BILL ANALYSIS Ó AB 2430 Page 1 Date of Hearing: May 11, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 2430 (Beth Gaines) - As Amended April 27, 2016 ----------------------------------------------------------------- |Policy |Revenue and Taxation |Vote:|9 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill authorizes the addition of the Type 1 Diabetes Research Fund (Fund) checkoff to the personal income tax return upon the removal of another voluntary contribution fund (VCF) from the return, or as soon as space is available. Specifically, AB 2430 Page 2 this bill: 1)Requires that all money transferred to the Fund, upon appropriation by the Legislature, will 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, b) To the University of California (UC) for distribution of grants to authorized diabetes research organizations. Both the UC and the authorized research organizations may also use up to 5% of the grant moneys for administrative cost. 2)Defines an "authorized diabetes research organization" as a California-based university, with a research program or a nonprofit charitable organization that engages in research. 3)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. 4)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. AB 2430 Page 3 5)Sunsets the Fund on the fifth taxable year following the Fund's appearance on tax returns. FISCAL EFFECT: 1)Minor ongoing GF revenue losses of up to $15,000 per year resulting from itemized taxpayer deductions. 2)Minor and absorbable administrative costs for the FTB or UC, the administering agency responsible for the Fund. COMMENTS: 1)Purpose. According to the author, AB 2430 would allow taxpayers to donate directly to an organization such as the Juvenile Diabetes research Foundation (JDRF), who is the leading global organization funding Type 1 diabetes research. The author notes that California has the lowest per capita funding for diabetes prevention in the nation. 2)Background. Current state tax law allows taxpayers to make contributions on their tax returns to a number of VCFs. Like many other VCFs, AB 2430 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). Moreover, AB 2430 would establish an administrating AB 2430 Page 4 agency: The money deposited into the Fund are allocated to the University of California for distribution of grants to authorized research organizations. 3)JDRF. According to the nonprofit tracking organization Guide Star, JDRF currently sponsors $568 million in scientific research in 17 countries. In 2012, JDRF provided more than $110 million in research. AB 2430 does not require funds to go to JDRF, and the author's office notes that JDRF is one example of an organization that does critical research on Type 1 diabetes. 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 2430, 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 2497 (Wagner), also on today's Committee agenda, repeals the voluntary contribution for the California Senior Legislature Fund and replaces it with a voluntary contribution for the California Senior Citizen Advocacy Fund. c) AB 2371 (Frazier), also on today's Committee agenda, adds a voluntary contribution for the Special Olympics Fund. AB 2430 Page 5 Analysis Prepared by:Luke Reidenbach / APPR. / (916) 319-2081