Existing law authorizes an individual taxpayer to contribute amounts in excess of his or her personal income tax liability for the support of specified funds. Existing law also contains administrative provisions that are generally applicable to voluntary contributions.

This bill would allow an individual to designate on his or her tax return that a specified amount in excess of his or her tax liability be transferred to the Revive the Salton Sea Fund, which would be created by this bill. The bill would prohibit a voluntary contribution designation for the Revive the Salton Sea Fund from being added on the tax return until another voluntary contribution designation is removed or a space is available and would require, once the designation is added, specified information to be on the tax form, including the purposes for which the contribution would be used.

This bill would require money contributed to the fund, upon appropriation by the Legislature, to be allocated to the Franchise Tax Board and the Controller for reimbursement of costs, as provided, and to the Natural Resources Agency for distribution of competitive grants to provide funds or supplement funding of the state, county and local agencies, nonprofit organizations, and projects identified as necessary for the restoration and maintenance of the Salton Sea and to develop a mechanism to provide ongoing public awareness, as specified.

The bill would provide that these provisions would remain in effect only until January 1 of the 5th taxable year following the first appearance of the fund on the tax return, but would further provide for an earlier repeal if the Franchise Tax Board determines that the amount of contributions estimated to be received during a calendar year will not equal or exceed the minimum contribution amount, as defined, for that calendar year, in which case these provisions would be repealed on December 1 of that year.

Existing law authorizes an individual taxpayer to contribute amounts in excess of his or her personal income tax liability for the support of specified funds. Existing law also contains administrative provisions that are generally applicable to voluntary contributions.

This bill would allow an individual to designate on his or her tax return that a specified amount in excess of his or her tax liability be transferred to the Revive the Salton Sea Fund, which would be created by this bill. The bill would prohibit a voluntary contribution designation for the Revive the Salton Sea Fund from being added on the tax return until another voluntary contribution designation is removed or a space is available and would require, once the designation is added, specified information to be on the tax form, including the purposes for which the contribution would be used.

This bill would require money contributed to the fund, upon appropriation by the Legislature, to be allocated to the Franchise Tax Board and the Controller for reimbursement of costs, as provided, and to the Natural Resources Agency for distribution of competitive grants to provide funds or supplement funding of the state, county and local agencies, nonprofit organizations, and projects identified as necessary for the restoration and maintenance of the Salton Sea and to develop a mechanism to provide ongoing public awareness, as specified.

The bill would provide that these provisions would remain in effect only until January 1 of the 5th taxable year following the first appearance of the fund on the tax return, but would further provide for an earlier repeal if the Franchise Tax Board determines that the amount of contributions estimated to be received during a calendar year will not equal or exceed the minimum contribution amount, as defined, for that calendar year, in which case these provisions would be repealed on December 1 of that year.

Existing law authorizes an individual taxpayer to contribute amounts in excess of his or her personal income tax liability for the support of specified funds. Existing law also contains administrative provisions that are generally applicable to voluntary contributions.

This bill would allow an individual to designate on his or her tax return that a specified amount in excess of his or her tax liability be transferred to the Revive the Salton Sea Fund, which would be created by this bill. The bill would prohibit a voluntary contribution designation for the Revive the Salton Sea Fund from being added on the tax return until another voluntary contribution designation is removed or a space is available and would require, once the designation is added, specified information to be on the tax form, including the purposes for which the contribution would be used.

This bill would require money contributed to the fund, upon appropriation by the Legislature, to be allocated to the Franchise Tax Board and the Controller for reimbursement of costs, as provided, and to the Natural Resources Agency for distribution of competitive grants to provide funds or supplement funding of the state, county and local agencies, nonprofit organizations, and projects identified as necessary for the restoration and maintenance of the Salton Sea and to develop a mechanism to provide ongoing public awareness, as specified.

The bill would provide that these provisions would remain in effect only until January 1 of the 5th taxable year following the first appearance of the fund on the tax return, but would further provide for an earlier repeal if the Franchise Tax Board determines that the amount of contributions estimated to be received during a calendar year will not equal or exceed the minimum contribution amount, as defined, for that calendar year, in which case these provisions would be repealed on December 1 of that year.

