BILL ANALYSIS Ó SENATE COMMITTEE ON GOVERNANCE AND FINANCE Senator Robert M. Hertzberg, Chair 2015 - 2016 Regular ------------------------------------------------------------------ |Bill No: |SB 17 |Hearing |4/8/15 | | | |Date: | | |----------+---------------------------------+-----------+---------| |Author: |Monning |Tax Levy: |No | |----------+---------------------------------+-----------+---------| |Version: |12/1/14 |Fiscal: |Yes | ------------------------------------------------------------------ ----------------------------------------------------------------- |Consultant|Bouaziz | |: | | ----------------------------------------------------------------- VOLUNTARY CONTRIBUTIONS: CALIFORNIA SEA OTTER FUND Extends the sunset date of the "California Sea Otter Fund" to January 1, 2021. Background and Existing Law 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 With a few exceptions, VCFs remain on the return until they are repealed by a sunset date or fail to generate a minimum contribution amount.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 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: California Firefighters' Memorial Foundation Fund, California Peace Officer Memorial Foundation Fund, and SB 17 (Monning) 12/1/14 Page 2 of ? California Seniors Special Fund. When a taxpayer contributes to VCFs, the Franchise Tax Board (FTB) deposits the total of all contributions 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 FTB, the Controller, and an administrative agency may deduct from the amount of donations each VCFs receives for direct costs of administering a fund. There are currently 18 check-offs listed on the tax return form. The tax check-off program typically collects $4-5 million in annual contributions for all VCFs. The following table provides information on the current tax check-offs. ------------------------------------------------------------ |Voluntary | 2014 | Contribution Allotment | |Contribution Fund |Contribution| | | | s | | |---------------------+------------+-------------------------| |Alzheimer's | $423,843 | As many as apply and | |Disease/Related | | receive contracts or | |Disorders Fund | | grants provided by the | | | |monies contributed. | |---------------------+------------+-------------------------| |American Red Cross, | $222,294 | To the Office of | |California Chapter | | Emergency Services for | | | | distribution to the | | | | American Red Cross. | | | | | |---------------------+------------+-------------------------| |CA Breast Cancer | $381,678 | As many as apply and | SB 17 (Monning) 12/1/14 Page 3 of ? |Research Fund | | receive grants provided | | | | from the monies | | | | contributed. | |---------------------+------------+-------------------------| |CA Cancer Research | $444,406 | As many as apply and | |Fund | | receive grants provided | | | | from the monies | | | | contributed. | |---------------------+------------+-------------------------| |CA Firefighters' | $140,388 | California Fire | |Memorial Fund | | Foundation. | |---------------------+------------+-------------------------| |CA Peace Officer | $127,249 | California Peace | |Memorial Foundation | | Officer Memorial | |Fund | | Commission. | |---------------------+------------+-------------------------| |CA Sea Otter Fund | $304,005 | Department of Fish and | | | | Wildlife, and as many | | | | as apply for grants and | | | | contracts provided for | | | | by 50% of | | | | contributions. | |---------------------+------------+-------------------------| |CA Seniors Special | $60,337 | The first $80K to the | |Fund | | Area Agency on Aging | | | | Advisory Council of | | | | California and the rest | | | | to area agencies as | | | | allocated by the | | | | California Department | | | | of Aging. | |---------------------+------------+-------------------------| |Child Victims of | $251,115 | As many counseling and | |Human Trafficking | | prevention centers that | |Fund | | apply and receive | | | | grants provided from | | | | monies contributed. | |---------------------+------------+-------------------------| |Emergency Food for | $452,667 | To the Department of | |Families Fund | | Social Services for the | | | | Emergency Food | | | | Assistance Program. | |---------------------+------------+-------------------------| |Keep Arts in Schools | $256,421 | To the Arts Council for | SB 17 (Monning) 12/1/14 Page 4 of ? |Fund | | grants to organizations | | | | providing parts | | | | programs in schools. | |---------------------+------------+-------------------------| |Protect Our Coast | $241,040 | To the California | |and Oceans Fund | | Coastal Commission to | | | | provide grants to | | | | organizations in | | | | support of coastal | | | | resource programs and | | | | related educational | | | | activities. | |---------------------+------------+-------------------------| |Rare & Endangered | $451,177 | Department of Fish and | |Species Preservation | | Wildlife endangered | |Program | | conservation programs. | |---------------------+------------+-------------------------| |School Supplies for | $337,949 | As many as apply and | |Homeless Children | | receive grants provided | |Fund | | for by the monies | | | | contributed. | |---------------------+------------+-------------------------| |State Parks | $335,922 | As many as purchase a | |Protection | | parks pass that can be | |Fund/Parks Pass | | provided from the | |Purchase | | monies contributed. | |---------------------+------------+-------------------------| |CA Senior |Initial Tax | To conduct the sessions | |Legislature Fund | Return | of the California | | | 2014 |Senior Legislature. | |---------------------+------------+-------------------------| |CA Sexual Violence |Initial Tax | As many as apply and | |Victim Services Fund | Return | receive grants provided | | | 2014 | from the monies | | | |contributed. | |---------------------+------------+-------------------------| |Habitat For Humanity |Initial Tax | To build affordable | |Fund | Return |housing in California. | | | 2014 | | ------------------------------------------------------------ The California Sea Otter Fund check-off was initially established in 2006 (AB 2485, Jones and Laird). The California SB 17 (Monning) 12/1/14 Page 5 of ? Sea Otter Fund first appeared on the 2007 return, and is subject to a minimum contribution amount that is adjusted annually for inflation. In 2011 the Fund's repeal date was extended from January 1, 2011, to January 1, 2016, (AB 971, Monning). This bill seeks to extend the repeal date once more. Proposed Law Senate Bill 17 extends, from January 1, 2016 to January 1, 2021, the repeal date for the California Sea Otter Fund tax check-off on the income tax form. State Revenue Impact FTB estimates revenue losses of $9,000 in (FY) 2016-17, $9,000 in 2017-18, and $9,000 in 2018-19. The estimate assumes that the fund will meet the minimum contribution amount each year. Comments 1. Purpose of the bill. The California Sea Otter Fund supports researchers and managers in their efforts to study and protect the threatened population of sea otters in California, which were decimated by the early 1900's. Today, fewer than 3,000 sea otters exist along the state's coastline. To date, the Fund has supported the advancement of a long-term study to identify impacts to sea otter health, including chemical and pathogen pollution that is prominent off the developed areas of the California Coast. This bill will continue to provide crucial funding to help scientists examine and understand causes of sea otter mortality, identify key factors limiting population growth and recovery, and work cooperatively and collaboratively with stakeholders to help mitigate and prevent environmental degradation and pollution of the near-shore marine ecosystem. 2. 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 to 18 SB 17 (Monning) 12/1/14 Page 6 of ? check-offs. Last year 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. SB 1207 (Wolk) was held on suspense in Assembly Appropriations. 3. 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 18. With legislation introduced every year to add new VCFs, there is little reason to expect this number to stop growing. The growing number results in significant costs to the Franchise Tax Board (FTB). It is estimated that FTB can only handle 12-15 more check-offs before it has to redesign its information technology system, at a cost of $800,000 to $1 million. Support and Opposition (4/2/15) Support : California Insurance Commissioner Dave Jones; Defenders of Wildlife; EarthEcho International; Friends of the Sea Otter; The Humane Society; Monterey Bay Aquarium; National Wildlife Federation, California; Natural Resources Defense Council; Oceana; Oceana Conservancy; WiLDCOAST. Opposition : Unknown. -- END -- SB 17 (Monning) 12/1/14 Page 7 of ?