BILL ANALYSIS �
SB 1207
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Date of Hearing: August 6, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 1207 (Wolk) - As Amended: August 4, 2014
Policy Committee: Revenue &
Taxation Vote: 6-1
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill establishes the California Voluntary Contribution
Program to promote charitable giving and provide taxpayers an
opportunity to give to a wide range of charitable causes on
their personal income tax return. Specifically, this bill:
1)Charges the Office of California Volunteers (OCV) with
responsibility for administering the program, including
developing application forms and establishing an application
fee sufficient to cover the costs of administering the
program.
2)Charges OCV with developing a plan to transition current
voluntary contribution funds from the tax return to the
program by January 1, 2020, except for the following three
voluntary contribution funds:
a) The California Firefighters' Memorial Fund
b) The California Peace Officer Memorial Foundation Fund
c) The California Fund for Senior Citizens or its successor
fund
3)Requires applying organizations to be either a state or local
agency or a charitable organization that has:
a) Registered with the Attorney General's Registry of
Charitable Trusts for each of the three years preceding the
date of application.
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b) Submitted annual returns or statements with the
Franchise Tax Board (FTB) for each of the three years
preceding the date of application.
c) Achieved average annual total revenues exceeding
$100,000 (or such higher amount as the OCV may adopt by
regulation) for each of the three years prior to
application.
4)Requires an organization approved to receive voluntary
contributions to continue to meet the average annual $100,000
minimum contribution amount (or such higher amount as adopted
by the OCV) for the prior three years, satisfy the other
requirements for application, and pay a renewal fee.
Organizations that have had their eligibility revoked may not
reapply to the program prior to three years after the
eligibility was revoked.
5)Limits the number of organizations that may participate in the
program each taxable year to 200, less the number of other
voluntary contribution funds established separately under the
Revenue and Taxation Code.
6)Establishes in the State Treasury the California Voluntary
Contribution Fund to receive contributions to approved
organizations.
7)Establishes the Charitable Giving Fund and requires OCV to
administer the fund as well as develop policies and procedures
for a competitive grant process to distribute fund proceeds to
other charitable organizations.
8)Provides that administrative costs to FTB, OCV, and the State
Controller may be reimbursed from proceeds to the California
Voluntary Contribution Fund and the Charitable Giving Fund,
but on and after January 1, 2020, no more than 5% of money
from the funds, exclusive of fee revenues, may be used for
administrative purposes.
9)Allows individual taxpayers to designate contributions on the
personal income tax return for up to five specific approved
organizations and/or the Charitable Giving Fund.
10)Requires OCV to provide annually to the Legislature and make
available publicly a report on the program, including
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performance measures and the effectiveness of efforts to
encourage charitable giving.
11)Sunsets this bill's provisions on January 1, 2023.
FISCAL EFFECT
1)One-time GF costs to FTB of approximately $600,000 to
implement programming changes to establish the program and
track contributions; ongoing annual GF costs to FTB of
approximately $90,000 to administer program thereafter, which
may be recoverable in whole or in part through reimbursement
from the California Voluntary Contribution Fund and the
Charitable Giving Fund.
2)GF costs to OCV in the low hundreds of thousands of dollars
annually to establish the application procedures and
regulations as specified in the bill, largely recoverable
through reimbursement from the funds and application fee
revenue.
3)Estimated GF revenue decreases of approximately $60,000 for
each $1 million of increased charitable contributions
generated by the program.
COMMENTS
1) Purpose. According to the author, there are many worthy
charitable causes in California that would benefit from
voluntary contributions from taxpayers, but are not able to
participate in the tax check-off program. The author believes
the current system is inequitable and underutilized while
lacking clear standards to ensure participating charities
remain in compliance with state laws. This bill expands
access to taxpayers' donations to up to 200 eligible
charities, establishes standards for participation, and
designates an agency to administer the program and monitor its
effectiveness.
Proponents note increasing demand from charitable
organizations wanting to participate in the check-off program
results in increasing costs to FTB to redesign tax forms and,
if demand grows significantly, will result in substantial
costs to redesign FTB's systems to accommodate the additional
funds. Proponents argue this bill will promote civic
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engagement while providing an overall savings to the state.
2) Voluntary Contribution Funds. The number of voluntary
contribution funds has grown significantly in the past few
years, from 11 in 2008 to 20 on the current personal income
tax form. With several new funds introduced in legislation
this year, the number of funds appears likely to increase
further. Most funds are subject to formal policy rules
requiring mandatory sunsets and minimum contribution
thresholds, indexed to inflation, to remain active on the
return. Nevertheless, legislation is routinely introduced to
renew voluntary contribution funds that have failed to meet
the support thresholds or exempt those funds from the policy
rules. The introduction of all these bills consumes a
meaningful amount of legislative resources.
The current system rewards those causes and organizations
dedicated to cultivating legislative support. The result is
an incoherent collection of funds on the tax return, limiting
taxpayers' ability to use this system to support other causes.
In addition, little uniformity exists among the
administrative structures of the voluntary contribution funds,
resulting in disparate costs among the funds and little or no
coordinated oversight.
3) Opposition. Opponents, led primarily by those charities
currently represented on the personal income tax form, argue
the voluntary tax check-off is a vital and, oftentimes, sole
source of funding for their organizations. These funds
contend the expansion of the pool of participating
organizations will result in substantial dilution of
contributions, effectively preventing any one organization
from stimulating significant revenue through the tax check-off
system, and jeopardizing the current funding for those
organizations dependent on tax check-off contributions.
Analysis Prepared by : Joel Tashjian / APPR. / (916) 319-2081