BILL ANALYSIS
SENATE REVENUE & TAXATION COMMITTEE
Senator Michael Machado, Chair
AB 190 - McLeod
Amended: March 3, 2005
Hearing: June 22, 2005 Fiscal: Yes
SUBJECT: Establishes a voluntary income tax contribution
for the California Sexual Violence Victim
Services.
EXISTING LAW: Federal law provides a tax form
check-off to direct $3 of a taxpayer's liability to the
Presidential Election Fund. Designating the amount does not
affect the taxpayer's liability or refund.
State law allows individual taxpayers to contribute
their own money in excess of their tax liability to 13
voluntary contribution funds listed on the state income tax
return. Each fund designation or check-off has been added
to the tax return through the legislative process. The
limit to the number of funds on the return is based on the
space allotted. Currently, 13 appears to be the maximum.
Existing law includes a queuing system for income tax
check-offs that are approved by the Legislature for
addition to the personal income tax return once another
check-off is removed. If the number of contingent
check-offs is greater than the number of check-offs removed
in a taxable year, the Franchise Tax Board (FTB) can add
the new check-offs in the order in which they were enacted.
If two or more were enacted on the same date, then the FTB
can add them in the chapter order. FTB can add one or more
approved check-offs on the same date, if the department
determines that there is room on the tax form.
No income tax check-offs are currently in the queue,
and FTB has never activated a queuing system.
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Existing law requires the following:
Contributions must be made in full dollar amounts
and can be made by each signatory on a joint tax
return,
Once a voluntary designation is made, it is
irrevocable,
If payments and credits on the return do not exceed
the taxpayer's liability, the state treats the tax
return as though no designation was made,
If a taxpayer fails to specify a designated fund,
the contribution is transferred to the General Fund
after the FTB is reimbursed for its actual costs for
collection and administration of contributions, and
If a taxpayer designates more than one fund and the
amount available exceeds the total amount designated,
the contribution is allocated among the designees on a
pro rata basis.
Each fund is generally required to reimburse FTB and the
Controller for the costs incurred in collecting and
transferring the contributions.
The following check-offs appeared on the 2004 tax form (for
taxes filed in 2005):
1.California Fund For Senior Citizens
2.Fish and Game Preservation Fund
3.State Children's Trust Fund
4.California Alzheimer's Disease and Related Research Fund
5.California Seniors Special Fund (no sunset date)
6.California Breast Cancer Research Fund
7.California Firefighters' Memorial Fund*
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8.Emergency Food Assistance Program Fund
9.California Peace Officer Foundation Memorial Fund*
10.California Missions Foundation Fund
11.Asthma & Lung Disease & Research Fund
12.California Military Family Relief Fund
13.California Prostate Cancer Research Fund
*These funds only have to meet the $250,000 minimum
contribution requirement if their repeal date is
specifically deleted in new legislation.
In 2004, two new voluntary funds were added to the
personal income tax return.
THIS BILL would create the California Sexual Violence
Victim Services Fund and establish the fund as a voluntary
contribution designation on the personal income tax return.
The check-off for this fund would not be added until
another voluntary contribution is removed from the tax
return.
All money contributed to this fund would go to the
FTB, the Controller, and the Epidemiology and Prevention of
Injury Control Branch of the State Department of Health
Services for allocation to the California Coalition Against
Sexual Violence (CALCASA). The bill specifies that the
Epidemiology and Prevention Injury Control Branch could not
use these contributions for its administrative costs.
Several other provisions are included in the bill:
The voluntary contribution designation would remain
on the tax return for five years unless this sunset
provision is deleted or extended.
The designation would be repealed if contributions
fall below $250,000. FTB is required to estimate by
September 1 of the first taxable year the fund is
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Page 7
listed whether the contributions will be less than the
minimum allowed.
The tax form would include information stating that
the contribution may be one dollar or more and that
the contribution will be used to further the services
that California's rape crisis centers provide for
victims of rape or sexual assault.
Beginning in the third calendar year that this fund
appears on the return, the FTB would be required to
adjust the minimum contribution amount, based on an
inflation factor.
By passing the bill, the Legislature would declare the
following:
Sexual violence is a problem of sweeping
proportions in California. The Justice Department
estimates that in 2003, 9,918 rapes occurred in
California. Yet it is estimated that only 28 percent
of rapes and sexual assaults are ever reported.
According to the National Institute of Justice,
rape is the costliest crime in the U.S., imposing
$86,500 in tangible and intangible costs per victim.
A study by the National Victim Center reported that
1.3 women age 18 and older in the U.S. are raped each
minute, 78 women raped per hour, 1,871 per day, or
683,000 per year.
In a study of more than 3,000 women at 32 U.S.
colleges and universities, 30 percent of identified
rape victims contemplated suicide after the crime.
