BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2430|
|Office of Senate Floor Analyses | |
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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
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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return until they are repealed by a sunset date or fail to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:
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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.
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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
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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
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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,
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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
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