BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 1589 HEARING: 7/3/12
AUTHOR: Huffman FISCAL: Yes
VERSION: 5/25/12 TAX LEVY: No
CONSULTANT: Miller
STATE PARKS: SUSTAINABILITY AND PROTECTION (URGENCY)
Enacts the California State Parks Stewardship Act of 2012
and changes the designation on the tax form so that
individuals may purchase a day use annual pass.
Background and Existing Law
I. State Tax Law: deductions and forms Existing state
laws allow individuals to deduct certain expenses, such as
medical expenses, charitable contributions, interest and
taxes as itemized deductions. Certain expenses are
considered miscellaneous itemized deductions and only the
portion that exceeds 2% of adjusted gross income (AGI) may
be deducted. The itemized deductions are limited for high
income taxpayers.
The tax forms are created, produced and distributed by the
FTB to over 14 million taxpayers in this state. The tax
forms are largely based on federal forms and their
principle purpose is to ensure that people pay their taxes
fully and efficiently.
Existing state law allows taxpayers to contribute money to
one or more of 15 voluntary contribution funds (VCFs or
check-offs) by checking a box on their state income tax
return. California law requires contributions made through
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 during the
subsequent year.
The Franchise Tax Board (FTB) designs tax returns to
provide for the designation of contributions to specified
funds either on the return itself or on a separate schedule
that must be attached to the return. With a few
AB 1589 -- 5/25/12 -- Page 2
exceptions, VCFs remain on the return until they are either
repealed or fail to meet their minimum contribution amount.
The minimum contribution amounts are adjusted annually for
inflation. For most VCFs, the minimum contribution amount
is $250,000 in the fund's second year. By September 1st of
each year, the FTB must determine the minimum contribution
amount required for each fund to remain on the form for the
following calendar year and whether estimated contributions
to each fund will be less than the minimum contribution
amount for that calendar year. If the FTB estimates that a
fund will fail to meet the minimum contribution amount,
that fund is repealed effective for taxable years beginning
on or after January 1st of the following calendar year.
Except for the California Senior Legislature (which is
fully funded by the check off and operates in concert with
the Legislature), the proceeds from the check-offs either
go to quasi-government organizations or to non-profits as a
competitive grant. The following list provides the current
information on all the check offs as well as how many
groups are eligible to receive the funds.
------------------------------------------------------------
|Check Off |Amount |Number of Groups that |
| |Earned |receive funds |
|---------------------+------------+-------------------------|
|ALS/Lou Gehrig's |Initial Tax |As many as apply and |
|Disease Research |Return 2011 |receive grants that are |
|Fund | |provided for by the |
| | |monies contributed. |
|---------------------+------------+-------------------------|
|Alzheimer's |$462,357 |As many as contract or |
|Disease/Related | |receive grants provided |
|Disorders Fund | |by the monies |
| | |contributed. |
|---------------------+------------+-------------------------|
|Arts Council Fund |$164,298 |As many as apply and |
| | |receive grants provided |
| | |by the monies |
| | |contributed. |
|---------------------+------------+-------------------------|
|CA Breast Cancer |$459,694 |As many as apply and |
|Research Fund | |receive grants provided |
| | |from the monies |
| | |contributed. |
AB 1589 -- 5/25/12 -- Page 3
|---------------------+------------+-------------------------|
|CA Cancer Research |$451,042 |As many as apply and |
|Fund | |receive grants provided |
| | |from the monies |
| | |contributed |
|---------------------+------------+-------------------------|
|CA Firefighters' |$157,166 |1 Group: California Fire |
|Memorial Fund | |Foundation |
|---------------------+------------+-------------------------|
|CA Fund for Senior |$308,763 |1 Group: California |
|Citizens | |Senior Legislature |
|---------------------+------------+-------------------------|
|CA Peace Officer |$137,782 |1 Group: California |
|Memorial Foundation | |Peace Officer Memorial |
|Fund | |Commission |
|---------------------+------------+-------------------------|
|CA Police Activities |$69,431 |The state CALPAL and |
|League (CALPAL) Fund | |county CALPAL chapters |
|---------------------+------------+-------------------------|
|CA Sea Otter Fund |$359,699 |Department of Fish and |
| | |Game, and as many that |
| | |apply for grants and |
| | |contracts provided for |
| | |by 50% of the monies |
| | |contributed. |
|---------------------+------------+-------------------------|
|CA Seniors Special |$53,813 |The first $80K to the |
|Fund | |Area Agency on Aging |
| | |Advisory Council of |
| | |California and the rest |
| | |to as many area agencies |
