BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 1399| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 1399 Author: Baker (R), et al. Amended: 6/9/16 in Senate Vote: 21 SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 6/8/16 AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach, Pavley SENATE APPROPRIATIONS COMMITTEE: 6-0, 6/27/16 AYES: Bates, Beall, Hill, McGuire, Mendoza, Nielsen NO VOTE RECORDED: Lara ASSEMBLY FLOOR: 78-0, 1/27/16 (Consent) - See last page for vote SUBJECT: Income taxes: voluntary contributions: California Domestic Violence Victims Fund SOURCE: Author DIGEST: This bill authorizes the addition of the California Domestic Violence Victims Fund check-off to the personal income tax return. ANALYSIS: Existing law: 1)Allows taxpayers to contribute money to voluntary contribution funds (VCFs) by checking a box on their state income tax AB 1399 Page 2 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. 2)Allows contribution amounts to be claimed as charitable contributions on taxpayers' tax returns in the subsequent year. 3)Requires that 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 With a few exceptions, VCFs remain on the return until they are repealed by a sunset date or fail to generate a minimum contribution amount.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 amounts are adjusted annually for inflation. For most VCFs, the minimum contribution amount is $250,000, beginning in the fund's second year. The following check-offs do not have a minimum contribution requirement: a) California Firefighters' Memorial Foundation Fund, b) California Peace Officer Memorial Foundation Fund, and c) California Seniors Special Fund. This bill: 1)Adds the California Domestic Violence Victims 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. 2)Requires the Fund to meet a minimum contribution threshold of $250,000 in the second calendar year the Fund appears on the AB 1399 Page 3 tax form, and the amount is indexed yearly for inflation. 3)Provides that all money transferred to the Fund, upon appropriation by the Legislature, be allocated as follows: a) To the Franchise Tax Board (FTB) and the State Controller for reimbursement of all costs incurred in administering the VCF. b) To the Office of Emergency Services (OES) 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 OES. 4)Prohibits funds to be used for administrative costs by both the grant recipients and OES. 5)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. Background When a taxpayer contributes to VCFs, the 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, OES passes VCF funds to the American Red Cross. Other funds require the Controller to AB 1399 Page 4 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. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No According to the Senate Appropriations Committee: FTB estimates that, beginning in 2017- 18, this bill would result in an annual revenue loss of $8,000 (General Fund) for every $250,000 contributed by itemizing taxpayers. OES would incur minor and absorbable costs to administer the program and provide grants. The Controller's Office and FTB and would be reimbursed for related administrative costs. SUPPORT: (Verified6/28/16) 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 AB 1399 Page 5 Safe Alternatives to Violent Environments State Board of Equalization Member Fiona Ma OPPOSITION: (Verified6/28/16) California Department of Finance ARGUMENTS IN SUPPORT: 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." ARGUMENTS IN OPPOSITION: Opponent argues that the bill is of limited value and results in a loss to the General Fund. Additionally, it is unclear why special preference should be given to one organization over the countless others that are not on the tax form. ASSEMBLY FLOOR: 78-0, 1/27/16 AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, AB 1399 Page 6 Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins NO VOTE RECORDED: Mathis Prepared by:Myriam Bouaziz / GOV. & F. / (916) 651-4119 6/29/16 15:56:04 **** END ****