Under existing law, taxpayers are allowed to contribute amounts in excess of their personal income tax liability for the support of the California Senior Legislature Fund until the year in which the minimum contribution is not received, or January 1, 2019, whichever occurs first. Existing law also contains administrative provisions that are generally applicable to voluntary contributions.

This bill would repeal these provisions regarding contributions for the support of the California Senior Legislature Fund and would instead allow a taxpayer, for taxable years beginning on or after January 1, 2016, to designate an amount in excess of personal income tax liability to be deposited to the California Senior Citizen Advocacy Fund, which the bill would create. This bill would require moneys transferred to the California Senior Citizen Advocacy Fund, upon appropriation by the Legislature, to be allocated to the Franchise Tax Board and the Controller, as provided, and to the California Senior Legislature for the purpose of funding the activities of the California Senior Legislature, as provided. The bill would require the California Senior Legislatures Internet Web site to report specified information, including all events the California Senior Citizen Advocacy Fund supports each year.

This bill would repeal these voluntary contribution provisions by a specified date or, if contributions made on returns would be less than a specified amount, by an earlier date as provided.

Under existing law, taxpayers are allowed to contribute amounts in excess of their personal income tax liability for the support of the California Senior Legislature Fund until the year in which the minimum contribution is not received, or January 1, 2019, whichever occurs first. Existing law also contains administrative provisions that are generally applicable to voluntary contributions.

This bill would repeal these provisions regarding contributions for the support of the California Senior Legislature Fund and would instead allow a taxpayer, for taxable years beginning on or after January 1, 2016, to designate an amount in excess of personal income tax liability to be deposited to the California Senior Citizen Advocacy Fund, which the bill would create. This bill would require moneys transferred to the California Senior Citizen Advocacy Fund, upon appropriation by the Legislature, to be allocated to the Franchise Tax Board and the Controller, as provided, and to the California Senior Legislature for the purpose of funding the activities of the California Senior Legislature, as provided.

This bill would repeal these voluntary contribution provisions by a specified date or, if contributions made on returns would be less than a specified amount, by an earlier date as provided.

Under existing law, taxpayers are allowed to contribute amounts in excess of their personal income tax liability for the support of the California Senior Legislature Fund until the year in which the minimum contribution is not received, or January 1, 2019, whichever occurs first. Existing law also contains administrative provisions that are generally applicable to voluntary contributions.

This bill would repeal these provisions regarding contributions for the support of the California Senior Legislature Fund and would instead allow a taxpayer, for taxable years beginning on or after January 1, 2016, to designate an amount in excess of personal income tax liability to be deposited to the California Senior Citizen Advocacy Fund, which the bill would create. This bill would require moneys transferred to the California Senior Citizen Advocacy Fund, upon appropriation by the Legislature, to be allocated to the Franchise Tax Board and the Controller, as provided, and to the California Senior Legislature for the purpose of funding the activities of the California Senior Legislature, as provided.

This bill would repeal these voluntary contribution provisions by a specified date or, if contributions made on returns would be less than a specified amount, by an earlier date as provided.

The Corporation Tax Law exempts various types of organizations from taxes imposed by that law. Existing law establishes a method by which an organization that has obtained a ruling or determination from the Internal Revenue Service that it is exempt from federal income taxes as an organization described in Section 501(c)(3), (c)(4), (c)(5), (c)(6), or (c)(7) of the Internal Revenue Code may obtain exemption from state taxes, as provided.

This bill would make nonsubstantive changes to that provision.

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

AB 2497 (Wagner) - Voluntary contributions: California Senior Legislature Fund: California Senior Citizen Advocacy Fund

This bill does not meet the criteria for referral to the Suspense File.

Bill Summary:

AB 2497 would (1) repeal the California Senior Legislature Fund, and (2) authorize in its place the addition of the California Senior Citizen Advocacy Fund check-off to the personal income tax return.

Fiscal Impact:

• The Franchise Tax Board (FTB) estimates that, beginning in 2017- 18, this bill would result in an annual revenue loss of $8,000 (General Fund) for every $250,000 contributed by itemizing taxpayers.
• The State Controller’s Office (SCO) and FTB and would be reimbursed for related administrative costs.