The California Coalition Against Sexual Assault is
the only statewide organization in California whose
sole purpose is to promote public policy, advocacy,
training, and assistance pertaining to sexual
violence. The coalition's primary membership is the 84
rape crisis centers, campus rape prevention programs,
and allied state members.
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The bill would go into effect January 1, 2006 and apply
to tax returns filed on or after that date.
FISCAL EFFECT: No significant impact on FTB.
ECONOMIC EFFECT: Assuming the minimum contribution level
is $250,000 for each year this fund is designated and an
itemized deduction is claimed for each contribution, the
potential revenue loss would be minor. FTB attributes the
revenue loss to itemized deductions claimed for the
contributions in the following taxable years: no loss in
FY2005-06, $15,000 loss in FY2006-07, and $15,000 loss in
FY2007-08.
COMMENTS:
A. Purpose of the Bill
According to the author's office, the bill would
increase funding for the California Coalition Against
Sexual Assault for rape crisis centers and the prevention
of rape and sexual assault. The proposal has the backing of
dozens of rape crisis and prevention centers statewide
which are performing an important service in helping women
and crime victims.
B. Rape Crisis Centers are in a Financial Crisis
As the bill outlines, sexual assault and rape have
reached sweeping proportions in California, one worthy of
increased attention. Sexual assault remains a devastating
crime for its victims, their families, and communities.
Moreover, sexual assaults are often a hidden crime with
women afraid of coming forward to report a crime. Women
require access to rape crisis centers and well-trained
counselors. This bill aims to increase funding through a
voluntary contribution reflects advocacy groups and rape
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crisis centers continued push for increased rape prevention
and awareness. Rape crisis and prevention organizations
work under tight budgets, especially during an economic
downturn, making it more difficult for these groups to
continue providing services. Contributions designated by
taxpayers may help backfill some of diminished funding.
A. Many Worthy Causes
In the past, members of this committee have expressed
concern that countless worthy causes could be funded by the
voluntary contribution tax system. Members of this
committee have stated that the current tax check-off system
requires them to choose between worthy charities and
non-profits for a spot on the tax return form. Past
committees have recognized the difficulty in turning down
many worthy causes.
The current system remains subjective and is limited
to those organizations with the means or ability to
advocate for a spot on the tax return form. Additionally,
taxpayers have the option to contribute a portion of their
refund checks to charities and non-profits they deem
worthy. For taxpayers who itemize, they can claim a
deduction for charitable contributions. The committee may
want to consider whether the state should play a role in
encouraging contributions to certain charitable
organizations through the tax code.
This check-off provides funds to a state department to
distribute to an organization rather than providing
additional funds to the agency through the budget process
that could then be used to fund the organization.
B. Precedent for Limiting Number of Check-offs
Both the Assembly and Senate Committees on Revenue &
Taxation had set a precedent to limit the number of
voluntary contributions to 12 on the tax form. A queue was
devised to only allow a new voluntary contribution to
appear once an existing check-off was removed from the form
(either by its sunset date or by not meeting the threshold
requirement). However, there is not a specific restriction
limiting the number of voluntary contributions. One new
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voluntary contribution was added last year, bringing the
total to 13 for the 2004 tax return.
E. Constitutional Questions
In 2004, a U.S. District Court in California ruled in
Women's Resource Network v. Department of Motor Vehicles
that the state's process for awarding special interest
license plates is unconstitutional in that it violates
freedom of speech. The court determined that the law
giving the Legislature "unfettered discretion" to decide
which private nonprofit groups would be able to use
special-interest license plates to raise money is
unconstitutional because "the First Amendment does not
allow the government to use a standardless forum to select
private speakers." The court specifically ruled that all
existing license plates could continue, but there could be
no new ones.
A similar objection could be raised against the
state's existing tax check-off system because of the way
the Legislature and the Governor are allowed to decide
which groups should be allowed to use the state tax return
to raise money. The process may limit more
controversial-although arguably worthy causes-or,
organizations with currently unpopular political or
religious points of view.
Rather than allowing lawmakers to control which
charities can appear on state tax forms, one option is to
designate a separate agency that selects qualified groups
based on a set of objective rules and standards.
F. The Hidden Cost of a Longer Tax Form
Listing voluntary contributions on the tax returns
limits the amount of space available for tax-related items.
Including non-tax items such as check-offs could cause the
tax form to become three-pages. This length is
unprecedented among other states and the Internal Revenue
Service. A three page return would also cause the FTB to
incur significant costs for printing, handling and storage.
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G. Existing Contribution Level
Thirteen voluntary contributions appeared on the 2004
state income tax returns. Total contributions have varied
from approximately $3.4 million in 1989-1990 to about $4
million in 2003-2004. The number of individuals making
contributions remains nearly constant at approximately;
140,000 or less than 1% of all taxpayers designating
contributions.
