BILL ANALYSIS
SENATE REVENUE & TAXATION COMMITTEE AB 3229 -
Brulte
Senator Lucy Killea, Chair Amended:
6/11/96
Hearing: July 3, 1996 Fiscal: Yes
SUBJECT: Personal Income Taxes: Allows taxpayers to direct
1% of their tax liability to fund local law
enforcement, criminal prosecution, and jail
operations and construction
DIGEST -- WHAT THE BILL DOES
EXISTING LAW allows taxpayers to make a donation to
different programs at the time they file they tax return.
These programs are known as ocheck-offo programs. These
donations are in addition to an individualos tax liability.
THIS BILL would establish the Local Law Enforcement Fund
and allow taxpayers to direct 1% of their tax liability to
the Fund. Taxpayers who make this designation would not see
an increase in the tax liabilities. This designation would
appear on the 1996 tax returns.
This bill also describes how moneys from the Local Law
Enforcement Fund are to be allocated and used.
Allocation of the Local Law Enforcement Fund to counties.
AB 3229 states that revenues in the Local Law Enforcement
Fund (LLE Fund) would be allocated first to the Franchise Tax
Board and the Controller for their costs in administering the
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Fund and overseeing that local revenues are used for their
intended purposes. The balance would be allocated oto the
counties in accordance with the proportion of the total
designated amount that is attributable to taxpayers in each
county.o It appears that this means that amounts designated
by a taxpayer would be directed to the county in which the
taxpayer resides. However, the language is not clear and
could be read to mean that the moneys in the LLE Fund would
be allocated to counties based on the number of taxpayers in
each county, rather than the amount of tax revenues
designated by taxpayers in each county.
Counties would be required to deposit the amounts they
received into a Supplemental Law Enforcement Services Fund
(SLES Fund).
Allocation of the county SLES Fund. The county auditor
is required to make the following annual allocations:
12.5% to the county sheriff for county jail construction
and operation
12.5% to the district attorney for criminal prosecution
75% to the county and the cities within the county based
on population. The county would receive moneys based on the
population in the unincorporated area.
Use of SLES Funds within a county. The district attorney
and county sheriff would make a written request to the county
board of supervisors specifying their ofront line law
enforcement serviceso needs and their requests for personnel,
equipment and programs. oFront line law enforcement
serviceso can include antigang and community crime prevention
programs.
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The board is required to respond to these funding
requests within 60 days. The decision can be made by oa
majority of a quorum present.o This process is separate from
the county budget process.
In Los Angeles, Orange, and San Diego counties, the
district attorneys may allocate a portion of the funds they
receive to city attorneys within the county to prosecute
misdemeanor violations of state law.
Use of a SLES Fund within a city. AB 3229 requires each
city to establish a SLES Fund within its treasury. The chief
of police or chief administrator of the law enforcement
agency would make a written request to the city council for
ofront line municipal police services,o including antigang
and community crime prevention programs. The city council
would be required to respond within 60 days. It could make
its decision by oa majority of a quorum present.o The
process would be separate from the budget process.
Restricted uses of SLES Funds. No more than 1/2% of SLES
funds may be used for overhead. Funds may not be used for
capital outlay or construction unless they directly support
front line law enforcement services. Funds may be used for
jail construction.
SLES Funds to be used to supplement existing funding. AB
3229 provides that SLES funds will be used only to supplement
existing funding for sheriffs, district attorneys, and
police. It requires that each county and city treasurer
provide a monthly investment report to the police chief,
county sheriff, and district attorney. Treasurers would also
be required to submit monthly reports of allocations from the
SLES Fund. In addition to these monthly reports, each
district attorney, county sheriff, and city police department
must provide an annual audit report to the countyos
Supplemental Law Enforcement Oversight Committee and the
State Controller.
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The role of the Supplemental Law Enforcement Oversight
Committee. Each county is required to establish a
Supplemental Law Enforcement Oversight Committee (SLEO
Committee). This Committee consists of one municipal police
chief, the county sheriff, the district attorney, the county
executive officer, and one city manager. The bill does not
provide how the city representatives are selected.
The SLEO Committee would be responsible for annually
reviewing the use of SLES Funds by the sheriff, district
attorney, and police departments. The report would be
available to the public. If the Committee determines that
the SLES Fund moneys have not been used properly, the
Committee will issue a report to the Controller.
The role of the Controller. Once the Controller receives
a report from a SLEO Committee, she must begin her own
investigation of local expenditures and report back to the
local SLEO Committee within 60 days. If the Controller
determines that funds have been improperly used, the agency
that has been found to have misused funds will receive no new
SLES Fund moneys until it has repaid the misused amount, with
interest, from its general fund. Note: it is not clear if
ogeneral fundo means the county or city general fund or the
general accounts of the sheriff, district attorney, or police
department that misused the SLES Fund moneys.
During the period an agency is oin suspension,o revenues
to which it would otherwise be entitled would be allocated to
other agencies.
The Controller is responsible for establishing a uniform
statewide review procedure that SLEO Committees should use
with the State District Attorneyos Association, State Police
Chiefos Association, State Sheriffos Association, and the
State County Auditoros Association.
