BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SBX1 3 HEARING: 6/29/11
AUTHOR: La Malfa FISCAL: Yes
VERSION: 6/21/11 TAX LEVY: No
CONSULTANT: Faulkner
VOLUNTARY CONTRIBUTION: HELP OUR STATE FUND
Adds the Help Our State check-off to the personal income
tax form.
Background and Existing Law
Existing state law allows taxpayers to contribute money to
one or more of 15 voluntary contribution funds (VCFs) by
checking a box on their personal 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. If a taxpayer does not designate to a specific
fund, the contribution is transferred to the General Fund.
This option is not delineated on the tax form.
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
exceptions, VCFs remain on the return until they are either
repealed or fail to meet the minimum contribution amount.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that fund is repealed effective for taxable years beginning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.
Proposed Law
SB 1X 3 -- 5/24/11 -- Page 2
Senate Bill X1 3 creates the Help Our State Fund for
taxpayers to contribute to the General Fund. The tax form
instructions will state that contributions will be used to
support the State government's general operations including
education, public safety, and other important programs.
The fund will be added to the tax form for taxable years
beginning on or after January 1, 2011 and repealed January
1, 2016.
SB 1X 3 -- 5/24/11 -- Page 3
State Revenue Impact
The FTB estimates this bill will result in revenue gains of
$5,000 in Fiscal Year (FY) 2011-12, $6,000 in FY 2012-13,
and $6,000 in 2013-14.
Comments
1. Purpose of the bill . The author states, " California
currently allows taxpayers to voluntarily contribute money
to various funds supporting issues ranging from sea otter
restoration to child abuse prevention. However,
California's income tax forms fail to provide any clear
means for citizens to contribute in support of the state
government's general operations, including education,
public safety and other important programs. This bill
rectifies this problem by creating a clear means for
Californians to voluntarily support state government above
any amount that they may be required to pay. This is a
simple, common sense measure that will give those
Californians who wish to pay increased taxes any easy means
to do so and will only result in increased revenue to the
state's General Fund."
2. Same but different . Since the inception of VCFs in
1982, over 13 million taxpayers have contributed $95.1
million to a variety of charities but never one dedicated
to the state's general operations. Like a traditional
VCF, contributions to the Help Our State Fund must be in
full dollar amounts and may be made individually by each
signatory on a joint return. Contributions must be made on
the original return and once made, are irrevocable. The
contribution amount is deductible the following year and
the fund sunsets in five years.
Unlike a traditional VCF, the Help Our State Fund does not
require the creation of a separate treasury fund to hold
the designated contributions. Instead, contributions are
directly deposited into the General Fund with no
reimbursement to the FTB or Controller. The fund does not
require contingency language before it appears on the
return and it does not require a minimum contribution
amount to remain on the form.
3. 2011 check-offs . Following is a list of 2011
SB 1X 3 -- 5/24/11 -- Page 4
check-offs and contribution amounts received in 2010:
-------------------------------------------------------------
|Alzheimer's Disease/Related |$426,417 |
|Disorders Fund | |
|------------------------------+------------------------------|
|Arts Council Fund |Initial Tax Return 2010 |
|------------------------------+------------------------------|
|CA Breast Cancer Research |$519,728 |
|Fund | |
|------------------------------+------------------------------|
|CA Cancer Research Fund |$275,587 |
|------------------------------+------------------------------|
|CA Firefighters' Memorial |$207,455 |
|Fund | |
|------------------------------+------------------------------|
|CA Fund for Senior Citizens |$296,144 |
|------------------------------+------------------------------|
|CA Peace Officer Memorial |$135,250 |
|Foundation Fund | |
|------------------------------+------------------------------|
|CA Police Activities League |Initial Tax Return 2010 |
|(CALPAL) Fund | |
|------------------------------+------------------------------|
|CA Sea Otter Fund |$263,543 |
|------------------------------+------------------------------|
|CA Seniors Special Fund |$59,192 |
|------------------------------+------------------------------|
|CA Veterans Homes Fund |Initial Tax Return 2010 |
|------------------------------+------------------------------|
|Emergency Food for Families |$487,333 |
|Fund | |
|------------------------------+------------------------------|
|Rare & Endangered Species |$578,215 |
|Preservation Program | |
|------------------------------+------------------------------|
|Safely Surrendered Baby Fund |Initial Tax Return 2010 |
|------------------------------+------------------------------|
|State Children's Trust for |$448,081 |
|the Prevention of Child Abuse | |
-------------------------------------------------------------
4. Can we all get along ? There are currently eight VCF
bills making their way through the Legislature. With an
estimated cost of $16,000 per bill to go through the
legislative process, combining future VCF-proposals into an
SB 1X 3 -- 5/24/11 -- Page 5
omnibus VCF bill could prove time and cost effective.
In addition to this bill, the following bills have been
introduced this year:
SB 164 (Simitian) extends the repeal dates of both the
State Children's Trust Fund for the Prevention of Child
Abuse and the Rare and Endangered Species Preservation
Program from January 1, 2013 to January 1, 2018. The
Assembly Revenue and Taxation Committee will hear the bill
on June 27th.
SB 583 (Vargas) reestablishes the ALS/Lou Gehrig's Disease
Research Fund. The bill is in the Assembly Appropriations
Committee.
SB 803 (DeSaulnier) creates a VCF designation on the
personal income tax form for taxpayers to contribute to
California Youth Leadership Project. The bill remains in
the Senate Appropriations Committee.
AB 233 (Hall) creates a VCF designation on the personal
income tax form for taxpayers to contribute to the
California YMCA Youth and Government Fund. The Committee
will hear the bill on July 29th.
AB 564 (Smyth) reestablishes the Municipal Shelter
Spay-Neuter Fund and encourages all persons who prepare
state income tax returns to inform their clients in writing
that they may contribute to any voluntary contribution
check-off on the return. The Committee will hear the bill
on July 29th.
AB 764 (Swanson) creates a VCF designation on the personal
income tax form for taxpayers to contribute to the Child
Victims of Human Trafficking Fund. The Committee will hear
the bill on July 29th.
AB 971 (Monning) reestablishes the California Sea Otter
Fund. The Committee will hear the bill on July 29th.
5. Technical amendments . FTB Staff recommends the
following amendments:
On page 4, line 3, after "years" add "beginning".
On page 4, line 5, replace "all" with "allow".
SB 1X 3 -- 5/24/11 -- Page 6
Support and Opposition (6/23/11)
Support : Unknown.
Opposition : Unknown.