BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 2371| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 2371 Author: Frazier (D) Amended: 5/12/16 in Assembly Vote: 21 SENATE GOVERNANCE & FIN. COMMITTEE: 6-0, 6/29/16 AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach NO VOTE RECORDED: Pavley SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/1/16 AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen ASSEMBLY FLOOR: 75-0, 5/19/16 - See last page for vote SUBJECT: Voluntary contributions: Special Olympics Fund SOURCE: Author DIGEST: This bill requires the addition of the Special Olympics Fund (Fund) check-off to the personal income tax return. ANALYSIS: Existing law: 1)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 AB 2371 Page 2 so-called "check-offs" to be made from taxpayers' own resources and not from their tax liability, as is possible on federal tax returns. 2)Allows contribution amounts to be claimed as charitable contributions on taxpayers' tax returns in the subsequent year. 3)Requires that 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 With a few exceptions, VCFs remain on the return until they are repealed by a sunset date or fail to generate a minimum contribution amount.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 amounts are adjusted annually for inflation. For most VCFs, the minimum contribution amount is $250,000, beginning in the fund's second year. The following check-offs do not have a minimum contribution requirement: a) California Firefighters' Memorial Foundation Fund, b) California Peace Officer Memorial Foundation Fund, and c) California Seniors Special Fund. This bill: 1)Adds the Fund, and allows 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. 2)Requires the Fund to meet a minimum contribution threshold of $250,000 in the second calendar year the Fund appears on the tax form, and the amount is indexed yearly for inflation. AB 2371 Page 3 3)Provides that all money transferred to the Fund, upon appropriation by the Legislature, be allocated as follows: a) To the Franchise Tax Board (FTB) and the State Controller for reimbursement of all costs incurred in administering the VCF. b) To the State Department of Developmental Services where the balance shall be disbursed between the Special Olympics Northern California (SONC) and Special Olympics Southern California (SOSC) based on the amount of donations provided by taxpayers in each organization's jurisdiction based on the county of the taxpayer contributing, for the purpose of supporting children and adults with intellectual disabilities. 4)Prohibits funds to be used for administrative costs by SONC and SOSC, and limits the State Department of Developmental Services to 3% of the moneys allocated to it for administrative costs. 5)Provides that the bill automatically sunsets on January 1 of the fifth taxable year following the Fund's first appearance on the personal income tax form. Background 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. The Special Olympics' global reach is approximately 4.4 million athletes. According to the proponents of this bill, SONC and SOSC serve 59,000 athlete families, receive assistance from over 45,000 volunteers and 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 AB 2371 Page 4 its minimum contribution requirement. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No According to the Senate Appropriations Committee: 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 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. SUPPORT: (Verified8/3/16) Association of Regional Center Agencies Special Olympics Northern California Special Olympics Southern California The Arc and United Cerebral Palsy California Collaboration OPPOSITION: (Verified8/3/16) California Department of Finance ARGUMENTS IN SUPPORT: According to the author, "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 AB 2371 Page 5 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. 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." ARGUMENTS IN OPPOSITION: Opponent argues that this bill is of limited value and results in a loss to the General Fund. Additionally, it is unclear why special preference should be given to one organization over the countless others that are not on the tax form. ASSEMBLY FLOOR: 75-0, 5/19/16 AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mayes, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Wood, Rendon NO VOTE RECORDED: Chang, Gordon, Mathis, McCarty, Williams Prepared by:Myriam Bouaziz / GOV. & F. / (916) 651-4119 8/3/16 19:33:36 **** END **** AB 2371 Page 6