Existing law allows individuals, until January 1, 2018, to designate on their personal income tax return that a specified amount in excess of their tax liability be contributed to the California Breast Cancer Research Fund, which is subject to appropriation by the Legislature, to be allocated to the Franchise Tax Board, the Controller, and the University of California for purposes of carrying out these provisions.

Existing law also allows individuals, until January 1, 2018, to designate on their tax returns that a specified amount in excess of their tax liability be contributed to the California Cancer Research Fund, which is subject to appropriation by the Legislature, to be allocated to the Franchise Tax Board, the Controller, and the University of California for purposes of carrying out these provisions. Existing law requires that each of these funds equal or exceed a minimum contribution amount, which initially was $250,000 and which was required to be and has been adjusted for inflation.

Existing law provides that when extending the operation of these voluntary tax contribution funds the words voluntary tax contribution be included in the name of the fund, that the administering agency comply with specified Internet Web site reporting requirements, that the fund provisions remain in effect only until January 1 of the 7th calendar year following the first appearance of the voluntary tax contribution on the personal income tax return, that the required calendar year minimum contribution amount for the fund to continue appearing on the return is $250,000, and that the contributions be continuously appropriated from the fund to the administering entity.

This bill would extend the operation of each funds provisions to January 1, 2025, and would conform to the above provisions by renaming the funds as the California Breast Cancer Research Voluntary Tax Contribution Fund and the California Cancer Research Voluntary Tax Contribution Fund, respectively, by continuously appropriating those funds to the Franchise Tax Board, the Controller, and the University of California for purposes of carrying out each funds provisions, and by requiring each fund to equal or exceed an unadjusted $250,000 minimum contribution amount to continue appearing on the return. By continuously appropriating these funds, the bill would make an appropriation. The bill would also provide that the Legislature requests the University of California and the Regents of the University of California, respectively, to post on their Internet Web sites the process for awarding money, the amount of money spent on administration, and an itemization of how program funds were awarded, including, but not limited to, information regarding recipients of funds.

Existing law allows individuals, until January 1, 2018, to designate on their personal income tax return that a specified amount in excess of their tax liability be contributed to the California Breast Cancer Research Fund, which is subject to appropriation by the Legislature, to be allocated to the Franchise Tax Board, the Controller, and the University of California for purposes of carrying out these provisions.

Existing law also allows individuals, until January 1, 2018, to designate on their tax returns that a specified amount in excess of their tax liability be contributed to the California Cancer Research Fund, which is subject to appropriation by the Legislature, to be allocated to the Franchise Tax Board, the Controller, and the University of California for purposes of carrying out these provisions. Existing law requires that each of these funds equal or exceed a minimum contribution amount, which initially was $250,000 and which was required to be and has been adjusted for inflation.

Existing law provides that when extending the operation of these voluntary tax contribution funds the words voluntary tax contribution be included in the name of the fund, that the administering agency comply with specified Internet Web site reporting requirements, that the fund provisions remain in effect only until January 1 of the 7th calendar year following the first appearance of the voluntary tax contribution on the personal income tax return, that the required calendar year minimum contribution amount for the fund to continue appearing on the return is $250,000, and that the contributions be continuously appropriated from the fund to the administering entity.

This bill would extend the operation of each funds provisions to January 1, 2025, and would conform to the above provisions by renaming the funds as the California Breast Cancer Research Voluntary Tax Contribution Fund and the California Cancer Research Voluntary Tax Contribution Fund, respectively, by continuously appropriating those funds to the Franchise Tax Board, the Controller, and the University of California for purposes of carrying out each funds provisions, and by requiring each fund to equal or exceed an unadjusted $250,000 minimum contribution amount to continue appearing on the return. By continuously appropriating these funds, the bill would make an appropriation. The bill would also provide that the Legislature requests the University of California and the Regents of the University of California, respectively, to post on their Internet Web sites the process for awarding money, the amount of money spent on administration, and an itemization of how program funds were awarded, including, but not limited to, information regarding recipients of funds.

Existing law allows individuals, until January 1, 2018, to designate on their personal income tax return that a specified amount in excess of their tax liability be contributed to the California Breast Cancer Research Fund, which is subject to appropriation by the Legislature, to be allocated to the Franchise Tax Board, the Controller, and the University of California for purposes of carrying out these provisions.

Existing law also allows individuals, until January 1, 2018, to designate on their tax returns that a specified amount in excess of their tax liability be contributed to the California Cancer Research Fund, which is subject to appropriation by the Legislature, to be allocated to the Franchise Tax Board, the Controller, and the University of California for purposes of carrying out these provisions. Existing law requires that each of these funds equal or exceed a minimum contribution amount, which initially was $250,000 and which was required to be and has been adjusted for inflation.

