BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 2371 (Frazier) - Voluntary contributions:  Special Olympics  
          Fund
          
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          |Version: May 12, 2016           |Policy Vote: GOV. & F. 6 - 0    |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: August 1, 2016    |Consultant: Robert Ingenito     |
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          This bill does not meet the criteria for referral to the  
          Suspense File.


          


          Bill  
          Summary: AB 2371 would add the Special Olympics Fund check-off  
          to the personal income tax return.


          Fiscal  
          Impact: 
                 The Franchise Tax Board (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.

                 The State Controller's Office (SCO) and FTB and would be  
               reimbursed for related administrative costs. Reimbursement  
               to the Department of Developmental Services would be  
               limited to three percent of moneys allocated to it.







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          Background: Current law allows taxpayers to contribute money to one or more  
          of 19 voluntary contribution funds (VCFs) during the process of  
          filing their state income tax return. These contributions are  
          made from taxpayers' own resources, not from their tax  
          liability, as is the case with federal tax returns. Check-off  
          amounts are deductible as charitable contributions on taxpayers'  
          returns during the subsequent tax year. With some exceptions,  
          each voluntary contribution fund has a sunset date and is  
          required to meet a minimum contribution amount of $250,000,  
          adjusted annually for inflation.
          When a taxpayer contributes to VCFs, 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. The authorizing statutes  
          of other VCFs 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 VCFs require the State Controller to send the funds  
          directly to private organizations without passing through an  
          administrative agency, such as the California Fire Foundation.  
          SCO and administrative agencies may deduct administration fees  
          from the amount of donations each VCF receives.




          Proposed Law:  
          This bill would add the Special Olympics Fund (Fund) check-off,  
          and allow 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.  The bill would  
          require the Fund to meet a minimum contribution threshold of  
          $250,000 in the second calendar year it appears on the tax form;  
          that amount would be indexed yearly for inflation.
          Additionally, the bill would provide that all money transferred  
          to the Fund, upon appropriation by the Legislature, be allocated  
          as follows: (1) to FTB and the State Controller for  
          reimbursement of all costs incurred in administering the VCF,  








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          and (2) to the State Department of Developmental Services (DDS),  
          where the balance would be disbursed between the Special  
          Olympics Northern California and Special Olympics Southern  
          California based on the amount of donations provided by  
          taxpayers in each organization's jurisdiction, as specified, for  
          the purpose of supporting children and adults with intellectual  
          disabilities.


          The bill would prohibit funds to be used for administrative  
          costs by the Special Olympics Northern California and the  
          Special Olympics Southern California, and would limit DSS to  
          three percent of the moneys allocated to it for administrative  
          costs. The VCF would automatically sunset on January 1 of the  
          fifth taxable year following the Fund's first appearance on the  
          personal income tax form.




          Related  
          Legislation: SB 1476 (Committee on Governance and Finance) would  
          establish general provisions for voluntary contribution funds.  
          Specifically, the bill would (1) establish a seven-year sunset,  
          (2) require 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 (3) require  
          administering agencies to post information online about the use  
          of the funds.  SB 1476 is currently awaiting action by the full  
          Assembly. 


          Staff  
          Comments: FTB data indicate that in 2012, 89,335 out of 15  
          million taxpayers contributed a total of $4.8 million via tax  
          check-offs.  The tax check-off program typically collects $4-5  
          million in annual contributions for all VCFs.


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