BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 164 HEARING: March 23,
2011
AUTHOR: Simitian FISCAL: Yes
VERSION: 2/2/11 TAX LEVY: No
CONSULTANT: Faulkner
PERSONAL INCOME TAX: VOLUNTARY CONTRIBUTIONS
Extends the repeal dates of the State Children's Trust Fund
for the Prevention of Child Abuse and the Rare and
Endangered Species Preservation Program to January 1, 2018.
Background and Existing Law
In 1982, SB 1504 (Presley) provided the first "check-off"
system for taxpayers to designate specified amounts on
their tax returns for payment to the California Election
Campaign Fund. In 1983, there were 3 other check offs: the
California Seniors' Fund (AB 50, Agnos), the State
Children's Trust Fund (AB 607, Vicencia), and the Rare and
Endangered Species Preservation Program (AB 384, Campbell).
Existing state law allows taxpayers to contribute money to
one or more of 15 voluntary contribution funds (VCFs) 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.
Existing law allows the Franchise Tax Board (FTB) to design
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.
Proposed Law
This bill extends the check-off for both the State
Children's Trust Fund for the Prevention of Child Abuse and
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the Rare and Endangered Species Preservation Program from
January 1, 2013 to January 1, 2018.
State Revenue Impact
FTB estimates this bill will result in a revenue loss of
$40,000 each fiscal year the two funds are in place. The
revenue impact of this bill is determined by the amount of
contributions to the funds and the subsequent claim of
those charitable contributions as itemized deductions.
Comments
1. Purpose of the Bill. The author states, "The Personal
Income Tax Law authorizes individual taxpayers to designate
on their personal income tax (PIT) form contribution
amounts in excess of their tax liability for the support of
15 voluntary contribution funds. Two of these funds, the
State Children's Trust Fund for the Prevention of Child
Abuse and the Rare and Endangered Species Preservation
Program, are set to sunset on January 1, 2013. This bill
would extend the sunset date to January 1, 2018.
Both the Children's Trust Fund and the Preservation Program
have enjoyed significant success as VCFs. Each of these
funds first appeared on the PIT form in 1983. The
Franchise Tax Board reports that in calendar year 2010, the
Children's Trust Fund received $448,081 in contributions,
while the Preservation Program received $578,215.
Contributions to the Children's Trust Fund are allocated to
the Department of Social Services for innovative child
abuse and neglect prevention and intervention programs.
Contributions to the Preservation Program are allocated to
the Department of Fish & Game for various programs for
endangered and rare animals and plants.
SB 164 would allow these two important programs to continue
to receive much needed funds through voluntary
contributions on PIT returns until January 1, 2018. "
2. Many Worthy Causes. The 1983 Senate Committee on
Revenue & Taxation analyses of the check-off bills stated
in part: "It can be argued that the use of the personal
income tax process to collect money for nongovernmental
organizations is bad tax policy in that any legitimate
organization could request like treatment. This would
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further complicate the tax form at a time when
simplification is in demand. The Franchise Tax Board is
concerned with the increasing number of proposals to use
"checkoffs" on the tax form as a method of funding special
interest organizations. The Board believes that increasing
numbers of "checkoffs" may dilute the effectiveness of this
approach, as well as putting the State in the position of
sponsoring or endorsing certain groups and interests to the
inevitable detriment of other equally worthy ones."
The arguments made against the check-off system almost 30
years ago can be made today. In the recent past, the
Committee has expressed concern that countless worthy
causes may be funded by tax check-offs. The current system
remains subjective and is limited to those organizations
that can convince the Legislature to include them on the
form. The Committee may wish to consider whether the state
should use the tax code to encourage contributions to
certain charitable organizations. Additionally, this bill
extends two check-offs that will be in place for 30 years
in 2013, when they are currently set to expire.
3. 2011 Check-offs . Following is a list of 2011
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 | |
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|------------------------------+------------------------------|
|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. What about us? With a few exceptions, VCFs remain
on the return until they are either repealed or fail to
meet their minimum contribution amount. The following chart
shows the monies received in recent years for the State
Children's Trust Fund for the Prevention of Child Abuse and
the Rare and Endangered Species Preservation Program. The
2011 minimum contribution requirement for these two funds
is $305, 338 per fund. The minimum contribution amounts
are adjusted annually for inflation.
2010 2009 2008
2007
-----------------------------------------------------------
|Children's |$448,081 |$528,298 |$528,609 |$499,827 |
|Trust Fund | | | | |
|-----------+-----------+-----------+-----------+-----------|
|Endangered |$578,215 |$648,868 |$580,823 |$572,043 |
|Species | | | | |
|Fund | | | | |
-----------------------------------------------------------
4. Similar legislation. In addition to this bill, the
following bills have been introduced this year:
SB 583 (Vargas) creates a VCF designation on the personal
income tax form for taxpayers to contribute to the ALS/Lou
Gehrig's Disease Research Fund. This bill is scheduled to
be heard in the Senate Governance and Finance Committee on
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April 27th.
AB 152 (Fuentes) requires, in part, that contributions
received under the Emergency Food for Families Fund are
used for the purchase, storage, and transportation of food
grown and produced in California. This bill has been
double referred to the Assembly Health Committee and the
Assembly Revenue and Taxation Committee. It is set to be
heard in the Revenue and Taxation Committee on March 22nd.
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. This bill is
currently in the Assembly Appropriations Committee.
AB 564 (Smyth) creates a VCF designation on the personal
income tax form for taxpayers to contribute to the
Municipal Shelter Spay-Neuter Fund. The bill also requires
a tax preparer, who prepares a tax return for a taxpayer,
to inform the taxpayer of existing voluntary contribution
funds. This bill is scheduled to be heard in the Assembly
Revenue and Taxation Committee on April 4th.
AB 764 (Swanson) creates a VCF designation on the personal
income tax form for taxpayers to contribute to the
Victim-Witness Assistance Fund for community-based
organization that serve minor victims of human trafficking.
This bill is scheduled to be heard in the Assembly Revenue
and Taxation Committee on April 4th.
AB 971 (Monning) extends the repeal date of the California
Sea Otter Fund by five years. This bill is scheduled to be
heard in the Assembly Revenue and Taxation Committee on
April 4th.
Support and Opposition (03/17/11)
Support : California's Political Action Committee for
Animal (PAW PAC), Audubon California, and The American
Federation of State, County and Municipal Employees
(AFSCME), AFL-CIO.
Opposition : Unknown.
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