Existing law provides that when extending the operation of these voluntary tax contribution funds the words voluntary tax contribution be included in the name of the fund, that the administering agency comply with specified Internet Web site reporting requirements, that the fund provisions remain in effect only until January 1 of the 7th calendar year following the first appearance of the voluntary tax contribution on the personal income tax return, that the required calendar year minimum contribution amount for the fund to continue appearing on the return is $250,000, and that the contributions be continuously appropriated from the fund to the administering entity.

This bill would extend the operation of each funds provisions to January 1, 2025, and would conform to the above provisions by renaming the funds as the California Breast Cancer Research Voluntary Tax Contribution Fund and the California Cancer Research Voluntary Tax Contribution Fund, respectively, by continuously appropriating those funds to the Franchise Tax Board, the Controller, and the University of California for purposes of carrying out each funds provisions, and by requiring each fund to equal or exceed an unadjusted $250,000 minimum contribution amount to continue appearing on the return. By continuously appropriating these funds, the bill would make an appropriation. The bill would also provide that the Legislature requests the University of California and the Regents of the University of California, respectively, post on their Internet Web sites the process for awarding money, the amount of money spent on administration, and an itemization of how program funds were awarded, including, but not limited to, information regarding recipients of funds.

Existing law allows taxpayers, individuals, until January 1, 2018, to designate on their personal income tax return that a specified amount in excess of their tax liability be contributed to the California Breast Cancer Research Fund, which is subject to appropriation by the Legislature, to be allocated to the Franchise Tax Board, the Controller, and the University of California for purposes of carrying out these provisions.

Existing law also allows taxpayers, individuals, until January 1, 2018, to designate on their tax returns that a specified amount in excess of their tax liability be contributed to the California Cancer Research Fund, which is subject to appropriation by the Legislature, to be allocated to the Franchise Tax Board, the Controller, and the University of California for purposes of carrying out these provisions. Existing law requires that each of these funds equal or exceed a minimum contribution amount, which initially was $250,000 and which was required to be and has been adjusted for inflation.

Existing law requires provides that when extending the operation of these voluntary tax contribution funds the words voluntary tax contribution be included in the name of the fund, that the administering agency comply with specified Internet Web site reporting requirements, that the fund provisions remain in effect only until January 1 of the 7th calendar year following the first appearance of the voluntary tax contribution on the personal income tax return, that the required calendar year minimum contribution amount for the fund to continue appearing on the return is $250,000, and that the contributions be continuously appropriated from the fund to the administering entity.

This bill would conform with those requirements by extending extend the operation of each funds provisions to January 1, 2025, and would conform to the above provisions by renaming each fund the funds as the California Breast Cancer Research Voluntary Tax Contribution Fund and the California Cancer Research Voluntary Tax Contribution Fund, respectively, and by continuously appropriating those funds to the Franchise Tax Board, the Controller, and the University of California for purposes of carrying out each funds provisions. The bill would also require provisions, and by requiring each fund to equal or exceed an unadjusted $250,000 minimum contribution amount. amount to continue appearing on the return. By continuously appropriating these funds, the bill would make an appropriation.

Existing law allows taxpayers, until January 1, 2018, to designate on their personal income tax return that a specified amount in excess of their tax liability be contributed to the California Breast Cancer Research Fund, which is subject to appropriation by the Legislature, to be allocated to the Franchise Tax Board, the Controller, and the University of California for purposes of carrying out these provisions.

Existing law also allows taxpayers, until January 1, 2018, to designate on their tax returns that a specified amount in excess of their tax liability be contributed to the California Cancer Research Fund, which is subject to appropriation by the Legislature, to be allocated to the Franchise Tax Board, the Controller, and the University of California for purposes of carrying out these provisions. Existing law requires that each of these funds equal or exceed a minimum contribution amount, which initially was $250,000 and which was required to be and has been adjusted for inflation.

Existing law requires that when extending the operation of these voluntary tax contribution funds the words voluntary tax contribution be included in the name of the fund, that the administering agency comply with specified Internet Web site reporting requirements, that the fund provisions remain in effect only until January 1 of the 7th calendar year following the first appearance of the voluntary tax contribution on the personal income tax return, that the required calendar year minimum contribution amount for the fund to continue appearing on the return is $250,000, and that the contributions be continuously appropriated from the fund to the administering entity.

This bill would conform with those requirements by extending the operation of each funds provisions to January 1, 2025, renaming each fund as the California Breast Cancer Research Voluntary Tax Contribution Fund and the California Cancer Research Voluntary Tax Contribution Fund, respectively, and continuously appropriating those funds to the Franchise Tax Board, the Controller, and the University of California for purposes of carrying out each funds provisions. The bill would also require each fund to equal or exceed an unadjusted $250,000 minimum contribution amount. By continuously appropriating these funds, the bill would make an appropriation.