Background:

Current law allows taxpayers to contribute money to one or more of 19 voluntary contribution funds during the process of filing their state income tax return (VCF). These contributions are made from taxpayers' own resources, not from their tax liability, as is the case with federal tax returns. Check-off amounts are deductible as charitable contributions on taxpayers' returns during the subsequent tax year. With some exceptions, each voluntary contribution fund has a sunset date and is required to meet a minimum contribution amount of $250,000, adjusted annually for inflation.

The California Senior Legislature (CSL) is a volunteer body whose primary mission is to gather ideas for legislation at the state and federal levels, craft the ideas into formal proposals, prioritize the proposals, present them to members of the Legislature or the Congress, and advocate for laws implementing the ideas. The entity has three major sources of funding: individual contributions, an annual membership group called “Friends of the CSL,” and donations via the VCF. Unlike some other VCF causes, this group is nearly entirely reliant on VCF donations.

Proposed Law:

This bill would repeal the California Senior Legislature Fund and add the California Senior Citizen Advocacy Fund (Fund). It would allow a taxpayer to make a voluntary contribution to the Fund on the state personal income tax return. The bill would require the Fund to meet a minimum contribution threshold of $250,000 in the second calendar year the Fund appears on the tax form, and the amount is indexed yearly for inflation.

Additionally, the bill would provide that all money transferred to the Fund, upon appropriation by the Legislature, be allocated as follows: (1) to FTB and the State Controller for reimbursement of all costs incurred in administering the VCF, and (2) to the California Senior Legislature, for its ongoing activities on behalf of older persons.

The bill would sunset on January 1, 2021.

Related Legislation:

SB 1476 (Committee on Governance and Finance) would establish general provisions for voluntary contribution funds. Specifically, the bill would (1) establish a seven-year sunset, (2) require a minimum contribution amount of $250,000 beginning in the fund’s second year, and each year thereafter, requires funds to be continuously appropriated, and (3) require administering agencies to post information online about the use of the funds. SB 1476 is currently awaiting action by the full Assembly.

Staff Comments:

The California Senior Legislature Fund first appeared on the 1983 tax return. The Fund’s name was changed in 1994, and again in 2014. Specifically, SB 997 (Morrell, Chapter 248, Statutes of 2014) repealed the California Fund for Senior Citizens and established the California Senior Legislature Fund. Annual contribution to the Fund and its predecessor have declined during the past four taxable years, totaling 234,247 in 2013, $229,522 in 2014, $60,137 in 2015, and $59,422 in 2016 (a preliminary figure).

FTB data indicate that in 2012, 89,335 out of 15 million taxpayers contributed a total of $4.8 million via tax check-offs. The tax check-off program typically collects $4-5 million in annual contributions for all VCFs.

-- END --

SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Robert M. Hertzberg, Chair

2015 - 2016 Regular

Voluntary contributions: California Senior Legislature Fund: California Senior Citizen Advocacy Fund

Authorizes the addition of the California Senior Citizen Advocacy Fund (Fund) check-off to the personal income tax return.

Background

Existing 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 liability, 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 by legislation. With a few exceptions, VCFs remain on the return until they are repealed by a sunset date or fail to generate a minimum contribution amount. In general, the minimum contribution amount is $250,000, beginning in the fund’s second year, and is adjusted yearly for inflation thereafter. The following check-offs do not have a minimum contribution requirement:

• California Firefighters’ Memorial Foundation Fund,
• California Peace Officer Memorial Foundation Fund, and
• California Seniors Special Fund.

When a taxpayer contributes to VCFs, the Franchise Tax Board (FTB) deposits the total of all contributions, less an administrative fee, into the fund created as part of the VCF’s legislative authorization. For some VCFs, such as the Protect Our Coast and Ocean Fund, taxpayers’ contributions are allocated to a state agency for use in a state administered grant program. Other VCFs’ authorizing statutes direct administrative agencies to allocate donations to a private organization. For example, the Office of Emergency Services passes VCF funds to the American Red Cross. Other funds require the State Controller to send the funds directly to private organizations without passing through an administrative agency, such as the California Fire Foundation. The Controller and administrative agencies may deduct administrations fees from the amount of donations each VCF receives.

There are currently 19 check-offs listed on the tax return form. The tax check-off program typically collects $4-5 million in annual contributions for all VCFs.

