SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 164
AUTHOR: Simitian
VERSION: 2/2/11
CONSULTANT: Faulkner
HEARING: March 23, 2011
FISCAL: Yes
TAX LEVY: No
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 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
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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 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 or-
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ganizations. 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 Disorders
Fund
Arts Council Fund
CA Breast Cancer Research Fund
CA Cancer Research Fund
CA Firefighters’ Memorial Fund
CA Fund for Senior Citizens
CA Peace Officer Memorial Foundation
Fund
CA Police Activities League (CALPAL)
Fund
CA Sea Otter Fund
CA Seniors Special Fund
CA Veterans Homes Fund
Emergency Food for Families Fund
Rare & Endangered Species Preservation Program
Safely Surrendered Baby Fund
State Children’s Trust for the Prevention of Child Abuse
$426,417
Initial Tax Return 2010
$519,728
$275,587
$207,455
$296,144
$135,250
Initial Tax Return 2010
$263,543
$59,192
Initial Tax Return 2010
$487,333
$578,215
Initial Tax Return 2010
$448,081
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
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bill is scheduled to be heard in the Senate Governance and Finance Committee
on 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 communitybased 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.