 UNFINISHED BUSINESS  

Bill No: SB 440

Author:

:

Vote:

SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 3/22/17

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

SENATE APPROPRIATIONS COMMITTEE: 7-0, 4/3/17

AYES: Lara, Bates, Beall, Bradford, Hill, Nielsen, Wiener

SENATE FLOOR: 39-0, 4/6/17

AYES: Allen, Anderson, Atkins, Bates, Beall, Bradford, Cannella, De León, Dodd, Fuller, Gaines, Galgiani, Glazer, Hernandez, Hertzberg, Hill, Hueso, Jackson, Lara, Leyva, McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell, Newman, Nguyen, Nielsen, Pan, Portantino, Roth, Skinner, Stern, Stone, Vidak, Wieckowski, Wiener, Wilk

NO VOTE RECORDED: Berryhill

ASSEMBLY FLOOR: 76-0, 8/24/17 (Consent) - See last page for vote

SUBJECT:

SOURCE: American Cancer Society, California

University of California

DIGEST:

This bill renames two existing voluntary contribution funds (VCFs) on the personal income tax return benefitting cancer research, extends the sunset date on both funds from January 1, 2018, to January 1, 2025, continuously appropriates the money in the funds to offset state administrative costs and to the University of California (UC) for cancer research, and makes other operational changes.

Assembly Amendments

add a provision stating that the Legislature requests the UC to report on its Internet Web site the process for awarding money, the amount of money spent on administration, and an itemization of how program funds were awarded, including, but not limited to, information regarding recipients of funds.

ANALYSIS: Existing law allows taxpayers to contribute money to VCFs by checking a box on their state income tax returns. Contributions made through VCFs are made from taxpayers’ own resources and not from their tax liability. There are currently 20 check-offs listed on the tax return form.

This bill:

1. Adds the words "Voluntary Tax Contribution" to the names of two existing VCFs, renaming them the California Breast Cancer Research Voluntary Tax Contribution Fund (CBCRF) and the California Cancer Research Voluntary Tax Contribution Fund (CCRF).
2. Requires all money transferred to the CBCRF and CCRF to be continuously appropriated and allocated (instead of allocated upon appropriation of the Legislature), to the Franchise Tax Board and State Controller to offset state administrative costs and to the UC for cancer research.
3. Extends the sunset date of the CBCRF and CCRF to January 1, 2025 (from January 1, 2018).
4. Resets the minimum contribution threshold the CBCRF and CCRF must meet to remain on the tax return to $250,000 and deletes the existing inflation adjustment for the minimum contribution threshold.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Assembly Appropriations Committee, minor ongoing General Fund revenue losses of up to $30,000 per year resulting from itemized taxpayer deductions beginning in 2018-19.

SUPPORT: (Verified 8/25/17)

American Cancer Society, California (co-source)

University of California (co-source)

American Congress of Obstetricians and Gynecologists, District IX

Breast Cancer Action

Breast Cancer Care & Research Fund

California Breast Cancer Organizations

California Life Sciences Association

City of Hope

OPPOSITION: (Verified 8/25/17)

None received

ASSEMBLY FLOOR: 76-0, 8/24/17

AYES: Acosta, Arambula, Baker, Berman, Bigelow, Bloom, Bocanegra, Bonta, Brough, Burke, Caballero, Calderon, Cervantes, Chau, Chávez, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dababneh, Dahle, Daly, Eggman, Flora, Fong, Frazier, Friedman, Gallagher, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gonzalez Fletcher, Gray, Grayson, Harper, Holden, Irwin, Jones-Sawyer, Kalra, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Quirk, Quirk-Silva, Reyes, Ridley-Thomas, Rodriguez, Rubio, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Voepel, Waldron, Weber, Wood, Rendon

NO VOTE RECORDED: Aguiar-Curry, Travis Allen, McCarty

Prepared by:

8/25/17 13:13:20

**** END ****

Date of Hearing: July 19, 2017

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

SBPCA Bill Id:SB 440

Author:(Hertzberg) – As Amended Ver:June 28, 2017

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

SUMMARY:

This bill extends and recasts the California Breast Cancer Research Fund and California Cancer Research Fund, two existing voluntary contribution funds (VCFs) on the state personal income tax return. Specifically, this bill:

1. Requires that all money transferred to both VCFs be continuously appropriated to the Franchise Tax Board (FTB) and the State Controller for reimbursement of administrative costs, and that remaining money be transferred to the University of California (UC) for cancer research funding.
2. Requests UC to report on how funds were allocated and repeals the VCFs on January 1, 2025, or if annual contribution amounts are less than $250,000.

FISCAL EFFECT:

1. Minor ongoing GF revenue losses of up to $30,000 per year resulting from itemized taxpayer deductions beginning in 2018-19.
2. Modest administrative costs for the FTB, State Controller, and UC for administering the VCFs.

