BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |AB 1789 |Hearing |6/15/16 |
| | |Date: | |
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|Author: |Santiago |Tax Levy: |No |
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|Version: |3/17/16 |Fiscal: |Yes |
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|Consultant|Bouaziz |
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Personal income taxes: voluntary contributions: School
Supplies for Homeless Children Fund
Extends the sunset date for the School Supplies for Homeless
Children Fund tax check-off on 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repealed by a sunset date or fail to generate a minimum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 1789 extends the sunset for the School Supplies
for Homeless Children Fund to January 1, 2022.
State Revenue Impact
FTB estimates that this bill would reduce General Fund revenues
by $10,000 in fiscal year (FY) 2017-18 and $15,000 in FY
2018-19.
Comments
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1. Purpose of the bill. According to the author, "Homelessness
is prevalent in urban and rural areas of California. The Los
Angeles School District has the highest number of homeless
students (14,323) and Sacramento ranks among the top six
districts in overall number of homeless students and as a county
has more homeless students than any other in Northern
California. A significant barrier to success homeless students
face is access to basic materials such as school supplies,
hygienic and dental products and other basic necessities. Lack
of basic material needs accompanied with low self-esteem lead to
absenteeism and truancy, which prevents homeless students from
obtaining the education that is their best opportunity to escape
poverty. The School Supplies for Homeless Children Fund
addresses the basic necessities these children need to succeed."
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. School Supplies for Homeless Children Fund. The School
Supplies for Homeless Children Fund was originally authorized by
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SB 1571 (DeSaulnier) in 2012 to help provide essential school
supplies to homeless children. To date, the Fund has
established a successful record of generating taxpayer
contributions. Specifically, the Fund received $337,949 in
valid contributions in 2014, and $398,900 in 2015.
5. 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 9-0
Assembly Appropriations 20-0
Assembly Floor 78-0
Support and
Opposition (6/8/16)
Support : California Catholic Conference, Inc.; California State
PTA; California Teachers Association; Common Sense Kids Action;
Give Something Back Office Supplies; K to College.
Opposition : California Department of Finance.
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