Existing law authorizes an individual taxpayer to contribute amounts in excess of his or her personal income tax liability for the support of specified funds. Existing law also contains administrative provisions that are generally applicable to voluntary contributions.

This bill would allow an individual to designate on his or her tax return that a specified amount in excess of his or her tax liability be transferred to the Revive the Salton Sea Fund, which would be created by this bill. The bill would prohibit a voluntary contribution designation for the Revive the Salton Sea Fund from being added on the tax return until another voluntary contribution designation is removed or a space is available and would require, once the designation is added, specified information to be on the tax form, including the purposes for which the contribution would be used.

This bill would require money contributed to the fund, upon appropriation by the Legislature, to be allocated to the Franchise Tax Board and the Controller for reimbursement of costs, as provided, and to the Natural Resources Agency for distributions distribution of grants to provide funds or supplement funding of the state, county and local agencies, nonprofit, nonprofit organizations, and projects identified as necessary for the restoration and maintenance of the Salton Sea and to develop a mechanism to provide ongoing public awareness, as specified.

The bill would provide that these provisions would remain in effect only until January 1 of the 5th taxable year following the first appearance of the fund on the tax return, but would further provide for an earlier repeal if the Franchise Tax Board determines that the amount of contributions estimated to be received during a calendar year will not equal or exceed the minimum contribution amount, as defined, for that calendar year, in which case these provisions would be repealed on December 1 of that year.

Existing law allows authorizes an individual taxpayer to contribute amounts in excess of his or her personal income tax liability for the support of specified funds. Existing law also contains administrative provisions that are generally applicable to voluntary contributions.

This bill would allow an individual to designate on his or her tax return that a specified amount in excess of his or her tax liability be transferred to the Revive the Salton Sea Fund, which would be created by this bill. The bill would require the Franchise Tax Board to revise the tax return form to include a space for the designation of contributions to the fund prohibit a voluntary contribution designation for the Revive the Salton Sea Fund from being added on the tax return until another voluntary contribution designation is removed or a space is available and to include would require, once the designation is added, specified information, information to be on the tax form, including the purposes for which the contribution would be used.

This bill would require money contributed to the fund, upon appropriation by the Legislature, to be allocated to the Franchise Tax Board and the Controller for reimbursement of costs, as provided, and to the nonprofit corporation Revive the Salon Sea to fund or supplement Natural Resources Agency for distributions of grants to provide funds or supplement funding of the state, county, county and local agencies local agencies, nonprofit, and projects identified as necessary for the restoration and maintenance of the Salton Sea and to develop a mechanism to provide ongoing public awareness, as specified.

The Salton Sea Restoration Act requires the Secretary of the Natural Resources Agency, in consultation and coordination with the Salton Sea Authority, to lead Salton Sea restoration efforts. The act authorizes the authority to lead a feasibility study, in coordination and under contract with the secretary, as prescribed. The act requires the secretary to seek input from the authority with regard to specified components of restoration of the Salton Sea.

This bill would state the intent of the Legislature to enact legislation to clean up the Salton Sea.

 UNFINISHED BUSINESS  

Bill No: SB 1416

Author:

:

Vote:

SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 4/20/16

AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach, Pavley

SENATE APPROPRIATIONS COMMITTEE: 6-0, 5/9/16

AYES: Lara, Beall, Hill, McGuire, Mendoza, Nielsen

NO VOTE RECORDED: Bates

SENATE FLOOR: 37-0, 5/27/16

AYES: Allen, Anderson, Bates, Beall, Block, Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall, Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Stone, Vidak, Wieckowski, Wolk

NO VOTE RECORDED: Berryhill, Lara, Runner

ASSEMBLY FLOOR: 78-0, 8/11/16 (Consent) - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST: This bill authorizes the addition of the Revive the Salton Sea Fund as a voluntary contribution fund on the personal income tax return.

Assembly Amendments require a competitive grant process to distribute funds and provide that funds cannot be used for administrative costs.