COMMENTS:

1. Purpose. According to the author, SB 440 will ensure that individuals can continue to make donations that support research that helps advance our understanding of cancer.
2. Recent changes to VCF policy. The proliferation of VCFs and the lack of consistency around their design and implementation resulted in SB 1476 (Senate Committee on Government and Finance), Chapter 597, Statutes of 2016, which established various administrative guidelines for all future or renewed VCFs. SB 1476 set a minimum contribution amount of $250,000 (not adjusted for inflation), lengthened the current five-year sunset to seven years, provided for the continuous appropriation of funds, and required that specified information be made public. SB 440 complies with SB 1476’s new VCF guidelines.
3. Related legislation. AB 280 (Low), which establishes the Rape Kit Back Log Voluntary Tax Contribution Fund, AB 846 (Cooley), which establishes the California YMCA Youth and Government Voluntary Tax Contribution Fund, and AB 519 (Levine), which establishes the California Senior Citizen Advocacy Fund, are pending on the Senate floor. Moreover, SB 61 (Hertzberg), which recasts and extends the Emergency Food for Families Fund, is being heard today and SB 503 (Newman), which extends the Keep Arts in Schools Fund, is pending a hearing in this committee.

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

Date of Hearing: June 19, 2017

ASSEMBLY COMMITTEE ON REVENUE AND TAXATION

Sebastian Ridley-Thomas, Chair

SBPCA Bill Id:SB 440

Author:(Hertzberg) – As Amended Ver:June 12, 2017

Majority vote. Fiscal committee.

SENATE VOTE: 39-0

SUBJECT: Personal income taxes: voluntary contributions: California Breast Cancer Research Voluntary Tax Contribution Fund and California Cancer Research Voluntary Tax Contribution Fund

SUMMARY: Renames the existing California Breast Cancer Research Fund and California Cancer Research Fund on the state personal income tax (PIT) return, extends the sunset date of both funds to January 1, 2025, and makes other operational changes to both funds. Specifically, this bill:

1. Adds the words "Voluntary Tax Contribution" to the names of two existing voluntary contribution funds (VCFs), renaming them the California Breast Cancer Research Voluntary Tax Contribution Fund (CBCRF) and the California Cancer Research Voluntary Tax Contribution Fund (CCRF).
2. Deletes existing provisions of law regarding the addition and order of the CBCRF and CCRF on the PIT return.
3. Requires all money transferred to the CBCRF and CCRF to be continuously appropriated and allocated (instead of allocated upon appropriation of the Legislature), as specified.
4. Extends the sunset date of the CBCRF and CCRF to January 1, 2025 (from January 1, 2018).
5. Resets the minimum contribution threshold the CBCRF and CCRF must meet to remain on the PIT return to $250,000 and deletes the existing inflation adjustment for the minimum contribution threshold.

EXISTING LAW:

1. Allows taxpayers to designate on their state PIT returns a contribution to any of the 19 VCFs on the 2016 PIT return, including the CBCRF and CCRF.
2. Establishes the CBCRF, with all received contributions allocated, upon appropriation by the Legislature, as follows:
3. To the Franchise Tax Board (FTB) and State Controller for reimbursement of all costs incurred in connection with administering the VCF; and,
4. To the University of California (UC) for support of the Breast Cancer Research Program, as specified, for purposes related solely to breast cancer research. The UC may use up to 5% of allocated funds for administering and promoting the program.
5. Establishes the CCRF, with all received contributions allocated, upon appropriation by the Legislature, as follows:
6. To the FTB and State Controller for reimbursement of all costs incurred in connection with administering the VCF; and,
7. To the Regents of the UC for distribution of grants for the purposes of conducting research on the causes and treatments for cancer, expanding community-based education on cancer, and providing culturally sensitive and appropriate prevention and awareness activities targeted toward communities that are disproportionately at risk or afflicted by cancer. The Regents may use allocated funds for reimbursement of any costs incurred administering the grants.
8. Provides the following requirements for new or extended VCFs that take effect on or after January 2, 2017:
9. Requires the words "voluntary tax contribution" to be included as part of the name of the fund.
10. Requires the administering agency's Internet Web site to report the process for awarding money, the amount of money spent on administration, and an itemization of how program funds were awarded by the agency, including information regarding recipients of funds.
11. Provides, unless otherwise specified, for each VCF's automatic sunset on January 1 of the seventh calendar year following the VCF's first appearance on the PIT return.
12. Requires each VCF to meet a minimum contribution threshold of $250,000 in the second calendar year and each subsequent year to remain on the PIT return.
13. Requires contributions made to each VCF to be continuously appropriated to the administering agency to be spent, as specified.
14. Provides a specific sunset date for each VCF, except for the California Seniors Special Fund and the State Parks Protection Fund. The CBCRF and CCRF have sunset dates of January 1, 2018.
15. Provides that the minimum annual contribution amounts required to remain in effect do not apply to the California Seniors Special Fund, the California Firefighters' Memorial Fund, and the California Peace Officer Memorial Foundation Fund. The CBCRF and CCRF must meet a minimum contribution threshold of $250,000 indexed for inflation to remain on the PIT return.

