BILL ANALYSIS Ó
AB 2371
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Date of Hearing: April 11, 2016
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Sebastian Ridley-Thomas, Chair
AB 2371
(Frazier) - As Amended March 18, 2016
Majority vote. Fiscal committee.
SUBJECT: Voluntary contributions: Special Olympics Fund
SUMMARY: Requires the addition of the Special Olympics Fund
(Fund) checkoff to the personal income tax (PIT) return upon the
removal of another voluntary contribution fund (VCF) from the
return, or as soon as space is available. Specifically, this
bill:
1)Allows individuals to designate on their PIT return that a
contribution in excess of their tax liability, if any, be made
to the Fund.
2)Establishes the Fund in the State Treasury.
3)Provides that all money transferred to the Fund, upon
appropriation by the Legislature, shall be allocated to the:
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a) Franchise Tax Board (FTB) and the State Controller for
reimbursement of all cost incurred in administering the
VCF; and,
b) Special Olympics Northern California and Special
Olympics Southern California. The funds shall be divided
proportionately according to each organization's
jurisdiction based on the county of the taxpayers
contributing, for the purpose of supporting children and
adults with intellectual disabilities.
4)Provides for the Fund provisions' automatic sunset on January
1 of the fifth taxable year following the Fund's first
appearance on the PIT return.
5)Requires the Fund to meet a minimum contribution threshold of
$250,000 indexed for inflation to remain on the PIT return.
EXISTING LAW:
1)Allows taxpayers to contribute to one or more of 19 VCFs on
the 2015 PIT return.
2)Provides a specific sunset date for each VCF, except for the
California Seniors Special Fund and the State Parks Protection
Fund.
3)Requires each VCF to meet an annual minimum contribution
amount to remain in effect, except for the California
Firefighters' Memorial Fund, the California Peace Officer
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Memorial Foundation Fund, and the California Seniors Special
Fund.
FISCAL EFFECT: The FTB's fiscal estimate for this bill is
currently pending. Based on prior VCF bills, Committee staff
estimates that this bill will result in minor General Fund
losses of up to $15,000 per year resulting from itemized
taxpayer deductions.
COMMENTS:
1)Author's Statement : The author has provided the following
statement in support of this bill:
The Special Olympics Northern California (SONC) and
Southern California (SOSC) provide athletic opportunities
to children and adults with intellectual disabilities,
instilling the confidence they need to succeed in life.
Through the power of sports, people with intellectual
disabilities discover new strengths and abilities, skills
and success. SONC and SOSC athletes find joy, confidence
and fulfillment - on the playing field and in life. They
also inspire people in their communities and elsewhere to
open their hearts to a wider world of human talents and
potential.
The California Special Olympics divided into two chapters
in 1995, SONC and SOSC. What started originally as a small
grassroots organization has since become a powerful voice
for athletes with intellectual disabilities. SONC and SOSC
has provided athletic opportunities to over 40,000 athletes
throughout the state.
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AB 2371 will allow individuals to make a voluntary
contribution in excess of their tax liability, if any, to
the Special Olympics Fund. Contributions to the Special
Olympics Fund shall be used to conduct activities of
Special Olympics Northern California and Special Olympics
Southern California.
2)Arguments in Support : The co-sponsors of this bill, SONC and
SOSC, state: "The change proposed to AB 2371 is both modest
and meaningful. The change proposed asks for no state funds,
but merely provides a vehicle for individuals to [voluntarily]
elect to make a contribution in support of Special Olympics
when completing their annual California State tax return
forms."
3)So Many Causes, So Little Space : There are countless worthy
causes that would benefit from the inclusion of a VCF on the
state's income tax returns. At the same time, space on the
returns is limited. Thus, it could be argued that the current
system for adding VCFs to the form is subjective and
essentially rewards organizations that can convince the
Legislature to include their fund on the form.