| | |that the California |
| | |Department of Aging |
| | |allocates available |
| | |contributed monies to. |
|---------------------+------------+-------------------------|
|CA Veterans Homes |$211,089 |The number of |
|Fund | |established veteran's |
| | |homes (I think 6 or 7). |
|---------------------+------------+-------------------------|
|Child Victims of |Initial Tax |As many counseling and |
|Human Trafficking |Return 2011 |prevention centers that |
|Fund | |apply and receive grants |
| | |provided from monies |
| | |contributed. |
|---------------------+------------+-------------------------|
AB 1589 -- 5/25/12 -- Page 4
|Emergency Food for |$598,157 |1 group: Department of |
|Families Fund | |social services for the |
| | |Emergency Food |
| | |Assistance Program. |
|---------------------+------------+-------------------------|
|Municipal Shelter |Initial tax |As many shelters as |
|Spay-Neuter Fund |Return 2011 |apply and receive grants |
| | |provided from the monies |
| | |contributed. |
|---------------------+------------+-------------------------|
|Rare & Endangered |$605,220 |1 group: Department of |
|Species Preservation | |Fish and Game endangered |
|Program | |conservation programs. |
|---------------------+------------+-------------------------|
|Safely Surrendered |$184,866 |1 group: Department of |
|Baby Fund | |Social Services for |
| | |Safely Surrender Baby |
| | |Law awareness programs. |
|---------------------+------------+-------------------------|
|State Children's |$409,043 |1 group: Department of |
|Trust for the | |Social Services for |
|Prevention of Child | |prevention and |
|Abuse | |intervention programs. |
------------------------------------------------------------
II. Department of Parks and Recreation. The California
Department of Parks and Recreation (DPR) operates and
maintains the state park system and is responsible for
administering, protecting, developing and providing visitor
interpretation and other services for the use and enjoyment
of the public. The system currently has 279 state parks.
DPR also has law enforcement responsibility at state parks.
DPR may collect fees, rents and other returns for the use
of state parks with amounts to be determined by DPR. DPR
may enter into operating agreements with qualified
nonprofit entities that will enable DPR to keep parks open
that would otherwise be subject to closure.
DPR is required to achieve required budget reductions by
closing, partially closing, and reducing services at
selected units of the state park system based on specified
factors. This requirement was contained in a trailer bill
to the 2011-12 budget bill.
Proposed Law
AB 1589 -- 5/25/12 -- Page 5
I. State Income Tax Form Assembly Bill 1589 requires FTB
to add an additional line to the income tax form so that an
individual may purchase or or more state parks annual day
passes by making a specified designation on his or her
personal income tax return and allows an income tax
deduction for the purchase price of the annual pass.
Under the bill, payments and credits reported on the income
tax return, together with any other credits associated with
the individual taxpayer's account, shall be applied in the
following order:
1. Existing income or franchise tax liability,
including penalties and interest, if any;
2. Qualified use tax;
3. Voluntary contributions designated on the
individual taxpayer return pursuant to Revenue and
Taxation Code (R&TC) Chapter 3 of Part 10.2
(commencing with Section 18711);
4. An amount designated for the purchase of an annual
pass.
Under the bill's, if the amount of payments and credits
reported on the return or associated with the taxpayer's
account is less than the total amount designated for the
purchase of annual passes, the designation amount shall be
reduced to an amount equal to the purchase price of one or
more single annual passes. If the amount of those payments
and credits is less than the amount of one annual pass, the
return shall be treated as though no purchase designation
has been made.
Under the bill, the annual pass will provide the taxpayer
with unlimited day use access to state parks and is valid
for one calendar year, beginning January 1 of the calendar
year immediately following the calendar year in which the
annual pass is purchased.
II. Department of Parks & Recreation AB 1589 also makes
various changes to the DPR program as heard in the Natural
Resources and Water Committee. Specifically, the bill:
Require the Department of Parks and Recreation
(DPR) to develop a prioritized action plan to increase
revenues and the collection of user fees at state
parks, and to report to the Legislature and Governor
on the plan by January 1, 2013.
Create a State Park Enterprise Fund, with monies in
AB 1589 -- 5/25/12 -- Page 6
the fund to be held in trust and used exclusively for
construction and installation of new revenue and fee
collection equipment and technologies, and other costs
of restoring and rehabilitating the state park system
that enhance resources and visitation, and provide
opportunities to increase revenues.