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FISCAL EFFECT:
AB 3229 would neither raise nor reduce tax revenues. The
Governoros Budget estimates that taxpayers would earmark
about $150 million of their tax liability for the Local Law
Enforcement Fund; the Legislative Analystos Office believes
$100 million is a more likely figure. Since designations to
the Local Law Enforcement Fund are revenues that would
otherwise be deposited in the General Fund, each dollar
dedicated to the Local Law Enforcement Fund reduces the
General Fund by a dollar.
Both the Franchise Tax Board and the Controller would
bear additional costs that would be paid out of the Local Law
Enforcement Fund. The FTB estimates that its costs would be
about $500,000 for increased transcription of tax returns --
FTB would have to enter the amount designated and the county
in which the taxpayer resides -- and increased errors.
The Controller would also incur additional costs to set
up the review standards and to investigate county agencies
which may have used funds improperly. It is not clear if
these costs would be borne by the Local Law Enforcement Fund
or if there would need to be additional General Fund support
for the Controller.
COMMENTS:
A. Purpose of the bill
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AB 3229 is part of the Governoros 1996-97 Budget.
According to the Governoros Budget Summary, ocitizens want
more public safety resources for their community. In order
to give the people of California a way to make this choice,
the Administration is proposing a new initiative -- Citizens
Options for Public Safety. Under this initiative, taxpayers
would be able to designate that one percent of their personal
income tax liability be directed for public safety purposes
in their communities.o
B. Earmarking of revenues
This bill would direct $100-150 million annually from the
General Fund to the Local Law Enforcement Fund without any
legislative approval or oversight. One of the concerns that
has been raised over the years about the budget process is
that the Legislatureos ability to make decisions about
spending priorities has been hindered by various
constitutional or statutory spending restrictions. This bill
adds another restriction and gives priority for funding of
local law enforcement over other State programs.
C. Sets precedent for future earmarking
The expansion of ocheck-offo programs in recent years for
school libraries, memorials, and senior programs serves as a
good example of what might happen if AB 3229 is enacted.
If an income tax set-aside for law enforcement is
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approved, it is likely that others will seek similar
legislation. For example, bills could be introduced that
would allow taxpayers to direct a portion of their taxes to
the University of California, prenatal programs, or prison
construction.
D. Fund covers more than law enforcement
The title of the fund, oLocal Law Enforcement Fund,o
implies that moneys directed to the fund would be used for
police and sheriff. But 25% of the moneys could be used for
jail construction and operations and support of the district
attorneyos office. Perhaps the fund name should be changed
so that taxpayers have a better idea how the moneys they
designate will be used.
E. Funding for anti-gang and crime prevention
AB 3229 would allow SLES Funds to be used for anti-gang
and crime prevention activities if the sheriff or chief of
police requests funding for these activities and the requests
are approved by the board of supervisors or city council.
This approach is different from SB 2157 (Hayden) which
required that one half of SLES Funds be used for these
activities.
According to some proponents, the author intends to place
a letter in the Assembly Journal indicating his intent that
antigang and violence prevention programs operated by
non-profit organizations can qualify for SLES funding. If
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this is the authoros intent, the bill can be amended to add
this language.
F. Issues concerning local use of the Fund
Moneys could be allocated by less than a majority of the
governing board. As drafted, two members of a five-member
board of supervisors or city council could approve allocation
of funds.
Oversight of funds is controlled by recipients of funds.
AB 3229 sets up a five-member committee within the county to
review how Supplemental Law Enforcement Services Funds (SLES
Funds) are used. But three members of the committee are
recipients of SLES Funds themselves.
State oversight of fund use is limited to the
Controlleros review. AB 3229 does not provide for any
oversight or review by the Legislature on the use of the
$100-150 million of funds that will be used for local law
enforcement purposes. Instead, it authorizes the Controller
to investigate any possible misuse of funds if she is
notified by the county oversight committee.
Repayment of misused funds should be clarified. If an
agency that receives SLES Funds is found to have misused
those funds, AB 3229 states that the SLES Fund be repaid from
the general fund. Itos not clear if this is the countyos or
cityos general fund or the agencyos general operating
account. If the money comes from the local general fund, the
rest of county or city government would be hurt by the misuse
of the SLES Fund moneys by a sheriffos office, police
department or district attorneyos office.
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Reporting requirements are substantial. In an effort to
ensure that these moneys will supplement, rather than
supplant, existing resources, AB 3229 imposes a series of
reporting requirements on local treasurers, sheriffs,
district attorneys, and police departments. It creates a new
mandate on treasurers, but provides no new funding to meet
that mandate.
The State gives $1.5 billion to local governments for
public safety purposes under Proposition 172 with minimal
reporting requirements. This program, which is intended to
provide about one-tenth of that amount, has substantially
more reporting requirements.
G. Franchise Tax Board concerns
The FTB analysis notes that it is not clear if otax
liabilityo refers to liability before or after credits are
applied. This should be clarified.
Support and Opposition
Support: City of Los Angeles (if amended)
Sheriff of Contra Costa County
Sheriff of Kings County
Sheriff-Coroner of Tulare County
Sheriff of Ventura County
Peace Officers Research Association of
California
Sheriff of Shasta County
Sheriff of Marin County
City of Oceanside
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City of Modesto
City of Lancaster
Sheriff-Coroner of San Benito County
City of Moreno Valley
Torres & Torres
League of California Cities
City of Cupertino
Los Gatos
City of Visalia
Oppose: California Professional Firefighters
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Consultant: Anne Maitland
June 24, 1996 8:30 AM