4)VCF Policy : This Committee's VCF Policy provides that "[a]ll
proponents seeking authorization for a new or reauthorized
checkoff shall provide information justifying their
expectation that the checkoff will meet its minimum
contribution requirement." According to the proponents of
this bill, SONC and SOSC serve 59,000 athlete families,
receive assistance from 45,000 volunteers and over 18,000 law
enforcement volunteers, and benefit from 36,000 current
donors. This wide base of support, coupled with a big social
media push during tax season if the voluntary contribution
designation is enacted, would help the Fund meet its minimum
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contribution requirement.
5)Special Olympics Fund : SONC and SOSC are chapters of Special
Olympics, an organization founded by Eunice Kennedy Shriver in
1968 that provides year-round sports training and athletic
competition for children and adults with intellectual
disabilities. Although Special Olympics' global reach expands
to 4.4 million athletes, with 24,000 athletes served by SONC
and 25,000 athletes served by SOSC, there may be individuals
unfamiliar with the mission of the organization and its
chapters. The Committee may wish to consider whether further
detail on the tax form instructions, specifying that the
activities of SONC and SOSC support children and adults with
intellectual disabilities, will help the Fund obtain its
minimum contribution requirement.
Although SONC and SOSC are non-profit organizations, VCF
monies are typically allocated first to a state agency for
purposes of overseeing the expenditure of the funds, rather
than allocated directly to a non-governmental entity. For
example, the VCF established to support Habitat for Humanity
first appropriates VCF monies to the Department of Housing and
Community Development for distribution of grants to Habitat
for Humanity affiliates. The Committee may wish to consider
whether money from the Fund should first be allocated to an
appropriate state agency that would be responsible for
administering the funds.
Although the overwhelming majority of expenses for both
chapters are direct programming, this bill does not further
specify how voluntary contributions should be utilized by SONC
or SOSC. Most of the 19 VCFs in operation today limit or
prohibit funds from being spent on administrative functions.
The Committee may wish to consider whether money from the Fund
should be restricted for direct programming to ensure the
taxpayer's contribution is utilized as it is likely intended.
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6)Technical Amendments : Committee staff suggests adoption of
the following technical amendments:
a) On Page 2, Line 15, strike "initial" and insert
"original";
b) Page 4, Line 25, strike "estimated"; and,
c) On Page 4, Line 27, strike "estimated", and insert
"prior" between "the" and "calendar".
7)Related Legislation :
a) AB 1399 (Baker) would add a voluntary contribution for
the California Domestic Violence Fund. This bill is
awaiting hearing in the Senate Committee on Governance and
Finance.
b) AB 1789 (Santiago) would extend the voluntary
contribution for the School Supplies for Homeless Children
Fund. This bill is scheduled to be heard by this Committee
today.
c) AB 2430 (Beth Gaines) would add a voluntary contribution
for the Juvenile Diabetes Research Fund. This bill is
scheduled to be heard by this Committee today.
d) AB 2497 (Wagner) would repeal the voluntary contribution
for the California Senior Legislature Fund and replace it
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with a voluntary contribution for the California Senior
Citizen Advocacy Fund. This bill is scheduled to be heard
by this Committee today.
e) SB 1416 (Jeff Stone) would add a voluntary contribution
for the Revive the Salton Sea Fund. This bill is awaiting
hearing in the Senate Committee on Governance and Finance.
f) SB 1476 (Committee on Governance and Finance) would
require additional guidelines for new or extended voluntary
contributions. This bill is awaiting hearing in the Senate
Committee on Governance and Finance.
REGISTERED SUPPORT / OPPOSITION:
Support
Association of Regional Center Agencies
Special Olympics Northern California (Co-Sponsor)
Special Olympics Southern California (Co-Sponsor)
The Arc and United Cerebral Palsy California Collaboration
Opposition
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None on file
Analysis Prepared by:Irene Ho / REV. & TAX. / (916) 319-2098