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AB-657 Child Welfare Funding Act.(2023-2024)



Current Version: 01/03/24 - Amended Assembly

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AB657:v97#DOCUMENT

Amended  IN  Assembly  January 03, 2024
Amended  IN  Assembly  March 23, 2023

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill
No. 657

Introduced by Assembly Member Jackson

February 09, 2023

An act to amend Section 6359 of, and to add Part 13.8 (commencing with Section 31210) to Division 2 of of, the Revenue and Taxation Code, and to add and repeal Chapter 6.6 (commencing with Section 13950) of Part 3 of Division 9 of the Welfare and Institutions Code, relating to taxation, children, and making an appropriation therefore.


LEGISLATIVE COUNSEL'S DIGEST


AB 657, as amended, Jackson. Mental Health Services Child Welfare Funding Act.

Existing

(1) Existing state sales and use tax laws impose a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state of, or on the storage, use, or other consumption in this state of, tangible personal property purchased from a retailer for storage, use, or other consumption in this state. The Sales and Use Tax Law provides various exemptions from those taxes, including an exemption for the sale of, or the storage, use, or consumption of, food products for human consumption. Existing law defines Proposition 163, an initiative measure approved by the voters at the November 3, 1992, general election, amended the California Constitution to prohibit the State of California or any of its political subdivisions from levying or collecting a sales or use tax on the sale of, or the storage, use, or other consumption in the state of, food products for human consumption except as provided by statute as of the effective date of that provision and in statute defined, for purposes of the sales and use tax exemption described above, “food products” to mean, among other things, sugar and sugar products, candy, gum, confectionery, and cocoa and cocoa products.

Existing law establishes the Mental Health Services Fund under the administration of the state and continuously appropriates money in the fund for certain purposes, including programs and other related activities as designated by the Children’s Mental Health Services Act, which establishes an interagency system of care for children with serious emotional and behavioral disturbances that provides comprehensive, coordinated care, as specified.

This bill would delete “candy” from the definition of “food products,” described above, that are exempt from tax.
The California Constitution authorizes the Legislature to amend or repeal an initiative statute by another statute that becomes effective when approved by the electors.
This bill would provide that the deletion provision described above would become effective only upon approval of the voters. It would also provide for submission of this measure to the voters for approval at the next statewide general election.

This

(2) This bill would also enact the Mental Health Services Child Welfare Funding Act that would require a distributor to pay a tax upon the distributor’s distributions of candy, as defined, at the rate of $0.05 for each untaxed candy distributed. The bill would define “distribution” to mean the sale, except a retail sale, of untaxed candy in this state. sales tax return filed with the California Department of Tax and Fee Administration (CDTFA) to report gross receipts for sales tax purposes to segregate the taxable sales attributable to the sale of candy, as defined, on a line or a separate form, as prescribed by the department. The bill would require all revenues, interest, and penalties, less refunds, collected from the candy tax an amount equal to the total amount of gross receipts, or adjusted gross receipts, attributable to the sale of candy for the prior fiscal year as reported to the Department of Finance (DOF) by the CDTFA, as specified, to be deposited into the Candy Tax Fund, a continuously appropriated fund created by the bill, as soon as reasonably possible and would require all amounts in the fund to be distributed to the Mental Health Services Fund. Child Welfare Grant Program Fund, a continuously appropriated fund that the bill would create for the purpose of funding the Child Welfare Grant Program grants described below. By creating a continuously appropriated fund and allocating additional moneys to a continuously appropriated fund, moneys to that fund, this bill would make an appropriation.

This bill would provide for the administration and collection of the tax described above pursuant to procedures set forth in the Fee Collection Procedures Law. By expanding the application of the Fee Collection Procedures Law, the violation of which is a crime, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

This bill would also establish the Child Welfare Grant Program and would require the State Department of Social Services to annually, on or before December 31, distribute to any qualified recipient with dependent minors a Child Welfare Grant Program grant, as prescribed. The bill would define “qualified recipient” to mean an individual who is a resident of the state and either filed a joint income tax return for the preceding taxable year that reported gross income in an amount not exceeding $150,000 or filed an individual income tax return for the preceding taxable year that reported gross income in an amount not exceeding $112,000.
This bill would provide that the provisions described above relating to the Child Welfare Funding Act and the Child Welfare Grant Program would become operative only if the amendment to Proposition 163 described above is approved by the voters and takes effect.
The bill would make the operation of its provisions contingent upon approval by the voters of an unspecified Assembly Constitutional Amendment of the 2023–24 Regular Session.
Vote: 2/3   Appropriation: YES   Fiscal Committee: YES   Local Program: YESNO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 6359 of the Revenue and Taxation Code is amended to read:

