BILL ANALYSIS Ó SB 1416 Page 1 Date of Hearing: August 3, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair SB 1416 (Stone) - As Amended June 15, 2016 ----------------------------------------------------------------- |Policy |Revenue and Taxation |Vote:|9 - 0 | |Committee: | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill authorizes the addition of the Revive the Salton Sea Fund (Fund) as a voluntary contribution fund (VCF) on the personal income tax (PIT) return. Specifically, this bill: 1)Requires all money transferred to the Fund, upon appropriation by the Legislature, to 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; SB 1416 Page 2 b) To the Natural Resources Agency for distribution of competitive grants to provide funds or supplement funding of state, county and local agencies, nonprofit organizations, and projects identified as necessary for the restoration and maintenance of the Salton Sea, including projects identified by the Salton Sea Authority; and, c) Up to 5% of the funds to the Natural Resources Agency for development of a mechanism to provide ongoing public awareness through activities that will promote the charitable tax deduction for the Fund and seek continued contributions 2)Requires the Fund to meet a standard minimum contribution amount of $250,000 indexed for inflation in subsequent years. 3)Provides that the Fund's statutory provisions shall remain operative only until January 1 of the fifth taxable year following the Fund's first appearance on the PIT return. FISCAL EFFECT: Minor ongoing GF revenue losses of approximately $8,000 per year resulting from itemized taxpayer deductions. COMMENTS: 1)The Salton Sea. The Salton Sea is California's largest lake with an area of 365 square miles. The Salton Sea formed in 1904 when the Colorado River flooded into the dry Salton Trough. The Salton Sea has no outlet, causing minerals flowing into the lake to become concentrated. As a result, the Salton Sea's water is roughly 1.5 times saltier than ocean SB 1416 Page 3 water. In compliance with a legal settlement on water known as the Quantitative Settlement Agreement, nearly a third of the inflow to the Salton Sea will bypass the region due to transfer of Colorado River water from regional agriculture to urban use in San Diego, beginning in 2017. There is considerable concern that this will result in the exposure of the lake's dusty shoreline causing a decrease in air quality. In addition, there is concern that the remaining lake will see an acceleration of salinity, causing a potential collapse of the lake's ecosystem. Currently, the lake is home to North America's largest population of migratory waterfowl outside the Everglades. 2)Purpose. According to the author, SB 1416 will complement the ongoing work by the Salton Sea Task Force. This Task Force was created in 2015 to implement the Salton Sea Management Program, which aims to restore habitat areas and minimize air pollution. The author notes that the money collected from this VCF will help fund the restoration and maintenance of the Salton Sea, and provide public awareness about the issues facing the region. 3)Background on VCFs. Current state tax law allows taxpayers to make contributions on their tax returns to a number of VCFs. Like many other VCFs, SB 1416 would require the Fund to meet a current minimum contribution amount to return on state tax returns ($250,000, indexed to inflation after the second year). Moreover, like other VCFs, SB 1416 would establish an administrating agency: The money deposited into the Fund are allocated to the Natural Resources Agency for distribution of grants. SB 1416 Page 4 4)New VCF Bills in 2016. Four Assembly bills were introduced in 2016 that would either extend existing VCFs or create new ones. Those bills are all pending in the Senate Appropriations Committee. a) AB 1789 (Santiago) extends the voluntary contribution for the School Supplies for Homeless Children Fund. b) AB 2371 (Frazier) adds a voluntary contribution for the Special Olympics Fund. c) AB 2430 (Beth Gaines) adds a voluntary contribution for the Type 1 Diabetes Research Fund. d) AB 2497 (Wagner) repeals the voluntary contribution for the California Senior Legislature Fund and replaces it with a voluntary contribution for the California Senior Citizen Advocacy Fund. Moreover, SB 1476 (Committee on Governance and Finance), which is currently pending on the Assembly Floor, 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. Analysis Prepared by:Luke Reidenbach / APPR. / (916) SB 1416 Page 5 319-2081