BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 997 HEARING: 4/24/14
AUTHOR: Morrell FISCAL: Yes
VERSION: 4/7/14 TAX LEVY: No
CONSULTANT: Urquiza
VOLUNTARY CONTRIBUTIONS:
CALIFORNIA FUND FOR SENIOR CITIZENS
Eliminates the minimum contribution requirement for the
California Fund for Senior Citizens.
Background and Existing Law
State law allows taxpayers to contribute money to voluntary
contribution funds (VCFs) by checking a box on their state
income tax returns. California law requires contributions
made through so-called "check-offs" to be made from
taxpayers' own resources and not from their tax
liabilities, as is possible on federal tax returns.
Check-off amounts may be claimed as charitable
contributions on taxpayers' tax returns in the subsequent
year.
Each VCF is individually added to the tax return through
the legislative process. This year's tax form lists 20
VCFs. With a few exceptions, VCFs remain on the tax form
until they are repealed by a sunset date or fail to
generate a minimum contribution amount. In general, the
minimum contribution amounts are adjusted annually for
inflation. For most VCFs, the minimum contribution amount
is $250,000, beginning in the fund's second year.
By September 1st of each year, the Franchise Tax Board
(FTB) must determine the minimum contribution amount
required for each VCF to remain on the form for the
following calendar year, and estimate whether contributions
to each VCF meet that amount. If FTB estimates that a VCF
will fail to meet its minimum contribution amount, that VCF
is repealed for the following calendar year. Three
check-offs do not have a minimum contribution requirement:
California Firefighters' Memorial Foundation Fund,
California Peace Officer Memorial Foundation Fund,
SB 997 - 4/7/14 -- Page 2
and
California Seniors Special Fund.
The following list provides information on when the
existing tax check-offs first appeared on the tax return,
when they will sunset, and their minimum contribution
requirements.
------------------------------------------------------------
| Voluntary Contribution Fund |Initia|Sunset|2014 minimum |
| |l Tax | Date | contribution |
| |Return| |requirement |
| | | | |
|-------------------------------+------+------+--------------|
|Alzheimer's Disease/Related | 1987 | 2019 | $347,328 |
|Disorders Fund | | | |
|-------------------------------+------+------+--------------|
|CA Breast Cancer Research Fund | 1992 | 2017 | $371, 724 |
|-------------------------------+------+------+--------------|
|CA Cancer Research Fund | 2008 | 2017 | $268, 471 |
|-------------------------------+------+------+--------------|
|CA Firefighters' Memorial Fund | 1993 | 2015 | No minimum |
| | | | requirement |
| | | | unless the |
| | | | repeal date |
| | | | is deleted |
|-------------------------------+------+------+--------------|
|CA Fund for Senior Citizens | 1983 | 2019 | $250,000 |
|-------------------------------+------+------+--------------|
|CA Peace Officer Memorial | 1999 | 2015 | No minimum |
|Foundation Fund | | | requirement |
| | | | unless |
| | | | repeal date |
| | | | is deleted |
|-------------------------------+------+------+--------------|
|CA Sea Otter Fund | 2006 | 2015 | $277,666 |
|-------------------------------+------+------+--------------|
|CA Seniors Special Fund | 1990 | None | No minimum |
| | | | requirement |
|-------------------------------+------+------+--------------|
|CA YMCA Youth and Government | 2012 | 2016 | $250,000 |
|Fund | | | |
|-------------------------------+------+------+--------------|
|CA Youth Leadership Fund | 2012 | 2016 | $250,000 |
SB 997 - 4/7/14 -- Page 3
|-------------------------------+------+------+--------------|
|Child Victims of Human | 2011 | 2015 | $254,250 |
|Trafficking Fund | | | |
|-------------------------------+------+------+--------------|
|Emergency Food for Families | 1998 | 2018 | $360,179 |
|Fund | | | |
|-------------------------------+------+------+--------------|
|Municipal Shelter Spay-Neuter | 2011 | 2015 | $254,250 |
|Fund | | | |
|-------------------------------+------+------+--------------|
|Rare & Endangered Species | 1983 | 2017 | $324, 972 |
|Preservation | | | |
|Program | | | |
|-------------------------------+------+------+--------------|
|School Supplies for Homeless | 2012 | 2016 | $250,000 |
|Children Fund | | | |
|-------------------------------+------+------+--------------|
|State Children's Trust for the | 1983 | 2017 | $324,972 |
|Prevention of Child Abuse | | | |
|-------------------------------+------+------+--------------|
|State Parks Protection | 2012 | None | $250,000 |
|Fund/Parks Pass Purchase | | | |
|-------------------------------+------+------+--------------|
|Keep Arts in Schools Fund | 2013 | 2018 | No minimum |
| | | | requirement |
| | | | for 2014 |
|-------------------------------+------+------+--------------|
|Protect Our Coast and Oceans | 2013 | 2017 | No minimum |
|Fund | | | requirement |
| | | | for 2014 |
|-------------------------------+------+------+--------------|
|American Red Cross, California | 2013 | 2017 | No minimum |
|Chapter | | | requirement |
| | | |for 2014 |
------------------------------------------------------------
The California Fund for Senior Citizens first appeared on
the 1983 personal income tax return. Donations to the
California Fund for Senior Citizens supports the ongoing
work of the California Senior Legislature (CSL), an
organization established by state law to identify, develop,
and support legislative proposals that protect and enhance
the quality of life of California's seniors.
SB 997 - 4/7/14 -- Page 4
From 1983 through 1999, the California Fund for Senior
Citizens was not directly subject to the minimum
contribution requirement. In 1999, AB 1697 (Committee on
Aging and Long-Term Care) extended the Fund's sunset date
and imposed a minimum contribution requirement of $250,000.
