BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
------------------------------------------------------------------
|Bill No: |AB 2497 |Hearing |6/15/16 |
| | |Date: | |
|----------+---------------------------------+-----------+---------|
|Author: |Wagner |Tax Levy: |No |
|----------+---------------------------------+-----------+---------|
|Version: |4/26/16 |Fiscal: |Yes |
------------------------------------------------------------------
-----------------------------------------------------------------
|Consultant|Bouaziz |
|: | |
-----------------------------------------------------------------
Voluntary contributions: California Senior Legislature Fund:
California Senior Citizen Advocacy Fund
Authorizes the addition of the California Senior Citizen
Advocacy Fund (Fund) check-off to the personal income tax
return.
Background
Existing state law allows taxpayers to contribute money to
voluntary contribution funds (VCFs), by checking a box on their
state income tax 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. Check-off amounts may be claimed as
charitable contributions on taxpayers' tax returns in the
subsequent year.
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repealed by a sunset date or fail to generate a minimum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
amount is $250,000, beginning in the fund's second year, and is
adjusted yearly for inflation thereafter. The following
check-offs do not have a minimum contribution requirement:
California Firefighters' Memorial Foundation Fund,
AB 2497 (Wagner) 4/26/16 Page 2
of ?
California Peace Officer Memorial Foundation Fund, and
California Seniors Special Fund.
When a taxpayer contributes to VCFs, the Franchise Tax Board
(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.
Other VCFs' authorizing statutes 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 funds require the State Controller to
send the funds directly to private organizations without passing
through an administrative agency, such as the California Fire
Foundation. The Controller and administrative agencies may
deduct administrations fees from the amount of donations each
VCF receives.
There are currently 19 check-offs listed on the tax return form.
The tax check-off program typically collects $4-5 million in
annual contributions for all VCFs.
Proposed Law
Assembly Bill 2497 repeals the California Senior Legislature
Fund and adds the California Senior Citizen Advocacy Fund
(Fund). AB 2497 allows a taxpayer to make a voluntary
contribution to the Fund on the state personal income tax
return. The bill 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.
Additionally, the bill provides that all money transferred to
the Fund, upon appropriation by the Legislature, be allocated as
follows:
To FTB and the State Controller for reimbursement of all
AB 2497 (Wagner) 4/26/16 Page 3
of ?
costs incurred in administering the VCF,
To the California Senior Legislature, for its ongoing
activities on behalf of older persons.
AB 2497 provides that the bill automatically sunsets on January
1, 2021.
State Revenue Impact
FTB estimates annual revenue losses of roughly $8,000 for every
$250,000 contributed to the Fund by taxpayers who itemize.
Comments
1. Purpose of the bill. According to the author, "AB 2497
would re-name the contribution fund from the California Senior
Legislature Fund to the "California Senior Citizen Advocacy
Fund" to more accurately portray the mission of the
organization, and to remove the stigma of being associated with
the State Legislature. This name change would provide for
retention on the Franchise Tax Board's Form 540, and thus allow
the marketing and promotional efforts to continue to be pursued.
Renaming the California Senior Legislature Fund is the simplest
method to prevent removal from the Franchise Tax Board's Form
540, and allows the California Senior Legislature to rebuild
their primary source of funding. "
2. Hitting the reset button. The California Senior Legislature
Fund first appeared on the 1983 personal income tax return. In
1994, AB 3266 (Martinez) changed the Fund's name to the
California Fund for Senior Citizens. In 2014, SB 997 (Morrell)
repealed the California Fund for Senior Citizens and established
the California Senior Legislature Fund. In 2015, the California
Senior Legislature Fund received contributions of approximately
$60,137, and as of May of this year, received contributions of
approximately $59,422. If the Fund does not meet the minimum
contribution amount of $250,000 by the end of this year, the
fund will not be included on the 2016 personal income tax return
(which is filed in 2017) and discontinued. Reauthorizing the
Fund effectively allows the Fund to reappear on the income tax
form after failing to meet the minimum contribution limit.
AB 2497 (Wagner) 4/26/16 Page 4
of ?
3. Is there a better way? The current tax check-off program
generates a relatively small share of statewide contributions to
charitable causes. In 2008, Californians donated more than $17
billion to charities. However, less than 1% of Californians use
the tax check-off program to make donations to charitable
organizations. FTB reports that in 2012, 89,335 out of 15
million taxpayers contributed a total of $4.8 million. In 2014,
SB 1207 (Wolk) attempted to address this issue and help grow
charitable giving by establishing the California Voluntary
Contribution Program to promote charitable giving and collect
donations. This would have allowed many more charities to
participate in the program, would have screened potential
participants before adding them onto the form, and eliminated
the need for each organization to go through the Legislative
process. Under SB 1207, charities would instead apply to the
office of California Volunteers for placement on the income tax
form. However, SB 1207 (Wolk) was held on suspense in Assembly
Appropriations.
4. Bills, bills, bills. Currently, tax check-offs must be
added by the Legislature. In 2008, 11 VCFs appeared on the
personal income tax return. Today, the return contains 19.
With legislation introduced every year to add new VCFs, there is
little reason to expect this number to stop growing. It is
estimated that FTB can only handle 8 or 9 more check-offs before
FTB has to create a separate tax schedule.
5. Similar Legislation. SB 1476 (Committee on Governance and
Finance) establishes general provisions for voluntary
contribution funds. Specifically, the bill establishes a seven
year sunset, requires 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 requires
administering agencies to post information online about the use
of the funds. SB 1476 is set to be heard in the Assembly
Committee on Revenue and Taxation on June 13, 2016.
Assembly Actions
Assembly Revenue and Taxation 9-0
Assembly Aging and Long Term Care6-0
Assembly Appropriations 20-0
AB 2497 (Wagner) 4/26/16 Page 5
of ?
Assembly Floor 76-0
Support and
Opposition (6/8/16)
Support : California Senior Legislature.
Opposition : California Department of Finance.
-- END --