ANALYSIS:

Existing law:

1. 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.
2. Allows contribution amounts to be claimed as charitable contributions on taxpayers’ tax returns in the subsequent year.
3. Requires that 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 amounts are adjusted annually for inflation. For most VCFs, the minimum contribution amount is $250,000, beginning in the fund’s second year. The following check-offs do not have a minimum contribution requirement:
   1. California Firefighters’ Memorial Foundation Fund,
   2. California Peace Officer Memorial Foundation Fund, and
   3. California Seniors Special Fund.

This bill:

1. Adds the Revive the Salton Sea Fund (Fund), and allows a taxpayer to make a voluntary contribution to the Fund on the state personal income tax return.
2. Provides that all money transferred to the Fund, upon appropriation by the Legislature, be allocated as follows:
   1. To the Franchise Tax Board (FTB) and the State Controller for reimbursement of all costs incurred in administering the VCF.
   2. To the Natural Resources Agency for distribution of competitive grants to provide funds or supplement funding of state, county and local agencies, nonprofit organizations, and projects identified as necessary for the restoration and maintenance of the Salton Sea, including projects identified by the Salton Sea Authority.
   3. Up to five percent of the funds to the Natural Resources Agency for development of a mechanism to provide ongoing public awareness through activities that will promote the charitable tax deduction for the Fund and seek continued contributions. These activities may include convening a philanthropic roundtable, developing literature for use by city, county, or local agencies and programs, and whatever other activities are deemed necessary and appropriate to promote the fund.
3. Provides that specified Fund moneys shall not be used for administrative costs.
4. Provides that money in the Fund shall not be used to supplant state General Fund money for any purpose.
5. Requires the Fund to meet a standard minimum contribution amount of $250,000 indexed for inflation in subsequent years.
6. Provides that the Fund's statutory provisions shall remain operative only until January 1 of the fifth taxable year following the Fund's first appearance on the personal income tax return.

Background

When a taxpayer contributes to VCFs, the 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 State 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.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Assembly Appropriations Committee, this bill results in minor ongoing General Fund revenue losses of approximately $8,000 per year resulting from itemized taxpayer deductions.

SUPPORT: (Verified 8/12/16)

None received

OPPOSITION: (Verified 8/12/16)

Department of Finance

ARGUMENTS IN SUPPORT: According to the author, “One of the most critical issues facing residents of Southern California and the 28th Senate District is the restoration of the Salton Sea. In May of 2015, Governor Brown created the Salton Sea Task Force to begin the important work of implementing the Salton Sea management plan, and create short and long term goals protect the regional air quality and the natural resources at the Sea. SB 1416 is designed to complement the on-going work of the Task Force by creating the Revive the Salton Sea Fund, which would be a tax check-off fund found on one’s State Income Tax Form. The money collected from the check-off would be used to help fund the restoration and maintenance of the Salton Sea, and provide public awareness.”

ARGUMENTS IN OPPOSITION: Opponent argues that this bill is of limited value and results in a loss to the General Fund. Additionally, it is unclear why special preference should be given to one organization over the countless others that are not on the tax form.

ASSEMBLY FLOOR: 78-0, 8/11/16

AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon

NO VOTE RECORDED: Roger Hernández, Low

Prepared by:

8/12/16 13:23:55

**** END ****

Date of Hearing: August 3, 2016

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

SBPCA Bill Id:SB 1416

Author:(Stone) – As Amended Ver:June 15, 2016

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

SUMMARY:

This bill authorizes the addition of the Revive the Salton Sea Fund (Fund) as a voluntary contribution fund (VCF) on the personal income tax (PIT) return. Specifically, this bill:

1. Requires all money transferred to the Fund, upon appropriation by the Legislature, to be allocated as follows:
   
   1. To the Franchise Tax Board (FTB) and the State Controller’s Office (SCO) for reimbursement of all costs incurred in administering the VCF;
      
   2. To the Natural Resources Agency for distribution of competitive grants to provide funds or supplement funding of state, county and local agencies, nonprofit organizations, and projects identified as necessary for the restoration and maintenance of the Salton Sea, including projects identified by the Salton Sea Authority; and,
      
   3. Up to 5% of the funds to the Natural Resources Agency for development of a mechanism to provide ongoing public awareness through activities that will promote the charitable tax deduction for the Fund and seek continued contributions
2. Requires the Fund to meet a standard minimum contribution amount of $250,000 indexed for inflation in subsequent years.
   