Proposed Law

Assembly Bill 2497 repeals the California Senior Legislature Fund and adds the California Senior Citizen Advocacy Fund (Fund). AB 2497 allows a taxpayer to make a voluntary contribution to the Fund on the state personal income tax return. The bill requires the Fund to meet a minimum contribution threshold of $250,000 in the second calendar year the Fund appears on the tax form, and the amount is indexed yearly for inflation.

Additionally, the bill provides that all money transferred to the Fund, upon appropriation by the Legislature, be allocated as follows:

• To FTB and the State Controller for reimbursement of all costs incurred in administering the VCF,
• To the California Senior Legislature, for its ongoing activities on behalf of older persons.

AB 2497 provides that the bill automatically sunsets on January 1, 2021.

State Revenue Impact

FTB estimates annual revenue losses of roughly $8,000 for every $250,000 contributed to the Fund by taxpayers who itemize.

Comments

1. Purpose of the bill. According to the author, “AB 2497 would re-name the contribution fund from the California Senior Legislature Fund to the "California Senior Citizen Advocacy Fund" to more accurately portray the mission of the organization, and to remove the stigma of being associated with the State Legislature. This name change would provide for retention on the Franchise Tax Board's Form 540, and thus allow the marketing and promotional efforts to continue to be pursued. Renaming the California Senior Legislature Fund is the simplest method to prevent removal from the Franchise Tax Board's Form 540, and allows the California Senior Legislature to rebuild their primary source of funding. “

2. Hitting the reset button. The California Senior Legislature Fund first appeared on the 1983 personal income tax return. In 1994, AB 3266 (Martinez) changed the Fund’s name to the California Fund for Senior Citizens. In 2014, SB 997 (Morrell) repealed the California Fund for Senior Citizens and established the California Senior Legislature Fund. In 2015, the California Senior Legislature Fund received contributions of approximately $60,137, and as of May of this year, received contributions of approximately $59,422. If the Fund does not meet the minimum contribution amount of $250,000 by the end of this year, the fund will not be included on the 2016 personal income tax return (which is filed in 2017) and discontinued. Reauthorizing the Fund effectively allows the Fund to reappear on the income tax form after failing to meet the minimum contribution limit.

3. Is there a better way? The current tax check-off program generates a relatively small share of statewide contributions to charitable causes. In 2008, Californians donated more than $17 billion to charities. However, less than 1% of Californians use the tax check-off program to make donations to charitable organizations. FTB reports that in 2012, 89,335 out of 15 million taxpayers contributed a total of $4.8 million. In 2014, SB 1207 (Wolk) attempted to address this issue and help grow charitable giving by establishing the California Voluntary Contribution Program to promote charitable giving and collect donations. This would have allowed many more charities to participate in the program, would have screened potential participants before adding them onto the form, and eliminated the need for each organization to go through the Legislative process. Under SB 1207, charities would instead apply to the office of California Volunteers for placement on the income tax form. However, SB 1207 (Wolk) was held on suspense in Assembly Appropriations.

4. Bills, bills, bills. Currently, tax check-offs must be added by the Legislature. In 2008, 11 VCFs appeared on the personal income tax return. Today, the return contains 19. With legislation introduced every year to add new VCFs, there is little reason to expect this number to stop growing. It is estimated that FTB can only handle 8 or 9 more check-offs before FTB has to create a separate tax schedule.

5. Similar Legislation. SB 1476 (Committee on Governance and Finance) establishes general provisions for voluntary contribution funds. Specifically, the bill establishes a seven year sunset, requires a minimum contribution amount of $250,000 beginning in the fund’s second year, and each year thereafter, requires funds to be continuously appropriated, and requires administering agencies to post information online about the use of the funds. SB 1476 is set to be heard in the Assembly Committee on Revenue and Taxation on June 13, 2016.

Assembly Actions

Assembly Revenue and Taxation 9-0

Assembly Aging and Long Term Care 6-0

Assembly Appropriations 20-0

Assembly Floor 76-0

Support and Opposition

(6/8/16)

Support: California Senior Legislature.

Opposition: California Department of Finance.