FISCAL EFFECT: The FTB estimates General Fund revenue losses of $30,000 for fiscal year (FY) 2018-19 and $30,000 for FY 2019-20 ($13,000 annually from the CBCRF's sunset date extension and $17,000 annually from the CCRF's sunset date extension).

COMMENTS:

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

SB 440 ensures that individuals can continue to make these voluntary donations that pay for rigorous scientific research that helps advance our understanding of cancer, how it works and how we can defeat it. The proposed legislation would bring revenue to UC for the purposes of cancer research and would not add new administrative costs either to the UC or to the state.

1. The UC, co-sponsor of this bill, states the following in support:

The CBCRF and CCRF are administered by the California Breast Cancer Research Program and the Tobacco-Related Disease Research Program in the UC Office of the President. Approximately 30,000 individuals donate annually to each fund. Each fund provides approximately $400,000 annually, which the programs use to support high-impact research…on topics such as identifying environmental factors that may cause breast cancer, as well as exploring the potential of natural products in preventing and treating breast cancer. The cancer research funds have supported lung cancer research, in particular new technologies for early detection and innovative strategies for reducing the cancer burden in disproportionately impacted communities.

1. Committee Staff Comments:
2. Existing VCFs – the CBCRF and CCRF: The CBCRF initially appeared on the state PIT return in 1992 and its sunset date has been extended several times. As such, its minimum contribution requirement for 2017 to stay on the PIT return is $384,464. The CBCRF received total annual contributions of $424,906 in 2015 and total annual contributions of $393,808 in 2016. Contributions made to the CBCRF are first allocated to the FTB and State Controller for reimbursement of all costs incurred in connection with administering the VCF. Second, funds are allocated to the UC for support of the Breast Cancer Research Program, with the UC authorized to use up to 5% of allocated funds for administering and promoting the program.

The CCRF initially appeared on the state PIT return in 2008 and its minimum contribution requirement for 2017 to stay on the PIT return is $283,781. The CCRF received total annual contributions of $472,423 in 2015 and total annual contributions of $507,071 in 2016. After funds are allocated to the FTB and State Controller for reimbursement of all costs incurred in connection with administering the VCF, funds are allocated to the UC for distribution of grants for the purposes of conducting research on the causes and treatments for cancer, expanding community-based education on cancer, and providing culturally sensitive prevention and awareness activities targeted toward communities disproportionately at risk or afflicted by cancer. The Regents may use allocated funds for reimbursement of any costs incurred administering the grants.

1. New VCF Requirements: On December 9, 2015, the Senate Governance and Finance Committee held an oversight hearing, "California's Tax Check-off Program: Room for Improvement?" The hearing reviewed the status of California's VCFs and found a framework was needed to improve the current VCF system. The Committee found that donated funds could take years to reach the intended recipient or, worse yet, the money would end up in state coffers. The Legislature created California's VCF system in 1982 with a noble intention – to make it easier for Californians to donate to charitable causes. To date, VCFs have raised over $102 million for various charitable causes, including social services, public health, and environmental protection.

SB 1476 (Senate Committee on Governance and Finance), Chapter 597, Statutes of 2016, established best practices and reforms needed to ensure that taxpayers' voluntary contributions are being put toward charitable purposes in a transparent and timely fashion. SB 1476 required the words "voluntary tax contribution" to be included in the name of any new fund, required that specified information be made public on the administering agency's Internet Web site, lengthened the current five-year sunset to seven years, set a minimum contribution amount of $250,000 (not adjusted for inflation), and provided for the continuous appropriation of funds.

This bill, which modifies two existing VCFs, follows most of the best practices established by SB 1476. The words "voluntary tax contribution" are added to both renamed funds, the sunset date of both funds are extended for seven years, the minimum contribution threshold for both funds is reset to $250,000, and continuous appropriation is provided from both funds. However, there is no explicit requirement that the UC post specified information online regarding allocation of money from both funds. The Committee may wish to consider whether this bill should be updated to maintain conformity with the reforms set forth by SB 1476.

