BILL ANALYSIS Ó
AB 1577
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Date of Hearing: May 4, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
1577 (Eggman) - As Amended April 27, 2016
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|Policy |Revenue and Taxation |Vote:|9 - 0 |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill expands the existing tax credit program under the
Personal Income Tax (PIT) Law and Corporation Tax (CT) Law for
contributions of qualified donation items to a food bank, and
extends the program until January 1, 2019. Specifically, this
bill:
1)Broadens the definition of a "qualified taxpayer" (QT) to
AB 1577
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include persons responsible for growing or raising a qualified
donation item, or harvesting, packing, or processing a
qualified donation item.
2)Expands the definition of "qualified donation item" (QDI) to
include, in addition to fresh fruits and vegetables, raw
agricultural products and processed foods, as specified.
3)Requires the FTB to include in its annual report to the
Legislature, among other things, the estimated value and the
origin of the QDIs by January 1, 2018.
4)Upon receipt and acceptance of the donations, the food bank is
required to sign and provide to the donor a certificate, which
must include certain information, as specified, including the
acceptance, grade, origin and qualified value of the donated
items.
5)Requires a qualified taxpayer to claim the credit only on a
timely filed return.
6)Extends the tax credit program until January 1, 2019, and
repeals it on December 1, 2019.
7)Renames the State Emergency Food Assistance Program (SEFAP) as
the CalFood Program (CFP), effective on or after January 1,
2017.
FISCAL EFFECT:
Estimated GF revenue loss of $750,000 in FY 2017-18.
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COMMENTS:
1)Purpose. According to supporters, AB 1577 will help expand
access to nutritious food and strengthen the existing credit.
2)Background. In 2011, a state tax credit program was enacted
into law to allow a qualified taxpayer, under both the PIT and
CT laws, a tax credit in an amount equal to 10% of the
inventory costs of the fresh fruits or fresh vegetables
donated to food banks located in California.
3)Bill history. This bill was amended in the Assembly Revenue
and Taxation Committee. Those amendments included:
a) Reversing a proposed modification to how the credit
would be calculated. The previous version of the bill
changed the credit to be 15% of the qualified value of the
donated items, which would be largely based on wholesale
prices. Committee amendments reverted the credit to its
current design, which is that the credit is worth 10% of
inventory costs. These amendments reduced the fiscal
exposure.
b) Moving the sunset year from 2022 to 2019.
4)Veto of similar legislation: This bill follows AB 515 (Eggman)
of 2015, which was similar to the introduced version of AB
1577 prior to policy committee amendments. AB 515 was vetoed
by the Governor, with the following message:
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"Despite strong revenue performance over the past few years,
the state's budget has remained precariously balanced due to
unexpected costs and the provision of new services. Now,
without the extension of the managed care organization tax
that I called for in special session, next year's budget faces
the prospect of over $1 billion in cuts.
Given these financial uncertainties, I cannot support
providing additional tax credits that will make balancing the
state's budget even more difficult. Tax credits, like new
spending on programs, need to be considered comprehensively as
part of the budget deliberations."
Analysis Prepared by:Luke Reidenbach / APPR. / (916)
319-2081