3. Provides that the Fund's statutory provisions shall remain operative only until January 1 of the fifth taxable year following the Fund's first appearance on the PIT return.
   

FISCAL EFFECT:

Minor ongoing GF revenue losses of approximately $8,000 per year resulting from itemized taxpayer deductions.

COMMENTS:

1. The Salton Sea. The Salton Sea is California's largest lake with an area of 365 square miles. The Salton Sea formed in 1904 when the Colorado River flooded into the dry Salton Trough. The Salton Sea has no outlet, causing minerals flowing into the lake to become concentrated. As a result, the Salton Sea's water is roughly 1.5 times saltier than ocean water.

In compliance with a legal settlement on water known as the Quantitative Settlement Agreement, nearly a third of the inflow to the Salton Sea will bypass the region due to transfer of Colorado River water from regional agriculture to urban use in San Diego, beginning in 2017. There is considerable concern that this will result in the exposure of the lake's dusty shoreline causing a decrease in air quality. In addition, there is concern that the remaining lake will see an acceleration of salinity, causing a potential collapse of the lake's ecosystem. Currently, the lake is home to North America's largest population of migratory waterfowl outside the Everglades.

1. Purpose. According to the author, SB 1416 will complement the ongoing work by the Salton Sea Task Force. This Task Force was created in 2015 to implement the Salton Sea Management Program, which aims to restore habitat areas and minimize air pollution. The author notes that the money collected from this VCF will help fund the restoration and maintenance of the Salton Sea, and provide public awareness about the issues facing the region.
2. Background on VCFs. Current state tax law allows taxpayers to make contributions on their tax returns to a number of VCFs. Like many other VCFs, SB 1416 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). Moreover, like other VCFs, SB 1416 would establish an administrating agency: The money deposited into the Fund are allocated to the Natural Resources Agency for distribution of grants.
3. New VCF Bills in 2016. Four Assembly bills were introduced in 2016 that would either extend existing VCFs or create new ones. Those bills are all pending in the Senate Appropriations Committee.
4. AB 1789 (Santiago) extends the voluntary contribution for the School Supplies for Homeless Children Fund.
5. AB 2371 (Frazier) adds a voluntary contribution for the Special Olympics Fund.
6. AB 2430 (Beth Gaines) adds a voluntary contribution for the Type 1 Diabetes Research Fund.
7. AB 2497 (Wagner) repeals the voluntary contribution for the California Senior Legislature Fund and replaces it with a voluntary contribution for the California Senior Citizen Advocacy Fund.

Moreover, SB 1476 (Committee on Governance and Finance), which is currently pending on the Assembly Floor, 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.

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

Date of Hearing: June 20, 2016

ASSEMBLY COMMITTEE ON REVENUE AND TAXATION

Sebastian Ridley-Thomas, Chair

SBPCA Bill Id:SB 1416

Author:(Stone) – As Amended Ver:June 15, 2016

Majority vote. Fiscal committee.

SENATE VOTE: 37-0

SUBJECT: Voluntary contribution: Revive the Salton Sea Fund

SUMMARY: Authorizes the addition of the Revive the Salton Sea Fund (Fund) as a voluntary contribution fund (VCF) on the personal income tax (PIT) return. Specifically, this bill:

1. Establishes the new Fund in the State Treasury.
2. Allows a deduction for any contribution made to the Fund.
3. Provides that all money transferred to the Fund, upon appropriation by the Legislature, shall be allocated as follows:
   
   1. To the Franchise Tax Board (FTB) and the Controller for reimbursement of all costs incurred in administering the VCF;
      
   2. To the Natural Resources Agency for distribution of competitive grants to provide funds or supplement funding of state, county and local agencies, nonprofit organizations, and projects identified as necessary for the restoration and maintenance of the Salton Sea, including projects identified by the Salton Sea Authority; and,
      
   3. Up to 5% of the funds to the Natural Resources Agency for development of a mechanism to provide ongoing public awareness through activities that will promote the charitable tax deduction for the Fund and seek continued contributions. These activities may include convening a philanthropic roundtable, developing literature for use by city, county, or local agencies and programs, and whatever other activities are deemed necessary and appropriate to promote the Fund.
      
