BILL ANALYSIS Ó
AB 2430
Page 1
Date of Hearing: April 18, 2016
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Sebastian Ridley-Thomas, Chair
AB 2430
(Beth Gaines) - As Amended April 13, 2016
Majority vote. Fiscal committee.
SUBJECT: Voluntary contributions: Type 1 Diabetes Research
Fund
SUMMARY: Authorizes the addition of the Type 1 Diabetes
Research 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)Establishes the Fund in the State Treasury.
2)Provides that all money transferred to the Fund, upon
appropriation by the Legislature, shall be allocated as
follows:
a) To the Franchise Tax Board (FTB) and the State
Controller for reimbursement of all costs incurred in
administering the Fund; and,
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b) The balance to an authorized diabetes research
organization, as defined, for the purpose of type 1
diabetes research. Allows the authorized diabetes research
organization to use up to 5% of the moneys allocated to
administer and promote the research.
3)Defines an "authorized diabetes research organization" as
either of the following:
a) A university, which is located in California, with a
research program; or,
b) A nonprofit charitable organization exempt from federal
income tax as an organization, described in Internal
Revenue Code Section 501(c)(3), that engages in research.
4)Defines "research" to include expenditures to develop and
advance the understanding, techniques, and modalities
effective in the cure, screening, and treatment of type 1
diabetes.
5)Allows a deduction for any contribution made by an individual
taxpayer to the Fund.
6)Requires the Fund to meet a standard minimum contribution
requirement of $250,000 in its second year. Thereafter, the
minimum contribution amount will be indexed for inflation.
7)Provides for the Fund provisions' automatic sunset on either
January 1 of the fifth taxable year following the Fund's first
appearance on the PIT return.
EXISTING LAW:
1)Allows taxpayers to contribute to one or more of 19 VCFs on
the 2015 PIT return.
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2)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
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)The Author's Statement . The author has provided the following
statement in support of this bill:
"Diabetes has reached epidemic levels in California. As of
2012, about 1 in 7 adult Californians have diabetes and as
many as 1 in 3 will be diagnosed in the near future. The
total cost for treatment of diabetes in California exceeds
$24.5 billion dollars. This dollar amount includes
hospitalization, outpatient treatment, disability payments,
loss of individual productivity, and more. As the number of
those affected increases, so too will the cost.
A January 2015 audit, requested by our office, of the
Department of Public Health indicated that "At a funding level
of 3 cents per capita, California has the lowest per capita
funding for diabetes prevention in the nation." As California
and its Legislature debates on how to address this shortfall
in diabetes funding, diabetics are seeing their costs
skyrocket on a daily basis.
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"Recently, a lot of attention has been given to the study
coming out of UCLA in March of 2016 on prediabetes, which
generally could result in a diagnosis of Type 2 diabetes.
However, little to no attention is given to Type 1 diabetes,
which used to be referred to as 'juvenile diabetes' given its
high incidence in children.
"In California, there is an estimated 190,000 people diagnosed
as type 1 diabetic. While it certainly seems to be a small
percentage compared to the 8 million+ of the diabetic
population, the costs associated with Type 1 diabetes are
immensely disproportionate. Because Type 1 diabetes is an
autoimmune disease in which a person's pancreas stops
producing insulin, Type 1 diabetics have to have to carefully
balance insulin doses (either by injections multiple times a
day or continuous infusion through a pump) with eating and
other activities throughout the day and night on a daily
basis. They must also measure their blood-glucose level by
pricking their fingers for blood six or more times a day.
These tools (the pump, the sharps, the blood glucose meters,
the testing strips, etc.) are not cheap and as technology
evolves, they get more expensive.
"AB 2430 seeks to create a voluntary tax contribution
designation on a state income tax deduction form so that
taxpayers can directly donate to the Juvenile Diabetes
Research Foundation (JDRF), who is the leading global
organization funding Type 1 diabetes research. JDRF is the
only global organization with a strategic plan to bring those
living with Type 1 diabetes a continuous flow of life-changing
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therapies and, ultimately, a cure for the disease."
2)Committee Staff Comments.
a) 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.
b) Distribution of funds : This bill requires the moneys
deposited in the Fund, minus administrative costs, to be
transferred to an authorized diabetes research
organization. Although an "authorized diabetes research
organization" is defined as either a university located in
California or a non-profit organization engaged in
research, 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.
1)Related Legislation :
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a) AB 1399 (Baker) would add a voluntary contribution for
the California Domestic Violence Fund. AB 1399 is pending
hearing by the Senate Committee on Governance and Finance.
b) AB 1789 (Santiago) would extend the voluntary
contribution for the School Supplies for Homeless Children
Fund. AB 1789 is pending hearing by the Assembly Committee
on Appropriations.
c) AB 2371 (Frazier) would add a voluntary contribution for
the Special Olympics Fund. AB 2371 is pending hearing by
the Assembly Committee on Appropriations.
d) AB 2497 (Wagner) would repeal the voluntary contribution
for the California Senior Legislature Fund and replace it
with a voluntary contribution for the California Senior
Citizen Advocacy Fund. AB 2497 is pending hearing by the
Assembly Committee on Aging and Long-Term Care.
e) SB 1416 (Jeff Stone) would add a voluntary contribution
for the Revive the Salton Sea Fund. SB 1416 is pending
hearing by 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:
AB 2430
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Support
None on file
Opposition
None on file
Analysis Prepared by:Oksana Jaffe / REV. & TAX. / (916) 319-2098