In 2006, SB 1249 (Alquist) removed the Fund's annual
inflation adjustment. As a result, the Fund's minimum
contribution amount is currently set at $250,000, unlike
most other check-offs whose minimum contribution
requirement is adjusted for inflation. Since 2010, the
Fund has received the following contributions amounts:
-----------------------------------------------------------
| 2010 | 2011 | 2012 | 2013 |
|--------------+--------------+--------------+--------------|
| $296,144 | $308,763 | $272,742 |$234,247 |
| | | | |
-----------------------------------------------------------
While the Fund received only $234,247 in valid
contributions in 2013, the Fund was still placed on the
2013 PIT return since FTB had estimated that the Fund would
meets its minimum contribution amount. FTB reports that
the Fund has received only $42,135 in valid contributions
thus far in 2014, slightly below the $43,174 received by
the same point last year. CSL is concerned that the Fund
will not meet the minimum donation requirement this year
and will be removed from the income tax form.
Proposed Law
SB 997 eliminates the $250,000 minimum contribution
requirement for the California Fund for Senior Citizens.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . The California Senior Legislature
SB 997 - 4/7/14 -- Page 5
is primarily funded through the tax check-off program. CSL
works to identify senior concerns, develop proposals, and
advocate for the inclusion of those concerns in legislative
bills. Since state law established CSL in 1981, 192 of
CSL's proposals have been chaptered into law. As a result
of the economic downturn, CSL has had difficulty meeting
the minimum donation requirement of $250,000. Unlike state
agencies, CSL does not receive funding through the General
Fund. SB 997 allows the California Senior Citizens Fund to
remain on the tax return. By preserving the primary source
of funding for the California Senior Legislature, SB 997
allows the CSL to continue its advocacy on behalf of the
state's senior citizens.
2. Unfair advantage . Since 2003, 15 check-offs have been
removed from the tax form as a result of failing to meet
the minimum donation requirement. Eliminating the minimum
contribution level for one tax check-off, without doing so
for the rest, creates bias and could unfairly disadvantage
other charities that compete for limited donations.
Additionally, eliminating the minimum donation requirement
will open the door for other check-offs to pursue a
suspension or elimination of the minimum contribution
thresholds.
3. Intent of minimum contribution . One purpose of the
minimum contribution threshold is to ensure that only
check-offs with substantial public support remain on the
tax return form. The other purpose is to limit the number
of check-offs on the tax form. The Legislature imposed a
minimum contribution requirement for the California Senior
Legislature specifically in response to concerns that the
tax form was in danger of expanding to three pages because
of the proliferation of tax check-offs. In 2012, FTB
created a separate page to accommodate all of the
check-offs, including those that had been on a "waiting
list" to appear on the form. The redesign of the form also
will allow the form to accommodate additional check-offs.
Given that the economic downturn has impacted overall
charitable giving and FTB has created a separate page to
accommodate a growing number of check-offs, the committee
may wish to consider the efficacy of the $250,000 minimum
contribution requirement.
4. Who's special ? In 2000, SB 2175 (Burton) eliminated
the minimum contribution requirement for the California
SB 997 - 4/7/14 -- Page 6
Peace Officers Memorial Foundation Fund and the California
Firefighters' Memorial Fund after these funds were in
danger of not meeting the minimum contribution requirement.
Donations to these funds are used to support the memorials
in Capitol Park and recognize the contributions of fallen
firefighters and peace officers. The California Senior
Special Fund appeared on the tax form in 1990 and has never
been required to meet the minimum contribution amount, nor
does it have a sunset date. The California Senior Special
Fund supports the Area Agency of Aging Councils, which
provide advice on and sponsorship of senior citizen issues.
Only taxpayers or spouses who claim the senior exemption
credit on their California return may contribute to the
Senior Special Fund. The committee may wish to consider
whether the California Fund for Senior Citizens is
distinctive enough to be included on the list of check-offs
without a minimum contribution requirement.
5. Related legislation .
AB 1833 (Garcia, 2014) contains provisions
identical to SB 997. AB 1833 is awaiting a hearing in
the Assembly Revenue & Taxation Committee which has a
policy of not extending VCFs that have failed to meet
their minimum donation requirement.
SB 1207 (Wolk, 2014) would redesign the tax
check-off process and lower the minimum contribution
requirement to $100,000.
6. Gut-and-amend . As introduced, SB 1249 contained
language relating to corporate taxes. The Committee never
heard that version of the bill. The February 13 amendments
deleted the bill's contents and inserted language relating
the California Fund for Senior Citizens.
Support and Opposition (4/21/14)
Support : California Senior Legislature; California Retired
Teachers Association; California State Retirees; Elder
Financial Protection Network; Vicent & Jeanne Agor; Garilee
Cave, Senior Assembly Member; Charlotte A. Dorsey; Marcia
Gould, Senior Assembly Member; Ken Hengst, Senior Assembly
Member; Rick Kaplowitz; Linda Matulich, Amador County
Commission on Aging; Wesley K. Mukoyama; Gloria Plasencia,
Senior Senator; Jean Robinson, Executive Director
Fresno-Madera Area Agency on Aging; Rabon Saip, Member
SB 997 - 4/7/14 -- Page 7
Sonoma County Area Agency on Aging Advisory Council; Jane
R. Schwickerath, Board member of the Senior Council of
Santa Cruz and San Benito Counties; Richard Shontz, Senior
Assembly Member; Bruce S Steir; Leo Sullivan, Senior
Assembly Member; Susan V. Walker, Senior Assembly Member;
Alexis Wiser, Senior Senator; William J. Witt.
Opposition : Unknown.