BILL ANALYSIS Ó AB 2430 Page 1 ASSEMBLY THIRD READING AB 2430 (Beth Gaines) As Amended April 27, 2016 Majority vote ------------------------------------------------------------------ |Committee |Votes|Ayes |Noes | | | | | | | | | | | | | | | | |----------------+-----+----------------------+--------------------| |Revenue & |9-0 |Ridley-Thomas, | | |Taxation | |Brough, Dababneh, | | | | |Gipson, Mullin, | | | | |O'Donnell, Patterson, | | | | |Quirk, Wagner | | | | | | | |----------------+-----+----------------------+--------------------| |Appropriations |20-0 |Gonzalez, Bigelow, | | | | |Bloom, Bonilla, | | | | |Bonta, Calderon, | | | | |Chang, McCarty, | | | | |Eggman, Gallagher, | | | | |Eduardo Garcia, Chau, | | | | |Holden, Jones, | | | | |Obernolte, Quirk, | | | | |Santiago, Wagner, | | | | |Weber, Wood | | | | | | | | | | | | ------------------------------------------------------------------ AB 2430 Page 2 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)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. 3)Defines an "authorized diabetes research organization" as a California-based university, with a research program or a nonprofit charitable organization 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. AB 2430 Page 3 5)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. 6)Provides for the Fund provisions' automatic sunset on either: a) January 1 of the fifth taxable year following the Fund's first appearance on the PIT return; or, b) January 1 of the calendar year in which the Fund does not meet minimum contribution amount of $250,000, as determined by the FTB. EXISTING LAW: 1)Allows taxpayers to contribute to one or more of 19 VCFs on the 2015 PIT return. 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: According to the Assembly Appropriation Committee: 1)Minor ongoing General Fund (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. AB 2430 Page 4 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. "Recently, a lot of attention has been given to the study coming out of [UC Los Angeles] 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 AB 2430 Page 5 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 therapies and, ultimately, a cure for the disease." 2)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. Analysis Prepared by: Oksana Jaffe / REV. & TAX. / (916) 319-2098 FN: 0003026 AB 2430 Page 6