BILL ANALYSIS                                                                                                                                                                                                    Ó






           ----------------------------------------------------------------- 
          |SENATE RULES COMMITTEE            |                       AB 2430|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
          |327-4478                          |                              |
           ----------------------------------------------------------------- 


                                   THIRD READING 


          Bill No:  AB 2430
          Author:   Beth Gaines (R) 
          Amended:  4/27/16 in Assembly
          Vote:     21 

           SENATE GOVERNANCE & FIN. COMMITTEE:  5-0, 6/29/16
           AYES:  Hertzberg, Nguyen, Beall, Hernandez, Moorlach
           NO VOTE RECORDED:  Lara, Pavley

           SENATE APPROPRIATIONS COMMITTEE:  7-0, 8/1/16
           AYES:  Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen

           ASSEMBLY FLOOR:  76-0, 5/23/16 - See last page for vote

           SUBJECT:   Voluntary contributions:  Type 1 Diabetes Research  
                     Fund


          SOURCE:    Author


          DIGEST:  This bill requires the addition of the Type 1 Diabetes  
          Research Fund (Fund) check-off to the personal income tax  
          return.


          ANALYSIS:  

          Existing law:


          1)Allows taxpayers to contribute money to voluntary contribution  
            funds (VCFs) by checking a box on their state income tax  








                                                                    AB 2430  
                                                                    Page  2


            returns.  California law requires contributions made through  
            so-called "check-offs" to be made from taxpayers' own  
            resources and not from their tax liability, as is possible on  
            federal tax returns.  





          2)Allows contribution amounts to be claimed as charitable  
            contributions on taxpayers' tax returns in the subsequent  
            year. 



          3)Requires that each VCF is individually added to the tax return  
            by legislation.  With a few exceptions, VCFs remain on the  
            return until they are repealed by a sunset date or fail to  
            generate a minimum contribution amount.  In general, the  
            minimum contribution amounts are adjusted annually for  
            inflation.  For most VCFs, the minimum contribution amount is  
            $250,000, beginning in the fund's second year.  The following  
            check-offs do not have a minimum contribution requirement:





             a)   California Firefighters' Memorial Foundation Fund,





             b)   California Peace Officer Memorial Foundation Fund, and 





             c)   California Seniors Special Fund.


          This bill:







                                                                    AB 2430  
                                                                    Page  3




          1)Adds the Type 1 Diabetes Research Fund (Fund), 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.  





          2)Requires the Fund to meet a minimum contribution threshold of  
            $250,000 in the second calendar year the Fund appears on the  
            tax form, and the amount is indexed yearly for inflation



          3)Provides that all money transferred to the Fund, upon  
            appropriation by the Legislature, be allocated as follows:





             a)   To the Franchise Tax Board (FTB) and the State  
               Controller's Office (SCO) for reimbursement of all costs  
               incurred in administering the VCF.





             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.



          4)Allows the UC and the authorized research organizations to use  
            up to 5% of the grant money for administrative costs.  









                                                                    AB 2430  
                                                                    Page  4



          5)Provides that the bill automatically sunsets on January 1 of  
            the fifth taxable year following the Fund's first appearance  
            on the personal income tax form.





          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 SCO 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.


          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No







                                                                    AB 2430  
                                                                    Page  5




          According to the Senate Appropriations Committee:




           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 UC, SCO, and FTB would be reimbursed for related  
            administrative costs. 




          SUPPORT:   (Verified8/3/16)


          None received


          OPPOSITION:   (Verified8/3/16)


          California Department of Finance 


          ARGUMENTS IN SUPPORT:     According to the author, "Diabetes has  
          reached epidemic levels in California.  As of 2012, about one in  
          seven adult Californians have diabetes and as many as one in  
          three 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 three cents per capita,  
          California has the lowest per capita funding for diabetes  







                                                                    AB 2430  
                                                                    Page  6


          prevention in the nation.  As California and its Legislature  
          debates 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 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  
          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."


          ARGUMENTS IN OPPOSITION:     Opponent argues that the bill is of  
          limited value and results in a loss to the General Fund.   
          Additionally, it is unclear why special preference should be  
          given to one organization over the countless others that are not  
          on the tax form.

          ASSEMBLY FLOOR:  76-0, 5/23/16
          AYES:  Achadjian, Alejo, Travis Allen, Atkins, Baker, Bigelow,  
            Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos,  
            Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh,  
            Dahle, Daly, Dodd, Frazier, Beth Gaines, Gallagher, Cristina  
            Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gray,  







                                                                    AB 2430  
                                                                    Page  7


            Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones,  
            Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,  
            Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,  
            Nazarian, Obernolte, O'Donnell, Olsen, Quirk, Ridley-Thomas,  
            Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond,  
            Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon
          NO VOTE RECORDED:  Arambula, Eggman, Gordon, Patterson

          Prepared by:Myriam Bouaziz / GOV. & F. / (916) 651-4119
          8/3/16 18:11:10


                                   ****  END  ****