-- END --

Date of Hearing: May 11, 2016

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 2497

Author:(Wagner) – As Amended Ver:April 26, 2016

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill replaces the existing California Senior Legislature Fund with the California Senior Citizen Advocacy Fund (Fund) as a voluntary contribution fund (VCF) on the personal income tax return for taxable years beginning on or after January 1, 2016, and before January 1, 2021. Specifically, this bill:

1. Repeals the statutory authorization for the existing California Senior Legislature Fund, which supports the work of the California Senior Legislature, and provides that the Fund is the successor fund of the California Senior Legislature Fund.

1. Requires that all money transferred to the Fund, upon appropriation by the Legislature, will be allocated as follows:
   1. To the Franchise Tax Board (FTB) and the State Controller for reimbursement of all costs incurred in administering the Fund; and,
   2. California Senior Legislature, for its ongoing activities on behalf of older persons.
2. Provides that the funds allocated to the California Senior Legislature shall be spent pursuant to the purview of the Joint Rules Committee of the California Senior Legislature in a manner consistent with the bylaws of the California Senior Legislature, established through a majority vote of the California Senior Legislature.

1. Requires the Fund to meet a standard minimum contribution requirement of $250,000 in its second year. Thereafter, the minimum contribution amount will be indexed for inflation.

FISCAL EFFECT:

1. Minor ongoing GF revenue losses of up to $15,000 per year resulting from itemized taxpayer deductions.
2. Minor and absorbable administrative costs for the FTB.

COMMENTS:

1. Purpose. According to the author, AB 2497 would re-name the contribution fund from the California Senior Legislature Fund to the "California Senior Citizen Advocacy Fund" to more accurately portray the mission of the organization, and to remove the stigma of being associated with the State Legislature.
2. Background. Current state tax law allows taxpayers to make contributions on their tax returns to a number of VCFs. Like many other VCFs, AB 2497 would require the Fund to meet a current minimum contribution amount to return on state tax returns ($250,000, indexed to inflation after the second year). Traditionally, because this VCF is dedicated to one organization, there has not been an administrating agency as has been common practice with new VCFs. However, Joint Rules oversees Fund expenses.
3. The California Senior Legislature. According to its website, the California Senior Legislature is a “volunteer body whose primary mission is to gather ideas for legislation at the state and federal levels, craft the ideas into formal proposals, prioritize the proposals, present them to members of the Legislature or the Congress, and advocate for laws implementing the ideas.”

The website also notes that group has three major sources of funding: individual contributions, an annual membership group called “Friends of the CSL,” and donations via the VCF. Unlike some other VCF causes, this group is nearly entirely reliant on VCF donations.

Currently, the ongoing work of the California Senior Legislature is supported by contributions to the existing California Senior Legislature Fund. Before the enactment of SB 997 (Morrell), Chapter 248, Statutes of 2014, the California Senior Legislature was supported by another VCF called the "California Fund for Senior Citizens".

1. Funding history. The California Senior Legislature has historically been funded by the California Fund for Senior Citizens. In 2014, following a gradual decline in donated funds, the fund was renamed to the California Senior Legislature Fund. However, that fund experienced a steep decline in donations, perhaps in part because the name change made the group less sympathetic to potential donors. The funding history, and the corresponding name of the fund, is as follows:
2. California Fund for Senior Citizen:
   1. 2010: $296,144
   2. 2011: $308,763
   3. 2012: $272,742
   4. 2013: $234,247
   5. 2014: $229,522
3. California Senior Legislature Fund:
   1. 2015: $60,137
4. New VCF Bills in 2016. Four Assembly bills were introduced in 2016 that would either extend existing VCFs or create new ones. In addition to AB 2497, those bills are:
5. AB 1789 (Santiago), also on today’s Committee agenda, extends the voluntary contribution for the School Supplies for Homeless Children Fund.
6. AB 2430 (Beth Gaines), also on today’s Committee agenda, adds a voluntary contribution for the Type 1 Diabetes Research Fund.
7. AB 2371 (Frazier), also on today’s Committee agenda, adds a voluntary contribution for the Special Olympics Fund.

