BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 2430 (Beth Gaines) - Voluntary contributions: Type 1 Diabetes Research Fund ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: April 27, 2016 |Policy Vote: GOV. & F. 5 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 1, 2016 |Consultant: Robert Ingenito | | | | ----------------------------------------------------------------- This bill does not meet the criteria for referral to the Suspense File. Bill Summary: AB 2430 would add the Type 1 Diabetes Research Fund check-off to the personal income tax return. Fiscal Impact: The Franchise Tax Board (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 University of California (UC), State Controller's Office (SCO) and FTB and would be reimbursed for related administrative costs. AB 2430 (Beth Gaines) Page 1 of ? Background: Current law allows taxpayers to contribute money to one or more of 19 voluntary contribution funds (VCFs) during the process of filing their state income tax return. These contributions are made from taxpayers' own resources, not from their tax liability, as is the case with federal tax returns. Check-off amounts are deductible as charitable contributions on taxpayers' returns during the subsequent tax year. With some exceptions, each voluntary contribution fund has a sunset date and is required to meet a minimum contribution amount of $250,000, adjusted annually for inflation. When a taxpayer contributes to VCFs, FTB deposits the total of all contributions, less an administrative fee, into the fund created as part of the VCF's legislative authorization. For some VCFs, such as the Protect Our Coast and Ocean Fund, taxpayers' contributions are allocated to a state agency for use in a state administered grant program. The authorizing statutes of other VCFs direct administrative agencies to allocate donations to a private organization. For example, the Office of Emergency Services passes VCF funds to the American Red Cross. Other VCFs require the State Controller to send the funds directly to private organizations without passing through an administrative agency, such as the California Fire Foundation. SCO and administrative agencies may deduct administration fees from the amount of donations each VCF receives. Proposed Law: This bill would add the Type 1 Diabetes Research Fund (Fund) check-off, 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. It would require the Fund to meet a minimum contribution threshold of $250,000 in the second calendar year the Fund appears on the tax form; the amount would be indexed yearly for inflation. Additionally, the bill would provide that all money transferred to the Fund, upon appropriation by the Legislature, be allocated as follows: (1) to FTB and SCO for reimbursement of all costs incurred in administering the VCF, and (2) to UC for distribution of grants to authorized diabetes research organizations. Both UC and the authorized research AB 2430 (Beth Gaines) Page 2 of ? organizations may also use up to five percent of the grant moneys for administrative cost. The new VCF would automatically sunset on January 1 of the fifth taxable year following the Fund's first appearance on the personal income tax form. Related Legislation: SB 1476 (Committee on Governance and Finance) would establish general provisions for voluntary contribution funds. Specifically, the bill would (1) establish a seven-year sunset, (2) require a minimum contribution amount of $250,000 beginning in the fund's second year, and each year thereafter, requires funds to be continuously appropriated, and (3) require administering agencies to post information online about the use of the funds. SB 1476 is currently awaiting action by the full Assembly. Staff Comments: FTB data indicate that in 2012, 89,335 out of 15 million taxpayers contributed a total of $4.8 million via tax check-offs. The tax check-off program typically collects $4-5 million in annual contributions for all VCFs. -- END --