The following table lists the amounts of each fund's 2004
contribution levels:
--------------------------------------------
|Voluntary Contribution Fund |2004 |
|(current as of the date of the |Contributio|
|FTB analysis) |ns |
| | |
|--------------------------------+-----------|
|Asthma and Lung Disease |$237,380 |
|Research Fund | |
| | |
|--------------------------------+-----------|
|California Alzheimer's Research |$591,303 |
|Fund | |
| | |
|--------------------------------+-----------|
|California Breast Cancer |$697,750 |
|Research Fund | |
| | |
|--------------------------------+-----------|
|California Firefighters' |$223,988 |
|Memorial Fund | |
| | |
|--------------------------------+-----------|
|California Fund for Senior |$283,341 |
|Citizens | |
| | |
|--------------------------------+-----------|
|California Military Family |NA |
|Relief Fund | |
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| | |
|--------------------------------+-----------|
|California Missions Foundation |$155,226 |
|Fund | |
| | |
|--------------------------------+-----------|
|California Peace Officer |$181,288 |
|Foundation Memorial Fund | |
| | |
|--------------------------------+-----------|
|California Prostate Cancer |NA |
|Research Fund | |
| | |
|--------------------------------+-----------|
|California Seniors Special Fund |$57,606 |
| | |
|--------------------------------+-----------|
|Emergency Food Assistance |$383,603 |
|Program | |
| | |
|--------------------------------+-----------|
|Rare and Endangered Species |$643,616 |
|Preservation Program | |
| | |
|--------------------------------+-----------|
|State Children's Trust Fund |$679,899 |
| | |
--------------------------------------------
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H. Should the Check-off System Be Changed?
SB 1736 (Bowen, 2004) proposed changing the tax check-off
system based on certain criteria by: (1) moving the tax
check-offs from the tax return into the tax information
booklet with spaces on the return; (2) requiring objective
criteria in order to be placed in the booklet; (3)
requiring the FTB to administer the program. This bill was
held in this committee.
I. Other States
Oregon allows a taxpayer contribution on the state
income tax return to help fund comparable programs through
the Oregon Coalition Against Domestic and Sexual Violence.
Illinois, Massachusetts, Michigan, Minnesota, and New
York allow for taxpayer contribution designations on the
personal income tax returns through the legislative
process. Florida does not have a personal income tax but
allows contribution designations through the legislative
process on the state's motor vehicle registration and
renewal forms.
Support and Opposition
Support:
AFSCME
California State Sheriffs' Association
Central Coast VNA & Hospice
Peace Officers Research Association of California
Junior Leagues of California
Project SISTER
Los Angeles Commission on Assaults Against Women
San Francisco Women Against Rape
Lassen Family Services
Tri-Valley Haven
Sexual Assault Recovery & Prevention Center
Santa Barbara Rape Crisis Center
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Antelope Valley Hospital
North County Rape Crisis & Child Protection Center
Sutter Auburn Faith Hospital
Haven Women's Center of Stanislaus
Sutter Lakeside Community Services
Volunteer Center of Napa Valley
University of Ontario Institute of Technology
North Coast Rape Crisis Team
Monterey Rape Crisis Center
Madera County Victim Services
Tahoe Women's Services
Rape Counseling Services of Fresno
Family Services of Tulare County
Rape Crisis Center in San Jose
SURE helpline
Sexual Assault Recovery and Prevention Center of San Luis
Obispo County
Alliance Against Family Violence and Sexual Abuse
United Against Sexual Assault of Sonoma County
Los Angeles Commission on Assaults Against Women
YWCA Rape Crisis Center of San Jose
YWCA of Silicon Valley
Rape Crisis Intervention
Sexual Assault & Domestic Violence Center
Rape Trauma Services of San Mateo County
Operation Care Amador County
South Lake Tahoe Women's Center
The Women's Center-High Desert
Community Solutions
Madera County Victim Services Center
Women's Center of San Joaquin County
Project Sanctuary
Center Against Sexual Assault of Southwest Riverside County
Children's Interview Center of Contra Costa County
Valley Trauma Center
WEAVE
North County Rape Crisis & Child Protection Center
Family Services of Tulare County
HRC Calaveras
Center for Community Solutions
East Los Angeles Women's Center
San Francisco Women Against Rape
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Sexual Assault Victim Services-Orange County
Operation Care
California Coalition Against Sexual Assault
Human Response Network
Casa de Esperanza, Center for the Pacific Asian Family
Community Violence Solutions/Rape Crisis Center of Contra
Costa and Marin Counties
Women's Crisis Center
Crime Victims United of California
2 licensed therapists
100s of private citizens.
Opposition: None on file.
---------------------------------
Consultant: Gigi Whitley
06/20/05 15:13