocated as
follows:
To FTB and the State Controller for reimbursement of all
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costs incurred in administering the VCF,
To the Office of Emergency Services for distribution to
domestic violence programs in California that are in active
status, exempt from federal income taxation as an
organization described in Section 501(c)(3) of the Internal
Revenue Code, and are active grant recipients under the
Comprehensive Statewide Domestic Violence Program within
the Office of Emergency Services.
The bill prohibits funds to be used for administrative costs by
both the grant recipients and the Office of Emergency Services.
AB 1399 provides that the bill automatically sunsets on January
1 of the fifth taxable year following the Fund's first
appearance on the personal income tax form.
State Revenue Impact
FTB estimates annual revenue losses of roughly $8,000 for every
$250,000 contributed to the Fund by taxpayers who itemize.
Comments
1. Purpose of the bill. According to the author, "On just one
day in 2014, 5,784 victims and their children received services
at domestic violence programs throughout the state. On that
same day 1, 2016 request for services went unmet, of which 55%
were for housing, largely due to lack of resources. That means
1,216, individuals, children, and families, could not secure a
safe place to stay, or receive vital counseling or resources.
Emergency shelter, transitional housing, and nonresidential
services could not be provided because of a lack of resources.
Of those unmet needs, approximately 49% of programs report that
victims return to their abuser, 37% report that victims become
homeless, and 16% report that families end up living in their
car. The cause for these unmet needs are reduced government
funding (37%) cuts from private funding (25%) lack of staff
(23%) and a reduction in individual donations (13%.). By
providing additional opportunities for donations to domestic
violence programs in own communities, we can better provide a
safe haven for families."
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2. Is there a better way? The current tax check-off program
generates a relatively small share of statewide contributions to
charitable causes. In 2008, Californians donated more than $17
billion to charities. However, less than 1% of Californians use
the tax check-off program to make donations to charitable
organizations. FTB reports that in 2012, 89,335 out of 15
million taxpayers contributed a total of $4.8 million. In 2014,
SB 1207 (Wolk) attempted to address this issue and help grow
charitable giving by establishing the California Voluntary
Contribution Program to promote charitable giving and collect
donations. This would have allowed many more charities to
participate in the program, would have screened potential
participants before adding them onto the form, and eliminated
the need for each organization to go through the Legislative
process. Under SB 1207, charities would instead apply to the
office of California Volunteers for placement on the income tax
form. However, SB 1207 (Wolk) was held on suspense in Assembly
Appropriations.
3. Bills, bills, bills. Currently, tax check-offs must be
added by the Legislature. In 2008, 11 VCFs appeared on the
personal income tax return. Today, the return contains 19.
With legislation introduced every year to add new VCFs, there is
little reason to expect this number to stop growing. It is
estimated that FTB can only handle 8 or 9 more check-offs before
FTB has to create a separate tax schedule.
4. Similar Legislation. SB 1476 (Governance and Finance)
establishes general provisions for voluntary contribution funds.
Specifically, the bill establishes a seven year sunset, requires
a minimum contribution amount of $250,000 beginning in the
fund's second year, and each year thereafter, requires funds to
be continuously appropriated, and requires administering
agencies to post information online about the use of the funds.
SB 1476 is set to be heard in the Assembly Committee on Revenue
and Taxation on June 13, 2016.
Assembly Actions
Assembly Revenue and Taxation 8-0
Assembly Appropriations 17-0
Assembly Floor 78-0
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Support and
Opposition (6/2/16)
Support : Alliance for Community Transformations; California
Partnership to End Domestic Violence; Center for Community
Solutions; Center for Domestic Peace; Contra Costa County Board
of Supervisors; Contra Costa District Attorney's Office; Fiona
Ma, State Board of Equalization Chairwoman; Safe Alternatives to
Violent Environments-SAVE.
Opposition : California Department of Finance.
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