BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2430


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          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


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          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.










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          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.  










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          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  








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            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













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