4. Provides that specified Fund moneys shall not be used for administrative costs.
   
5. Provides that money in the Fund shall not be used to supplant state General Fund money for any purpose.
   
6. Requires the Fund to meet a standard minimum contribution amount of $250,000 indexed for inflation in subsequent years.
   
7. Provides that the Fund's statutory provisions shall remain operative only until January 1 of the fifth taxable year following the Fund's first appearance on the PIT return.
   

EXISTING LAW:

1. Allows taxpayers to contribute to one or more of 19 VCFs on the 2015 PIT return.
2. Provides a specific sunset date for each VCF, except for the California Seniors Special Fund and the State Parks Protection Fund.
   
3. Requires each VCF to meet an annual minimum contribution amount to remain in effect, except for the California Seniors Special Fund, the California Firefighters' Memorial Fund, and the California Peace Officer Memorial Foundation Fund.

FISCAL EFFECT: The FTB estimates that this bill would reduce General Fund revenues by $8,000 beginning in fiscal year 2017-18.

COMMENTS:

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

One of the most critical issues facing residents of Southern California and the 28^th Senate District is the restoration of the Salton Sea.  In May of 2015, Governor Brown created the Salton Sea Task Force to begin the important work of implementing the Salton Sea management plan, and create short and long term goals [to] protect the regional air quality and the natural resources at the Sea.  SB 1416 is designed to complement the on-going work of the Task Force by creating the Revive the Salton Sea Fund, which would be a tax check-off [fund] found on one's State Income Tax Form.  The money collected from the check-off would be used to help fund the restoration and maintenance of the Salton Sea, and provide public awareness.

1. Committee staff comments:
   1. The Salton Sea: The Salton Sea, situated in Riverside and Imperial Counties, is California's largest lake with an area of 365 square miles. For thousands of years, the Colorado River washed sediment and flood waters into the Gulf of California, eventually creating a large sea known as Lake Cahuilla where the Salton Sea is now. Lake Cahuilla, in turn, flooded, receded, and evaporated many times throughout its history. The Salton Sea formed in 1904 when the Colorado River flooded into the dry Salton Trough. The Salton Sea has no outlet, causing minerals flowing into the lake to become concentrated. As a result, the Salton Sea's water is roughly 1.5 times saltier than ocean water.

In compliance with a legal settlement on water known as the Quantitative Settlement Agreement, nearly a third of the inflow to the Salton Sea will bypass the region due to transfer of Colorado River water from regional agriculture to urban use in San Diego, beginning in 2017. There is considerable concern that this will result in the exposure of the lake's dusty shoreline causing a decrease in air quality. In addition, there is concern that the remaining lake will see an acceleration of salinity, causing a potential collapse of the lake's ecosystem. Currently, the lake is home to North America's largest population of migratory waterfowl outside the Everglades.

• 1. What would this bill do? This bill would establish the Fund as a new VCF on the PIT return. Moneys in the Fund would be allocated to the Natural Resources Agency for distribution of competitive grants to state, county and local agencies, nonprofit organizations, and projects identified as necessary for the restoration and maintenance of the Salton Sea.
  2. So many causes, so little space: There are countless worthy causes that would benefit from the inclusion of a new VCF on the state's income tax returns. At the same time, space on the return is limited. Thus, it could be argued that the current system for adding VCFs to the form is subjective and essentially rewards causes that can convince the Legislature to include their fund on the form.

REGISTERED SUPPORT / OPPOSITION:

Support

None on file

Opposition

None on file

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

 THIRD READING  

Bill No: SB 1416

Author: , et al.

:

Vote:

SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 4/20/16

AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach, Pavley

SENATE APPROPRIATIONS COMMITTEE: 6-0, 5/9/16

AYES: Lara, Beall, Hill, McGuire, Mendoza, Nielsen

NO VOTE RECORDED: Bates

SUBJECT:

SOURCE: Author

DIGEST: This bill authorizes the addition of the Revive the Salton Sea Fund check-off to the personal income tax return.

Senate Floor Amendments of 5/23/16 add coauthors and make a technical change.