Analysis Prepared by: Luke Reidenbach / APPR. / (916) 319-2081

Date of Hearing: April 19, 2016

ASSEMBLY COMMITTEE ON AGING AND LONG-TERM CARE

Cheryl Brown, Chair

ABPCA Bill Id:AB 2497 (

Author:Wagner) – As Amended Ver:April 13, 2016

SUBJECT: Voluntary contributions: California Senior Legislature Fund: California Senior Citizen Advocacy Fund.

SUMMARY: Authorizes the addition of the California Senior Citizen Advocacy Fund as a voluntary contribution fund on the personal income tax return form to serve as the principle source of funding for the California Senior Legislature. Specifically, this bill:

1. Repeals the statutory authorization for the existing California Senior Legislature Fund, which supports the work of the California Senior Legislature.
2. Establishes the new Fund, the California Senior Citizen Advocacy Fund, in the State Treasury, to which any individual may designate a contribution in full-dollar amounts to support the California Senior Legislature’s (CSL) annual session and ongoing activities.
3. Provides that the Fund is the successor fund of the California Senior Legislature Fund.
4. Requires the individual tax form to include space for the California Senior Citizen Advocacy Fund to allow individuals to contribute.
5. Permits contributions made to the California Senior Citizen Advocacy Fund to be treated as a deduction.
6. Renames and creates the California Senior Citizen Advocacy Fund within the state treasury to serve as the successor fund to the California Senior Legislature Fund.
7. Directs the California Senior Citizen Advocacy Fund, to reimburse the Franchise Tax Board and the Controller for costs incurred by the Franchise Tax Board and the Controller for administration of the fund.
8. Authorizes unspent funds to be carried-over from year to year.
9. Requires the Joint Rules Committee of the California Senior Legislature (CSL) to direct fund expenditures in a manner consistent with the bylaws of the CSL, established by a majority vote of the members of the CSL.
10. Provides that the Fund’s statutory provisions shall remain in effect only for taxable years beginning before January 1, 2021, and will sunset and repeal as of December 1, 2021.
11. Establishes a minimum contribution requirement of $250,000 in the Fund’s second year and provides that in subsequent years the minimum contribution amount will be indexed for inflation.
12. Beginning in September of 2017 and on an annual basis the Franchise Tax Board shall determine the minimum contribution amount necessary for the fund to appear on the tax return for the taxable year and shall report this amount to the California Senior Legislature.
13. Provides an estimate of contributions during the calendar year and if they will be equal to, or exceed, the minimum amount required to remain on the form.
14. Eliminates the fund if contributions are estimated to be below minimum levels established by the Franchise Tax board during the tax year following the third tax year after the fund is established (2020).

EXISTING LAW:

1. Establishes the California Senior Legislature, comprised of two houses, with 80 and 40 members, each member serving four-year terms, elected or appointed, in all 33 Area Agencies on Aging, according to rules developed by the California Senior Legislature in cooperation with the California Association of Area Agencies on Aging.
2. Finds and declares that senior citizens can best assess the needs of senior citizens for public programs in health, social services, recreation, transportation, education, housing, cultural services, and other appropriate areas of service.
3. States that the California Senior Legislature has been effective in providing model legislation for older citizens and advocating for the needs of seniors.
4. Grants the California Senior Legislature full authority to define its program and utilize its funds in any way necessary to carry out the organizational duties.
5. Requires that funds for the California Senior Legislature be allocated from the California Senior Legislature Fund, or from private funds directed to CSL, for the purpose of funding activities of the California Senior Legislature.
6. Permits the California Senior Legislature to accept grants from any source, public or private, to help perform its functions.
7. Requires each voluntary contribution fund (VCF) to meet an annual minimum contribution amount to remain in effect, except for the California Firefighters’ Memorial Fund, the California Peace Officer Memorial Foundation Fund, and the California Seniors Special Fund.

FISCAL EFFECT: Unknown

COMMENTS:

Author’s Statement: “AB 2497 would re-name the contribution fund from the California senior Legislature Fund to the “California Senior Citizen Advocacy Fund” to more accurately portray the mission of the organization, and to remove the stigma of being associated with the State Legislature. This name change would provide for the retention on the Franchise Tax Board’s Form 540, and thus allow the marketing and promotional efforts to continue to be pursued. Renaming the California Senior Legislature Fund is the simplest method to prevent removal from the Franchise Tax Board’s Form 540, and allows the California Senior Legislature to rebuild their primary source of funding.”

