BILL ANALYSIS
SENATE REVENUE & TAXATION COMMITTEE
Senator Gilbert Cedillo, Chair
AB 243 - Vargas
Amended: As Introduced
Hearing: June 25, 2003 Tax Levy Fiscal: Yes
SUBJECT: Increases the maximum rental allowance for
ministers that are state employees.
EXISTING LAW
FEDERAL LAW excludes from a minister's gross income 1) the
rental value of a home furnished as part of his or her
compensation; or 2) the rental allowance paid as part of
his or her compensation to the extent used to rent or
provide a home. Federal regulations allow a rental
allowance to be used to 1) rent a home, 2) purchase a home,
or 3) pay expenses directly related to providing a home.
The federal Clergy Housing Allowance Clarification Act of
2002 specified that the amount of rental allowance
exclusion is limited to the amount used to provide the
home, and may not exceed the fair rental value of the home,
including furnishings and accessories, plus the cost of
utilities. No fair rental value is stated, however, the
amount may not exceed the fair rental value of the home.
This act is applicable for taxable years beginning after
December 31, 2001.
STATE LAW conforms to federal law as of January 1, 2001.
However, California does not currently conform to the
federal Clergy Housing Allowance Clarification Act of 2002.
As a result, a minister's gross income exclusion is
limited to the actual amount used to provide a home.
STATE LAW allows up to 25% of gross salary for a
state-employed minister to be allocated for 1) the rental
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value of a home furnished as part of his or her
compensation, or 2) the rental allowance paid to rent or
provide a home.
THIS BILL
1.Increases the maximum amount that may be allocated as a
housing allowance from the gross salary of a
state-employed member of the clergy from 25% to 50%;
2.Changes the term "minister of the gospel" to "member of
the clergy"; and
3.Defines "member of the clergy" to mean a priest,
minister, religious practitioner, or similar functionary
of a religious denomination or religious organization.
FISCAL EFFECT:
FTB estimates that this bill will lose approximately
$150,000 annually.
COMMENTS:
A. Purpose of the bill
According to the author, this bill will assist members of
clergy who are serving as employees in this state to
acquire housing. The author cites the following
information:
The cost of housing in California has risen
considerably since clergy members' salary was
last increased in 1967. Clergy members' housing
cost deception is substantially lower than the
allowable deduction all other ordained clergy
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with the same education and credentials in other
ministries across the United States. State
members of the clergy that are serving in areas
of California with significantly higher housing
expenses are disproportionately penalized.
B. Member of Clergy-Defined
This bill applies only to members of the clergy who are
employed by the state. In practice, this includes chaplains
who serve at state prisons, youth authorities, mental
health facilities, centers for the developmentally
disabled, and the Legislature.
C. Housing Allowance Background
Chaplains have traditionally been provided a parsonage on
church grounds or, in the absence of a parsonage, an
allowance for housing. California's housing allowance for a
state chaplain was last raised in 1967. Housing costs have
increased substantially since that time, and this bill's
author and sponsor believe that California's housing
allowance should be increased to reflect that fact.
Support and Opposition
Support: American Federation of State, County, and
Municipal Employees AFSCME(sponsor)
Associated Chaplains in California State Service
California Catholic Conference Committee on Moral Concerns
Department of Corrections
The Board of Rabbis of Northern California
James McGee, Ex-Protestant Chaplain at Folsom State Prison
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Consultant: Gayle Miller
AB 243-Vargas
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