ANALYSIS:

Existing law:

1. 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.
2. Allows contribution amounts to be claimed as charitable contributions on taxpayers’ tax returns in the subsequent year.
3. Requires that 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 amounts are adjusted annually for inflation. For most VCFs, the minimum contribution amount is $250,000, beginning in the fund’s second year. The following check-offs do not have a minimum contribution requirement:
   1. California Firefighters’ Memorial Foundation Fund,
   2. California Peace Officer Memorial Foundation Fund, and
   3. California Seniors Special Fund.

This bill:

1. Adds the Revive the Salton Sea Fund (Fund), and allows a taxpayer to make a voluntary contribution to the Fund on the state personal income tax return.
2. Provides that all money transferred to the Fund, upon appropriation by the Legislature, be allocated as follows:
   1. To the Franchise Tax Board (FTB) and the State Controller for reimbursement of all costs incurred in administering the VCF.
   2. To the Natural Resources Agency, to be used to fund or supplement funding of state, county, and local agencies and projects identified as necessary for the restoration and maintenance of the Salton Sea, including projects identified by the Salton Sea Authority.
   3. Up to five percent of the funds allocated to the Fund shall be used for the development of a mechanism to provide ongoing public awareness through activities that will promote the charitable tax deduction for the Fund and seek continued contributions.

Background

When a taxpayer contributes to VCFs, the 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.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee, the FTB estimates that this bill will result in an annual General Fund revenue loss of $8,000 for every $250,000 contributed by itemizing taxpayers.

SUPPORT: (Verified 5/11/16)

None received

OPPOSITION: (Verified 5/11/16)

None received

ARGUMENTS IN SUPPORT: According to the author, “One of the most critical issues facing residents of Southern California and the 28th Senate District is the restoration of the Salton Sea. In May of 2015, Governor Brown created the Salton Sea Task Force to begin the important work of implementing the Salton Sea management plan, and create short and long term goals protect the regional air quality and the natural resources at the Sea. SB 1416 is designed to complement the on-going work of the Task Force by creating the Revive the Salton Sea Fund, which would be a tax check-off fund found on one’s State Income Tax Form. The money collected from the check-off would be used to help fund the restoration and maintenance of the Salton Sea, and provide public awareness.”

Prepared by:

5/25/16 13:50:31

**** END ****

 THIRD READING  

Bill No: SB 1416

Author:

:

Vote:

SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 4/20/16

AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach, Pavley

SENATE APPROPRIATIONS COMMITTEE: 6-0, 5/9/16

AYES: Lara, Beall, Hill, McGuire, Mendoza, Nielsen

NO VOTE RECORDED: Bates

SUBJECT:

SOURCE: Author

DIGEST: This bill authorizes the addition of the Revive the Salton Sea Fund check-off to the personal income tax return.

ANALYSIS:

Existing law:

1. 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.
2. Allows contribution amounts to be claimed as charitable contributions on taxpayers’ tax returns in the subsequent year.
3. Requires that 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 amounts are adjusted annually for inflation. For most VCFs, the minimum contribution amount is $250,000, beginning in the fund’s second year. The following check-offs do not have a minimum contribution requirement:
   1. California Firefighters’ Memorial Foundation Fund,
   2. California Peace Officer Memorial Foundation Fund, and
   3. California Seniors Special Fund.

This bill:

1. Adds the Revive the Salton Sea Fund (Fund), and allows a taxpayer to make a voluntary contribution to the Fund on the state personal income tax return.
2. Provides that all money transferred to the Fund, upon appropriation by the Legislature, be allocated as follows:
   1. To the Franchise Tax Board (FTB) and the State Controller for reimbursement of all costs incurred in administering the VCF.
   2. To the Natural Resources Agency, to be used to fund or supplement funding of state, county, and local agencies and projects identified as necessary for the restoration and maintenance of the Salton Sea, including projects identified by the Salton Sea Authority.
   3. Up to five percent of the funds allocated to the Fund shall be used for the development of a mechanism to provide ongoing public awareness through activities that will promote the charitable tax deduction for the Fund and seek continued contributions.

Background

When a taxpayer contributes to VCFs, the 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.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee, the FTB estimates that this bill will result in an annual General Fund revenue loss of $8,000 for every $250,000 contributed by itemizing taxpayers.