Background: The California Senior Legislature (CSL) is a volunteer organization which advocates for priorities to support senior citizens. The CSL pursues its priorities by way of model legislation to present to members of the State Legislature and Congress. Traditionally, the CSL meets in a mock legislative session every fall - this year made impossible with plummeting funds.

The CSL was created in 1979 by legislation authored by then-Assembly Member Henry Mello. Volunteers are 60 years and older, elected by their peers. The CSL is organized into two committees, the Joint Rules Committee which provides for the governance, and the Legislative Committee which directs advocacy activities related to CSL priorities.

CSL has seen over 200 proposals authored by legislators and proposed into legislation. Key policy achievements include advances in Alzheimer’s disease treatment and programs, and improved care in long-term care facilities, as well as expanded consumer protections addressing the prevention of elder abuse, identity theft, gender discrimination, and reverse mortgage fraud.

CSL Funding: For 35 years, CSL funding derived from taxpayer contributions. Taxpayers can contribute to voluntary contribution funds (VCFs) by checking a box and designating an amount on their state income tax returns. VCF contributions may then be claimed as charitable contributions on taxpayers’ tax returns in the subsequent year. Legislation is necessary to add a VCF to the tax return, and is repealed by a sunset date or failure to generate a required minimum contribution amount. The minimum contribution amount for most VCFs is $250,000, beginning in the fund’s second year. The Franchise Tax Board (FTB) determines the minimum contribution amount required for each VCF to remain on the form and also whether contributions to each VCF meet that amount. There are 3 exceptions to the minimum level which include the California Firefighters’ Memorial Foundation Fund, the California Peace Officer Memorial Foundation Fund, and, the California Seniors Special Fund which supports the Triple-A Council of California by accepting surrendered senior tax credits by those eligible for that credit. The CSL Fund has not always been subject to a minimum amount. In 1999 the Fund’s sunset date was extended and a minimum contribution requirement of $250,000 was created.

Contributions: In 2014, for the first time contributions fell below the mandatory minimum and was dropped from the form. Legislation enacted in 2014 renamed the Fund to the “California Senior Legislature Fund.” Contributions plummeted to less than 25% of previous average contribution amounts. Due to the loss of funds, CSL has been forced to eliminate important advocacy activities, suspended its annual session, and reduced staff. AB 2497 is an attempt to re-constitute the organization by returning the fund to its original title.

Arguments in Support: Individuals writing in support of AB 2497 state that “4.3 million individual age 65 and over are expected to nearly triple to 12.4 million by 2060. With these numbers, it is imperative that the CSL continue to inform the Legislature of key issues affecting California seniors.” They cite many legislative proposals resulting in state laws that have contributed to improved lives of older people and others in California.

Arguments in Opposition: None

Related Legislation

SB 1249 (Alquist), Chapter 645, Statutes of 2006 removes the annual inflation factor adjustment on the minimum tax contributions for the California Fund for Senior Citizens, and reduces and fixes the minimum contribution threshold amount in order for the checkoff to remain on the tax return at $250,000.

SB 997 (Morrell), Chapter 248, Statutes of 2014 repealed authorization for the California Fund for Senior Citizens, which supported work of the California Senior Legislature, and authorized the creation of a new California Senior Legislature Fund as a voluntary contribution fund on the personal income tax return for taxable years beginning on or after January 1, 2014.

REGISTERED SUPPORT / OPPOSITION:

Support

Numerous individuals.

Opposition

None on file.

Analysis Prepared by: Gail Gronert / AGING & L.T.C. / (916) 319-3990

Date of Hearing: April 11, 2016

ASSEMBLY COMMITTEE ON REVENUE AND TAXATION

Sebastian Ridley-Thomas, Chair

ABPCA Bill Id:AB 2497 (

Author:Wagner) – As Amended Ver:March 15, 2016

Majority vote. Fiscal committee.

SUBJECT: Voluntary contributions: California Senior Legislature Fund: California Senior Citizen Advocacy Fund

SUMMARY: Authorizes the addition of the California Senior Citizen Advocacy Fund (Fund) as a voluntary contribution fund (VCF) on the personal income tax (PIT) return for taxable years beginning on or after January 1, 2016. Specifically, this bill:

1. Repeals the statutory authorization for the existing California Senior Legislature Fund, which supports the work of the California Senior Legislature.
2. Establishes the new Fund in the State Treasury.
   