1. So Many Causes, So Little Space: There are countless worthy causes that would benefit from the inclusion of a VCF on the state's PIT return. At the same time, space on the PIT return is limited. Thus, it could be argued that the current system for adding or extending VCFs on the form is subjective and essentially rewards organizations that can convince the Legislature to promote their fund on the form. Additionally, expanding the list of qualifying VCFs may have the unintended consequence of reducing the individual contributions that existing VCFs receive since they have to compete against a broader group of worthy causes. This could make it more difficult for existing VCFs to meet the $250,000 minimum requirement and cause them to fall off the tax return.
2. Technical Amendments:
3. On Page 2, Line 6, add "That designation is to be used as a voluntary contribution on the tax return."
4. On Page 3, Line 4, strike "individual" and insert "original".
5. On Page 5, Line 6, add "That designation is to be used as a voluntary contribution on the tax return."
6. On Page 5, Line 10, strike "individual" and insert "original".
7. Related Legislation:
8. AB 280 (Low) establishes the Rape Kit Back Log Voluntary Tax Contribution Fund. AB 280 is pending hearing by the Senate Committee on Governance and Finance.
9. AB 846 (Cooley) establishes the California YMCA Youth and Government Voluntary Tax Contribution Fund. AB 846 is pending hearing by the Senate Committee on Appropriations.
10. AB 519 (Levine) establishes the California Senior Citizen Advocacy Fund. AB 519 is pending hearing by the Senate Committee on Governance and Finance.
11. AB 1031 (Waldron) establishes the Native California Wildlife Rehabilitation Voluntary Tax Contribution Fund. AB 1031 is pending hearing by the Senate Committee on Natural Resources and Water.
12. SB 61 (Hertzberg) extends the sunset date of the Emergency Food for Families Fund, adds the words "voluntary tax contribution" to the name of the fund, and makes other operative changes. SB 61 is scheduled to be heard by this Committee today.
13. SB 503 (Newman) extends the sunset date of the Keep Arts in Schools Fund, adds the words "voluntary tax contribution" to the name of the fund, and makes other operative changes. SB 503 is pending hearing by the Committee on Arts, Entertainment, Sports, Tourism, and Internet Media.

REGISTERED SUPPORT / OPPOSITION:

Support

American Cancer Society, California (Co-Sponsor)

University of California (Co-Sponsor)

American Congress of Obstetricians and Gynecologists, District IX

Breast Cancer Action

Breast Cancer Care & Research Fund

California Breast Cancer Organizations

California Life Sciences Association

City of Hope

Opposition

None on file

Analysis Prepared by: Irene Ho / REV. & TAX. / (916) 319-2098

 THIRD READING  

Bill No: SB 440

Author:

:

Vote:

SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 3/22/17

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

SENATE APPROPRIATIONS COMMITTEE: 7-0, 4/3/17

AYES: Lara, Bates, Beall, Bradford, Hill, Nielsen, Wiener

SUBJECT:

SOURCE: Author

DIGEST: This bill extends the sunset dates and renames two voluntary contribution funds appearing on California’s income tax form.

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.
4. Establishes the California Breast Cancer Research Fund as a VCF on the income tax form, administered by the University of California. The VCF has met the minimum contribution amounts for each year it’s been on the tax form, but will sunset on January 1, 2018.
5. Establishes the California Cancer Research Fund as a VCF on the income tax form, administered by the University of California. The VCF has met the minimum contribution amounts for each year it’s been on the tax form, but will sunset on January 1, 2018.

This bill:

1. Renames the California Breast Cancer Research Fund to the California Breast Cancer Research Voluntary Contribution Fund and extends it until January 1, 2025.
2. Provides that moneys donated by taxpayers are continuously appropriated to its specified purposes, instead of appropriated by the Legislature.
3. Renames the California Cancer Research Fund to the California Cancer Research Voluntary Contribution Fund, and extends it until January 1, 2025.
4. Provides that moneys donated by taxpayers are continuously appropriated to its specified purposes, instead of appropriated by the Legislature.
5. Sets the minimum contribution amount for both VCFs to continue appearing on the form at $250,000, and deletes provisions adjusting that amount for inflation.
6. Makes technical and conforming changes.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

• The Franchise Tax Board (FTB) estimates that extending the sunset of the California Breast Cancer Research Voluntary Tax Contribution Fund would result in annual revenue losses of $13,000 (General Fund), beginning in 2018-19.
• FTB estimates that extending the sunset of the California Cancer Research Voluntary Tax Contribution Fund would result in annual revenue losses of $17,000 (General Fund), beginning in 2018-19.
• The State Controller’s Office and FTB and would be reimbursed for related administrative costs.

SUPPORT: (Verified 4/5/17)

American Cancer Society

American Lung Association in California

Breast Cancer Action

Breast Cancer Care & Research Fund

Breast Cancer Prevention Partners

California Breast Cancer Organizations

The American Congress of Obstetricians and Gynecologists

The University of California

Three Individuals

OPPOSITION: (Verified 4/5/17)

None received

ARGUMENTS IN SUPPORT: According to the author, “Cancer is the second leading cause of death in California and the United States after heart disease. More than 57,000 Californians died of cancer in 2013, the most recent year for complete statistics on causes of death. The funding provided by voluntary tax contributions to the California Breast Cancer Research Fund has supported research on topics such as identifying environmental factors that may cause breast cancer, as well as exploring the potential of natural products in preventing and treating breast cancer. The contributions to the California Cancer Research Fund has supported research into lung cancer, and in particular the relation to its early detection in disproportionately-impacted communities in California. I introduced SB 440 so that individuals can continue to make these voluntary donations that pay for rigorous scientific research that helps advance our understanding of cancer, how it works and how we can defeat it. The proposed legislation would bring revenue to UC and would not add new administrative costs either to UC or to the State.”