SUPPORT: (Verified 5/11/16)

None received

OPPOSITION: (Verified 5/11/16)

None received

ARGUMENTS IN SUPPORT: According to the author, “One of the most critical issues facing residents of Southern California and the 28th Senate District is the restoration of the Salton Sea. In May of 2015, Governor Brown created the Salton Sea Task Force to begin the important work of implementing the Salton Sea management plan, and create short and long term goals protect the regional air quality and the natural resources at the Sea. SB 1416 is designed to complement the on-going work of the Task Force by creating the Revive the Salton Sea Fund, which would be a tax check-off fund found on one’s State Income Tax Form. The money collected from the check-off would be used to help fund the restoration and maintenance of the Salton Sea, and provide public awareness.”

Prepared by:

5/11/16 15:44:22

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SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

SB 1416 (Stone) - Voluntary contribution: Revive the Salton Sea Fund

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

Bill Summary: AB 1416 would authorize the addition of the Revive the Salton Sea Fund check-off to the personal income tax return.

Fiscal Impact:

• The Franchise Tax Board (FTB) estimates that this bill would result in an annual revenue loss of $8,000 (General Fund) for every $250,000 contributed by itemizing taxpayers.
• The Natural Resources Agency would incur minor and absorbable costs to administer the program and provide grants.
• The State Controller’s Office 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 (tax check-off). 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.

Proposed Law: This bill would create the Revive the Salton Sea Fund (Fund), and allow a taxpayer to make a voluntary contribution to the Fund on the state personal income tax return. 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 check-off, (2) to the Natural Resources Agency, for the distribution of grants, as provided, and (3) up to five percent for the development of a mechanism to provide ongoing public awareness through activities that will promote the charitable tax deduction for the Fund and seek continued contributions, as specified. Like most other check-offs, the Fund would be required to meet a minimum contribution amount of $250,000, adjusted annually for inflation. It would not appear on the tax return until another voluntary contribution designation is removed, or space is available, and would sunset five years later.

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 at the Assembly Desk awaiting committee referral.

Staff Comments: FTB data indicate that in 2012, 89,335 out of 15 million taxpayers contributed a total of $4.8 million via tax check-offs.

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SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Robert M. Hertzberg, Chair

2015 - 2016 Regular

Personal income taxes: voluntary contribution: the Salton Sea

Authorizes the addition of the Revive the Salton Sea 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

Senate Bill 1416 adds the Revive the Salton Sea Fund (Fund), and allows a taxpayer to make a voluntary contribution to the Fund on the state personal income tax return.

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 Revive the Salton Sea, a California non-profit corporation, to be used to fund or supplement funding of state, county, and local agencies and projects identified as necessary for the restoration and maintenance of the Salton Sea, including projects identified by the Salton Sea Authority.
• Up to 5 percent of the funds allocated to the Revive the Salton Sea Fund shall be used for the development of a mechanism to provide ongoing public awareness through activities that will promote the charitable tax deduction for the fund and seek continued contributions.

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, “One of the most critical issues facing residents of Southern California and the 28^th Senate District is the restoration of the Salton Sea. In May of 2015, Governor Brown created the Salton Sea Task Force to begin the important work of implementing the Salton Sea management plan, and create short and long term goals protect the regional air quality and the natural resources at the Sea. SB 1416 is designed to complement the on-going work of the Task Force by creating the Revive the Salton Sea Fund, which would be a tax check-off fund found on one’s State Income Tax Form. The money collected from the check-off would be used to help fund the restoration and maintenance of the Salton Sea, and provide public awareness.”

2. 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.

3. 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.

4. Not like the others. Generally, tax check-offs are administered by a state agency, have a five year sunset, and are subject to a yearly minimum contribution threshold that begins the second year a tax check-off is on the income tax form and is adjusted yearly for inflation. These provisions ensure transparency, viability, and allow the Legislature to review tax check-offs periodically. SB 1416 does not contain any of these provisions. The Committee may wish to consider amending the bill to include an administering state agency, a sunset, and a minimum contribution amount.

5. Related Legislation. SB 1476 (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 this Committee on April 20, 2016.

Support and Opposition

(4/13/16)

Support: Unknown.

Opposition: Unknown.

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