3. Provides that the Fund is the successor fund of the California Senior Legislature Fund. Specifically, all assets, liabilities, revenues, and expenditures of the California Senior Legislature Fund shall be transferred to, and become part of, the Fund, as provided.
   
4. Allows a deduction for any contribution made to the Fund.
   
5. Provides that all money transferred to the Fund, upon appropriation by the Legislature, shall be allocated to the:
   
   1. Franchise Tax Board (FTB) and the Controller for reimbursement of all costs incurred in administering the VCF; and,
      
   2. California Senior Legislature, for its ongoing activities on behalf of older persons.
      
6. Provides that the funds allocated to the California Senior Legislature shall be spent pursuant to the purview of the Joint Rules Committee of the California Senior Legislature in a manner consistent with the bylaws of the California Senior Legislature, established through a majority vote of the California Senior Legislature.
   
7. Provides that the Fund's statutory provisions shall remain in effect only for taxable years beginning before January 1, 2021.
   
8. Requires the Fund to meet a standard minimum contribution requirement of $250,000 in its second year. Thereafter, the minimum contribution amount will be indexed for inflation.

EXISTING LAW:

1. Allows taxpayers to contribute to one or more of 19 VCFs on the 2015 PIT return.
   
2. Authorizes the California Senior Legislature Fund as a VCF on the PIT return.

COMMITTEE RULES:

1. Require that VCF bills comply with this Committee's VCF (Income Tax Checkoff) Policy (VCF Policy). This Committee's VCF Policy, in turn, requires all existing VCFs for which reauthorization is sought "to comply with an inflation-adjusted $250,000 minimum contribution requirement."
   
2. Provide that existing VCFs "that have failed to meet their minimum contribution requirement will not be extended or reauthorized."

FISCAL EFFECT: The FTB's fiscal estimate for this bill is currently pending. Based on prior VCF bills, Committee staff estimates that this bill will result in minor General Fund losses of up to $15,000 per year resulting from itemized taxpayer deductions.

COMMENTS:

1. The author has provided the following statement in support of this bill:

AB 2497 would re-name the contribution fund from the California Senior Legislature Fund to the "California Senior Citizen Advocacy Fund" to more accurately portray the mission of the organization, and to remove the stigma of being associated with the State Legislature. This name change would provide for retention on the Franchise Tax Board's Form 540, and thus allow the marketing and promotional efforts to continue to be pursued. Renaming the California Senior Legislature Fund is the simplest method to prevent removal from the Franchise Tax Board's Form 540, and allows the California Senior Legislature to rebuild their primary source of funding.

1. Proponents of this bill note the following:

For 35 years, the CSL has successfully advocated for California Seniors, and because of their actions, millions of seniors are living better lives. CSL has helped California's seniors have a voice in the Legislature for over three decades. However, as of January 2017, the CSL will be removed from the tax check-off and lose the primary source of funding to sustain the organization.

The 4.3 million individuals age 65 and over is expected to nearly triple to 12.4 million by 2060. With these numbers, it is imperative that the CSL continue to inform the Legislature of key issues affecting our State's growing senior population. To date, the volunteer members have had over 200 senior proposals chaptered into legislation.

1. Committee Staff Comments
   
   1. The California Senior Legislature: Currently, the ongoing work of the California Senior Legislature is supported by contributions to the existing California Senior Legislature Fund. Before the enactment of SB 997 (Morrell), Chapter 248, Statutes of 2014, the California Senior Legislature was supported by another VCF called the "California Fund for Senior Citizens" (see discussion below). The California Senior Legislature notes that since 1981 it has labored to identify, develop, and support legislative proposals that protect and enhance the quality of life of California's seniors.
      
   2. The California Senior Legislature's first VCF: The California Senior Legislature was originally supported by the California Fund for Senior Citizens which, the FTB notes, first appeared on the 1983 PIT return. From 2010 to 2013, the California Fund for Senior Citizens received the following contribution amounts:

The California Fund for Senior Citizens' minimum contribution amount was set at $250,000 and, unlike most other VCF thresholds, was not annually adjusted for inflation. While the California Fund for Senior Citizens received only $234,247 in valid contributions in 2013, the VCF was still placed on the 2013 PIT return. This is because, by September 1, 2013, the FTB estimated (incorrectly, it turns out) that the California Fund for Senior Citizens would meet its minimum contribution amount for the year.

