BILL ANALYSIS Ó AB 2371 Page 1 Date of Hearing: May 11, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 2371 (Frazier) - As Amended March 18, 2016 ----------------------------------------------------------------- |Policy |Revenue and Taxation |Vote:|9 - 0 | |Committee: | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill 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)Requires that all money transferred to the Fund, upon appropriation by the Legislature, will be allocated as follows: AB 2371 Page 2 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 (SONC) and Special Olympics Southern California (SOSC). The funds will 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. 2)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. 3)Requires the Fund to meet a minimum contribution threshold of $250,000 indexed for inflation to remain on the PIT return. FISCAL EFFECT: 1)Minor and absorbable costs to administrate the fund. 2)Minor ongoing GF revenue losses of up to $15,000 per year resulting from itemized taxpayer deductions. COMMENTS: 1)Purpose. According to the author, AB 2371 will allow individuals to make voluntary contributions to the Special Olympics Fund, which will help provide athletic opportunities to children and adults with intellectual disabilities and AB 2371 Page 3 instilling the confidence they need to succeed in life. 2)Background and purpose. Current state tax law allows taxpayers to make contributions on their tax returns to a number of VCFs. Like many other VCFs, AB 2371 would require the Fund to meet a current minimum contribution amount to return on state tax returns ($250,000, indexed to inflation after the second year). Unlike other VCFs, AB 2371 would not establish an administering agency to oversee allocation of funds. 3)Special Olympics. The author notes that 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 have provided athletic opportunities to over 40,000 athletes throughout the state. 4)New VCF Bills in 2016. Four Assembly bills were introduced in 2016 that would either extend existing VCFs or create new ones. In addition to AB 2497, those bills are: a) AB 1789 (Santiago), also on today's Committee agenda, extends the voluntary contribution for the School Supplies for Homeless Children Fund. b) AB 2430 (Beth Gaines), also on today's Committee agenda, adds a voluntary contribution for the Type 1 Diabetes Research Fund. c) AB 2497 (Wagner), also on today's Committee agenda, repeals the voluntary contribution for the California Senior Legislature Fund and replaces it with a voluntary AB 2371 Page 4 contribution for the California Senior Citizen Advocacy Fund. 1)Amendments. Staff suggests amending the bill to assign an administrating agency, whose administrative costs are capped as a percentage of the Fund, to distribute the funds to the different chapters of the Special Olympics. Typically, new VCFs are given an administrative agency with issue are expertise to oversee fund distribution. Analysis Prepared by:Luke Reidenbach / APPR. / (916) 319-2081