Prepared by:

4/5/17 14:44:45

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2017 - 2018 Regular Session

SB 440 (Hertzberg) - Personal income taxes: California Breast Cancer Research Voluntary Tax Contribution Fund and California Cancer Research Voluntary Tax Contribution Fund

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

Bill Summary:

SB 440 would extend the sunset dates of both (1) the California Breast Cancer Research Voluntary Tax Contribution Fund, and (2) the California Cancer Research Voluntary Tax Contribution Fund, as renamed, to January 1, 2025.

Fiscal Impact:

• The Franchise Tax Board (FTB) estimates that extending the sunset of the California Breast Cancer Research Voluntary Tax Contribution Fund would result in annual revenue losses of $13,000 (General Fund), beginning in 2018-19.
• FTB estimates that extending the sunset of the California Cancer Research Voluntary Tax Contribution Fund would result in annual revenue losses of $17,000 (General Fund), beginning in 2018-19.
• 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 20 voluntary contribution funds (VCF) during the process of filing their state income tax return. 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.

When a taxpayer contributes to VCFs, 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, 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, such as the American Red Cross. Other VCFs require SCO to send the funds directly to private organizations, such as the California Fire Foundation, without passing through an administrative agency. SCO and administrative agencies may deduct administration fees from the amount of donations each VCF receives.

In 2016, SB 1476 (Committee on Governance and Finance) established general provisions for all VCFs established or extended after January 2, 2017. Specifically, the bill: (1) set a minimum contribution amount of $250,000 beginning the second calendar year after the first appearance of the fund on the income tax return and eliminates the inflation adjustment in subsequent years, (2) increased the current standard five-year sunset to seven years, (3) required the administering agency to post online the process for awarding money, the amount of money spent on administration, and an itemization of how program funds were awarded by the agency, including, but not limited to, information regarding recipients of funds, (4) provided that funds shall be continuously appropriated to the administering agency to be spent as prescribed in the bill that enacts the voluntary contribution, and (5) required “voluntary tax contribution” in the name of the fund.

Proposed Law:

This bill would change the name of (1) the California Breast Cancer Research Fund to the California Breast Cancer Research Voluntary Tax Contribution Fund, and (2) the California Cancer Research Fund to the California Cancer Research Voluntary Tax Contribution Fund. It would extend the sunset date for both renamed funds from January 1, 2018, to January 1, 2025.

In addition, this bill would (1) reset the minimum contributions requirement for these two funds to $250,000, and (2) remove the annual inflation adjustment requirement.

Related Legislation:

SB 1476 (Committee on Governance and Finance, Chapter 597, Statutes of 2016) added general requirements applicable to VCFs added or extended on or after January 2, 2017.

Staff Comments:

FTB notes that California taxpayers contributed $394,000 to the California Breast Cancer Fund, and $507,000 to the California Cancer Research Fund. FTB indicates that approximately 56 percent of taxpayers who contributed itemized their deductions. Assuming an average tax rate of six percent, FTB estimates the annual revenue loss would be $13,000 and $17,000, respectively.

The fiscal impact of the bill would begin when tax returns for 2017 are filed. Specifically, the deduction for such contributions made in 2017 would be claimed on the 2018 return, to be filed by April 2019; consequently, revenue impact from the bill would not begin until 2018-19.

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 20 VCFs.

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SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Mike McGuire, Chair

2017 - 2018 Regular

Personal income taxes: California Breast Cancer Research Voluntary Tax Contribution Fund and California Cancer Research Voluntary Tax Contribution Fund

Extends the sunset dates of the California Breast Cancer Research Voluntary Tax Contribution Fund and California Cancer Research Voluntary Tax Contribution Fund to January 1, 2025.

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 VCFs, or tax 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, 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.

Last year, SB 1476 (Committee on Governance and Finance) established general provisions for all VCFs established or extended after January 2, 2017. Specifically, the bill:

• Set a minimum contribution amount of $250,000 beginning the second calendar year after the first appearance of the fund on the income tax return and eliminates the inflation adjustment in subsequent years.
• Lengthened the current standard five year sunset to seven years.
• Required the administering agency to post online the process for awarding money, the amount of money spent on administration, and an itemization of how program funds were awarded by the agency, including, but not limited to, information regarding recipients of funds,
• Provided that funds shall be continuously appropriated to the administering agency to be spent as prescribed in the bill that enacts the voluntary contribution,
• Required “voluntary tax contribution” in the name of the fund.