• 1. What happened in 2014? In 2014, contributions to the California Fund for Senior Citizens lagged slightly behind contributions in the prior year. The California Senior Legislature grew understandably concerned that the California Fund for Senior Citizens would not meet its minimum contribution amount in 2014, thereby jeopardizing the VCF's place on the 2014 PIT return.
     

Thus, the California Senior Legislature advocated for the enactment of SB 997 (Morrell), which sunset the California Fund for Senior Citizens and effectively replaced it with a newly named VCF – the California Senior Legislature Fund. SB 997 (Morrell) was designed to serve two main purposes. First, it ensured that a VCF supporting the work of the California Senior Legislature was included on the 2014 PIT return, thus allowing the California Senior Legislature to continue its work. In exchange for this temporary reprieve from a minimum contribution requirement, the California Senior Legislature agreed to index the new California Senior Legislature Fund's minimum contribution requirement for inflation in subsequent years. Second, SB 997 (Morrell) included the California Senior Legislature's name in the newly enacted VCF to make promotion of the fund easier and to avoid taxpayer confusion with the California Seniors Special Fund.

• 1. Best laid plans: Unfortunately, the newly named California Senior Legislature Fund has not generated significant support since its creation. In 2015, the fund generated only $60,137 in valid contributions. Moreover, the fund has only generated $8,693 through February of this year. The California Senior Legislature speculates that this dramatic drop in historic contribution levels is associated with the addition of the word "Legislature" in the fund's name. Thus, they are advocating for this bill, which would sunset the California Senior Legislature Fund and add a third VCF to the form highlighting the California Senior Legislature's advocacy work.
  2. A potentially questionable precedent: As noted above, this Committee's VCF Policy requires all existing VCFs for which reauthorization is sought "to comply with an inflation-adjusted $250,000 minimum contribution requirement." The VCF Policy also provides that existing VCFs "that have failed to meet their minimum contribution requirement will not be extended or reauthorized." The Committee's VCF Policy was originally adopted in response to the proliferation of VCF legislation and in recognition of the fact that space on the PIT return is limited.

Proponents of this bill might argue that the California Senior Legislature should once again be given special dispensation given their vital work advancing the interests of senior Californians. Critics, however, might contend that it is unfair to give this one organization special treatment in light of the many other VCFs whose public support has diminished in recent years. There are no fewer than 30 VCFs that have been eliminated from the return in recent years, mainly for failing to meet their minimum contribution amount. The following is only a representative sample:

• • 1. The ALS/Lou Gehrig's Disease Research Fund received only $131,655 in 2013 and, as a result, was eliminated from the return;
       
    2. The Municipal Shelter Spay-Neuter Fund received only $217,883 in 2013 and, as a result, was eliminated from the return;
       
    3. The Arts Council Fund received only $165,647 in 2012 and, as a result, was eliminated from the return;
       
    4. The California Police Activities League Fund received only $67,202 in 2012 and, as a result, was eliminated from the return;
       
    5. The California Veterans Homes Fund received only $210,078 in 2012 and, as a result, was eliminated from the return;
       
    6. The Safely Surrendered Baby Fund received only $158,645 in 2012 and, as a result, was eliminated from the return;
       
    7. The California Military Family Relief Fund received only $202,010 in 2010 and, as a result, was eliminated from the return; and,
       
    8. The California Ovarian Cancer Research Fund received only $121,427 in 2010 and, as a result, was eliminated from the return.
       
  1. Suggested technical amendments: Committee staff suggests adoption of the following technical amendments:
     
     1. On page 4, in line 14, strike "initial" and insert "original"; and,
     2. On page 6, in line 20, strike "California Senior Legislature Fund" and insert "California Senior Citizen Advocacy Fund".

REGISTERED SUPPORT / OPPOSITION:

Support

12 individuals

Opposition

None on file

Analysis Prepared by: M. David Ruff / REV. & TAX. / (916) 319-2098