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
          
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          |Version: April 27, 2016         |Policy Vote: GOV. & F. 5 - 0    |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: August 1, 2016    |Consultant: Robert Ingenito     |
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          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  
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          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  
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          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.


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