BILL ANALYSIS Ó
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Date of Hearing: June 22, 2015
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Philip Ting, Chair
SB
17 (Monning) - As Introduced December 1, 2014
Majority vote. Fiscal committee.
SENATE VOTE: 35-2
SUBJECT: California Sea Otter Fund
SUMMARY: Extends, from January 1, 2016, to January 1, 2021, the
sunset date for the statutory provisions authorizing the
California Sea Otter Fund (Fund) as a voluntary contribution
fund (VCF) on the Personal Income Tax (PIT) return.
EXISTING LAW:
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1)Allows taxpayers to contribute to one or more of 18 VCFs on
the 2014 PIT return.
2)Provides a specific sunset date for each VCF, except for the
California Seniors Special Fund and the State Parks Protection
Fund.
3)Requires each VCF to meet an annual minimum contribution
amount to remain in effect, except for the California
Firefighters' Memorial Fund, the California Peace Officer
Memorial Foundation Fund, and the California Seniors Special
Fund.
4)Provides that all money transferred to the Fund, upon
appropriation by the Legislature, shall first be allocated to
the Franchise Tax Board (FTB) and the State Controller for
reimbursement of all costs incurred in administering the Fund.
The remaining moneys are divided equally between the:
a) Department of Fish and Wildlife to establish a sea otter
fund used for sea otter conservation, including for
increased investigation, prevention, and enforcement
actions related to sea otter mortality, and for public
outreach activities that encourage taxpayers to make
contributions to the Fund; and,
b) State Coastal Conservancy for competitive grants and
contracts to public agencies and nonprofit organizations
for research, science, protection, projects, or programs
related to the Federal Sea Otter Recovery Plan or improving
the nearshore ocean ecosystem, including program activities
to reduce sea otter mortality, and for public outreach
activities that encourage taxpayers to make contributions
to the Fund.
5)Allows a deduction for any contribution made to the Fund.
FISCAL EFFECT: The FTB estimates that this bill would reduce
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General Fund revenues by $9,000 per year beginning in fiscal
year 2016-17.<1> This estimate assumes that the Fund will meet
its minimum contribution amount each year.
COMMENTS:
1)The author notes the following in support of this bill:
Given that the sea otter population remains in trouble, it
is important to extend the tax check-off option on the
state income tax form in order for Californians to be able
to voluntarily assist in helping to protect this keystone
species. The reauthorization of the California Sea Otter
Fund will ensure that support for research to protect the
sea otter will continue uninterrupted.
2)This bill is sponsored by Friends of the Sea Otter, which
notes the following:
The California Sea Otter Fund has been instrumental in
supporting sea otter research, conservation, and education
projects that are critical for sea otter recovery. The
money raised from the California Sea Otter Fund has
supported a long-term study to determine the impacts of
toxic chemicals and disease-carrying pollution on sea
otters living along the developed areas of the California
coast. While some of these answers are known, researchers
were looking for a deeper understanding of the
relationships between sea otters and their habitat. In
addition the money from the Fund has led to a project on
-------------------------
<1>
Approximately 56% of taxpayers who contribute to the VCF
itemize their deductions. The FTB estimates that the average
tax rate for these taxpayers is 6%, resulting in an estimated
revenue loss of $9,000 annually.
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investigating the use of Elkhorn Slough by sea otters. Sea
Otter Awareness Week and educational outreach programs to
local schools in the Monterey Bay area have also been
funded through the California Sea Otter Fund.
3)This bill is supported by Insurance Commissioner Dave Jones,
who notes the following:
The California Sea Otter Fund was created in 2006 through
Assembly Bill 2485, which was jointly authored by me and
Secretary (then Assemblymember) John Laird, in order to
study and protect the threatened population of sea otters
in California which had significantly declined in the early
1990s [sic] due to hunting and the emergence of diseases,
parasites, and toxicants that kill sea otters. Today,
California's sea otter population is still one-fifth of its
historic population and the fund is the primary source of
funding for sea otter research and conservation efforts.
The Sea Otter tax fund check-off is the main source for all
sea otter funding in California. The fund has raised more
than $2.3 million in the past eight years enabling the
Department of Fish and Wildlife and the California State
Coastal Conservancy to study the threats sea otters face,
promote awareness, and work on sea otter restoration.
4)Committee Staff Comments
a) California's sea otters : California's southern sea
otters (Enhydra lutris nereis) were thought to be extinct
during the early 20th century. In 1938, however, a small
population was discovered near Big Sur. In 1977, the
species was listed as threatened under the federal
Endangered Species Act. The animals are also protected by
the federal Marine Mammal Protection Act and have
California's fully protected species status.
California's southern sea otter population gradually grew
to roughly 2,000 animals, and has fluctuated between 2,000
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and 3,000 since 1995. According to the Department of Fish
and Wildlife, the population has plateaued and the animals
are currently "stuck in recovery" largely due to the high
death rate of prime-aged adults.
Fund donations have, among other things, supported
scientific research that has discovered that a substantial
portion of sea otter mortality results from diseases,
parasites, and toxins. For example, research has shown
that various types of pollution are contributing to the
premature deaths of otters that should live longer and
produce more pups.
b) Legislative history : The Fund first appeared on the
2006 PIT return. The original legislation provided for the
Fund provisions' automatic repeal on January 1 of the fifth
taxable year following the Fund's first appearance on the
tax return. As such, the original Fund provisions were
repealed by their own terms on January 1, 2011. AB 971
(Monning), Chapter 209, Statutes of 2011, then reauthorized
the addition of the Fund checkoff to the PIT form beginning
with the 2011 return.
In the last three years alone, the Fund has generated
nearly $1 million. Specifically, the Fund received valid
contributions of $351,037 in 2012; $307,544 in 2013; and
$304,005 in 2014.
c) What would this bill do ? As noted by the FTB, this bill
would allow the Fund to remain on the PIT returns filed for
taxable years 2016 through 2020, provided contributions
meet the annual minimum contribution threshold.
The Fund's minimum contribution requirement for 2015 is
$283,775, and the Fund has received a total of $228,661 in valid
contributions through April of this year. The minimum
contribution requirement is adjusted annually for inflation,
with the annual inflation adjustment based on the percentage
change in the California Consumer Price Index.
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d) So many causes, so little space : There are countless
worthy causes that would benefit from the inclusion of a
VCF on the state's income tax returns. At the same time,
space on the returns is limited. Thus, it could be argued
that the current system for adding VCFs to the form is
subjective and essentially rewards organizations that can
convince the Legislature to include their fund on the form.
REGISTERED SUPPORT / OPPOSITION:
Support
Friends of the Sea Otter (Sponsor)
Defenders of Wildlife (Co-Sponsor)
California Association of Professional Scientists
EarthEcho International
Humane Society of the United States
Insurance Commissioner Dave Jones
Monterey Bay Aquarium
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National Wildlife Federation
Natural Resources Defense Council
Ocean Conservancy
Oceana
Planning and Conservation League
Sierra Club California
WILDCOAST
Opposition
None on file
Analysis Prepared by:M. David Ruff / REV. & TAX. / (916)
319-2098
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