BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 132
                                                                  Page  1

          Date of Hearing:   May 7, 2003

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                              Darrell Steinberg, Chair

                    AB 132 (Chavez) - As Amended:  April 21, 2003 

          Policy Committee:                              Revenue and  
          Taxation     Vote:                            7-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY  

          This bill provides ordering rules to be used by the Franchise  
          Tax Board (FTB) when adding income tax checkoffs to the personal  
          income tax return. 

           FISCAL EFFECT  

          Negligible. This bill merely clarifies the ordering rules to be  
          used by FTB when adding income tax checkoffs to the form. 

           COMMENTS  

           1)Background  . Current law allows taxpayers to contribute money  
            to one or more of 11 voluntary contribution funds by checking  
            a box on their state income tax return. California law  
            requires contributions made through checkoffs to be made from  
            taxpayers' own resources (not from their tax liability, as is  
            possible on federal tax returns). Checkoff amounts may be  
            claimed as charitable contributions on taxpayers' tax returns  
            during the subsequent year.

            To address the concern that the proliferation of income tax  
            checkoffs would require California's 540-Series tax forms to  
            be expanded from two to three pages, at a cost to the state of  
            several million dollars annually, the Legislature has in  
            recent years incorporated language into checkoff bills  
            requiring a  $250,000 minimum contribution requirement for a  
            checkoff to remain on the tax form, and the requirement that  
            an existing checkoff be removed before a new one is added to  
            the tax form (so-called queuing language).









                                                                  AB 132
                                                                  Page  2

           2)Purpose  .  This bill, sponsored by the author, is intended to  
            do two things: a) allow FTB to add contingent income tax  
            checkoffs to the return if there is room to do so, regardless  
            of how many checkoffs were removed from the return that year,  
            and b) clarify the ordering rules that should be used by FTB  
            when adding contingent checkoffs to the return. 



           Analysis Prepared by  :    Stephen Shea / APPR. / (916) 319-2081