III. Urgency The bill includes an urgency measure so that
it is immediately operative to fund the urgent needs at the
state parks.
State Revenue Impact
According to FTB, this bill will result in startup costs of
$617,000 and an ongoing revenue loss of $20,000 per year.
Comments
1. Purpose of the bill . According to the author: AB 1589
would improve management of state parks, reduce the number
of park closures, and provide the state with new tools to
enhance revenues for state parks. California's state parks
are in crisis, with 70 state parks slated for closure on
July 1st. Our state parks are a source of pride and
renewal for many California families, and a tourist
destination for millions of visitors from around the world.
They protect unique natural resources like our iconic
redwoods which exist nowhere else in the world, and
invaluable cultural and historical resources that tell the
story of California's history and preserve our legacy for
future generations. However, after years of neglect,
draconian budget cuts and deferred maintenance, our parks
are in serious trouble. For the first time in our history
we are facing the imminent closure of 25% of our state
parks. This bill attempts to address these concerns and
increase funding for the state parks.
2. Is there a better way ? In order to increase visits to
the state parks and funding so that the parks stay open, AB
1589 proposes adding a line to the income tax form so that
taxpayers may purchase day passes to the parks. Except for
the check offs, the tax form has always been limited to
paying taxes and focuses on that as the most important
function of both the taxpayer and the FTB. This bill sets
a new precedent by complicating the tax form with a non-tax
AB 1589 -- 5/25/12 -- Page 7
item that is not a check off. In order to reduce costs,
utilize the existing system at the FTB, and avoid a
dangerous precedent, the Committee may wish to consider
amending the bill as follows:
1. Create a tax check off for the state parks pursuant
to existing law for the purchase of an annual state
park pass or charitable contribution to DPR
2. Require FTB to include instructions about a
purchase of the annual state park pass in the
instructions along with the charitable deduction
information.
3. State that any park pass purchased reduces the
amount of the taxpayer's refund.
4. Require the check off to raise $250,000 annually to
stay on the form.
5. Do not require a time sunset for the check off.
6. Require FTB to generate an annual report that
includes the name, address and amount of tax paid so
DPR may provide the annual pass or passes to the
taxpayer.
7. In the event the amount is less than an annual
pass, the amount shall be considered a charitable
donation to DPR.
3. Learn by example . Beginning in 1997, the State of
Maine allows day use access passes to be purchased through
the Maine Revenue Services when individuals file their
state income tax return. The first year the program
increased pass purchases by about 700 by 2011 the increase
more than doubled the amount of purchases. The lines on
the form are also on the "Voluntary Contributions and
Purchase of Park Passes" section of the tax form and not on
the form with taxpayer information, payment and liability.
The Committee may wish to consider not only the success of
Maine's program, but also keeping separately taxpayer's
taxes and charitable contributions or park pass purchases.
4. Twice Bitten . This bill was heard in the Senate
Committee on Natural Resources and Water and passed out on
consent 9-0. The issues related to Department of Parks and
Recreation and the State Park Enterprise Fund were heard
under that Committee's jurisdiction.
5. Budget . SB 1018 (Committee on Budget & Fiscal Review,
2012) is the resources trailer bill which is on the
Governor's Desk awaiting action. The bill includes
AB 1589 -- 5/25/12 -- Page 8
language on the enterprise fund and the bond funds being
directed to revenue generating projects. If the bill is
signed, the author will remove the provisions in the budget
from AB 1589.
6. Technical amendment . The author will take a technical
amendment in Committee to clarify that the purchase of a
day pass on the income tax form includes the same parks
currently accessible with the Department of Parks and
Recreation's existing day use annual pass to clarify that
county parks administered by DPR will not be included.
Assembly Actions
Assembly Water, Parks & Wildlife:12-0
Assembly Revenue and Taxation Committee: 8-0
Assembly Appropriations Committee:17-0
Assembly Floor: 78-0
Support and Opposition (6/28/12)
Support : Born Free USA; California Hotel and Lodging
Association; California League of Conservation Voters;
California Outdoor Recreation Partners; California State
Parks Foundation; California Travel Association; County of
Mendocino; County of Santa Cruz, Board of Supervisor Member
Neal Coonerty; Family Winemakers of California; Golden Gate
Audubon Society; Green California; Humane Society of the
United States; League of California Cities; Paw Pac; Sierra
Club California; State Controller John Chiang; State Park
Partners Coalition; Trust for Public Lands.
Opposition : Unknown.