BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON GOVERNANCE AND FINANCE
                         Senator Robert M. Hertzberg, Chair
                                2015 - 2016  Regular 

                              
          
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          |Bill No:  |SB 17                            |Hearing    |4/8/15   |
          |          |                                 |Date:      |         |
          |----------+---------------------------------+-----------+---------|
          |Author:   |Monning                          |Tax Levy:  |No       |
          |----------+---------------------------------+-----------+---------|
          |Version:  |12/1/14                          |Fiscal:    |Yes      |
           ------------------------------------------------------------------ 
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          |Consultant|Bouaziz                                               |
          |:         |                                                      |
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                  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          repealed by a sunset date or fail to generate a minimum  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 







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              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    |








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          |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 |








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          |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  








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          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  








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          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.


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