There are currently 20 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 440 extends the sunset dates of the California Breast Cancer Research Voluntary Tax Contribution Fund and California Cancer Research Voluntary Tax Contribution Fund to January 1, 2025. SB 440 also conforms to the general provisions for all VCFs set forth in SB 1476 (Committee on Governance and Finance, 2016).

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, “Cancer is the second leading cause of death in California and the United States after heart disease. More than 57,000 Californians died of cancer in 2013, the most recent year for complete statistics on causes of death. The funding provided by voluntary tax contributions to the California Breast Cancer Research Fund has supported research on topics such as identifying environmental factors that may cause breast cancer, as well as exploring the potential of natural products in preventing and treating breast cancer. The contributions to the California Cancer Research Fund has supported research into lung cancer, and in particular the relation to its early detection in disproportionately-impacted communities in California. I introduced SB 440 so that individuals can continue to make these voluntary donations that pay for rigorous scientific research that helps advance our understanding of cancer, how it works and how we can defeat it. The proposed legislation would bring revenue to UC and would not add new administrative costs either to UC or to the State.”

2. SB 1476. In December of 2015, this Committee held an oversight hearing which identified best practices and reforms needed to ensure that taxpayers’ voluntary contributions are being put toward charitable purposes in a transparent and timely fashion.

For tax check-offs enacted prior to January 2, 2017, the tax check-off process starts with the Legislature enacting legislation. Next, a taxpayer contributes to an established tax check-off on the income tax form. The donation is collected by FTB and distributed to the State Controller by June 15th each year. Contributions made after June are not distributed to the State Controller’s Office until the following year. The State Controller then distributes the funds according to the enacting statute, which generally requires an appropriation by the Legislature. Next, the administering agency generally must submit a budget change proposal (BCP) to the Department of Finance. Once the Department of Finance approves the BCP, the appropriation is placed into a bill to be approved by the Legislature. After the Governor signs that bill, only then can the Controller transfer the donation to the administering agency. This process can take years.

When a tax check-off is repealed, or fails to meet the minimum contribution limit, the check-off fund is removed from the income tax form. After four years of inactivity the tax check-off fund is abolished, and unused funds revert to the General Fund at the direction of the Department of Finance. Before the Department of Finance abolishes a tax check-off fund, the Department sends a letter to the Joint Legislative Budget Committee informing the Committee of all funds slated to be abolished. At that time, the Joint Legislative Budget Committee has the opportunity to object to the check-off fund’s abolishment. The letter from the Department of Finance does not specify the type of fund being abolished; the letter only lists names of funds. Thus, it is unclear from the face of the letter if an abolished fund is a privately-funded taxpayer check-off fund or a government fund.

After the passage of SB 1476 (Committee on Governance and Finance, 2016), all check-offs enacted in 2017, going into effect in 2018 will ensure timely use of tax check-off funds by eliminating the current requirement of “appropriation by the Legislature” of funds. Elimination of requiring an appropriation by the Legislature for each tax check-off will result in funds arriving to the administering agency at least a year earlier than under the current process. The bill also protects tax check-off funds from reverting to the General Fund by requiring tax check-off funds to include “voluntary contribution fund” in their names so that the Legislature, Department of Finance, and the Joint Legislative Budget Committee are aware when a tax check-off fund is slated for abolishment and reversion to the General Fund. Lastly, the bill includes reporting requirements by the administering agency. This serves as a safeguard against eliminating the appropriation by the Legislature requirement. Instead of the intended use of the funds only being available to the Department of Finance in a BCP, the use of the funds will be online available to everyone. The bill also extended the standard sunset from 5 to 7 years and permanently set the annual minimum contribution amount to $250,000 beginning the second calendar year after the first appearance of the fund on the income tax return

SB 440 conforms to the general provisions for all VCFs set forth in SB 1476 (Committee on Governance and Finance, 2016).

3. Not all the same. While SB 1476 established general provisions for all tax check-offs, currently there are a small number of tax check-offs that either do not have a sunset or are not subject to a minimum contribution amount. This bill did not seek to impose all provisions on all tax check-offs, but instead serve as a framework of best practices for tax check-offs. Current and future tax check-offs that have unique circumstances may continue to craft legislation exempting them from some of the general provisions enacted in SB 1476.

4. 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.

5. 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 20. 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 7 or 8 more check-offs before FTB has to create a separate tax schedule.

Support and Opposition

(3/16/17)

Support: American Cancer Society; American Lung Association in California; Breast Cancer Action; Breast cancer Care & Research Fund; Breast Cancer Prevention Partners; California Breast Cancer Organizations; The University of California; 3 Individuals.

Opposition: None received.

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