6359.
 (a) There are exempted from the taxes imposed by this part the gross receipts from the sale of, and the storage, use, or other consumption in this state of, food products for human consumption.
(b) For the purposes of this section, “food products” includes all of the following:
(1) Cereals and cereal products, oleomargarine, meat and meat products, fish and fish products, eggs and egg products, vegetables and vegetable products, fruit and fruit products, spices and salt, sugar and sugar products, candy, gum, confectionery, coffee and coffee substitutes, tea, and cocoa and cocoa products.
(2) Milk and milk products, milkshakes, malted milks, and any other similar type beverages that are composed at least in part of milk or a milk product and that require the use of milk or a milk product in their preparation.
(3) All fruit juices, vegetable juices, and other beverages, whether liquid or frozen, including bottled water, but excluding spirituous, malt, or vinous liquors or carbonated beverages.
(c) For purposes of this section, “food products” does not include any of the following:
(1) Medicines, including medicinal cannabis or medicinal cannabis products, as defined in Division 10 (commencing with Section 26000) of the Business and Professions Code, and preparations in liquid, powdered, granular, tablet, capsule, lozenge, and pill form sold as dietary supplements or adjuncts.
(2) Cannabis, as defined in Section 11018 of the Health and Safety Code, and cannabis products, as defined in Section 11018.1 of the Health and Safety Code.
(3) This addition of this subdivision does not constitute a change in, but is declaratory of, existing law.
(d) None of the exemptions in this section apply to any of the following:
(1) When the food products are served as meals on or off the premises of the retailer.
(2) When the food products are furnished, prepared, or served for consumption at tables, chairs, or counters or from trays, glasses, dishes, or other tableware whether provided by the retailer or by a person with whom the retailer contracts to furnish, prepare, or serve food products to others.
(3) When the food products are ordinarily sold for immediate consumption on or near a location at which parking facilities are provided primarily for the use of patrons in consuming the products purchased at the location, even though those products are sold on a “take out” or “to go” order and are actually packaged or wrapped and taken from the premises of the retailer.
(4) When the food products are sold for consumption within a place, the entrance to which is subject to an admission charge, except for national and state parks and monuments, marinas, campgrounds, and recreational vehicle parks.
(5) When the food products are sold through a vending machine.
(6) When the food products sold are furnished in a form suitable for consumption on the seller’s premises, and both of the following apply:
(A) Over 80 percent of the seller’s gross receipts are from the sale of food products.
(B) Over 80 percent of the seller’s retail sales of food products are sales subject to tax pursuant to paragraph (1), (2), (3), or (7).
(7) When the food products are sold as hot prepared food products.
(e) “Hot prepared food products,” for the purposes of paragraph (7) of subdivision (d), include a combination of hot and cold food items or components where a single price has been established for the combination and the food products are sold in combination, such as a hot meal, a hot specialty dish or serving, a hot sandwich, or a hot pizza, including any cold components or side items. Paragraph (7) of subdivision (d) does not apply to a sale for a separate price of bakery goods or beverages (other than bouillon, consommé, or soup), or where the food product is purchased cold or frozen; “hot prepared food products” means those products, items, or components that have been prepared for sale in a heated condition and that are sold at any temperature that is higher than the air temperature of the room or place where they are sold.
(f) Notwithstanding paragraph (6) of subdivision (d), if the seller elects to separately account for sales of food products specified in subdivision (b), then the gross receipts from the sale of those food products shall be exempt under subdivision (a), provided that the separate accounting is fully documented in the seller’s records. However, if the seller’s records do not reflect the separate accounting of the gross receipts from sales of nontaxable food products, the seller’s election under this subdivision shall be revoked.

SECTION 1.SEC. 2.

 Part 13.8 (commencing with Section 31210) is added to Division 2 of the Revenue and Taxation Code, to read:

PART 13.8. Mental Health Services Child Welfare Funding Act

CHAPTER  1. General Provisions

31210.
 This part shall be known as the Mental Health Services Child Welfare Funding Act.

31211.
 For purposes of this part:
(a) “Adjusted total gross receipts” means an adjusted total gross receipt amount determined pursuant to subparagraph (B) of paragraph (2) of subdivision (b) of Section 31213.

(a)

(b) “Candy” means a preparation of sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruits, nuts, or other ingredients or flavorings in the form of bars, drops, or pieces.

(b)“Candy tax” means the tax imposed by Section 31213.

(c) “Department” means the California Department of Tax and Fee Administration.

(d)“Distribution” means the sale, except a retail sale, of untaxed candy in this state.

(e)“Distributor” means a person who distributes candy in this state.

(f)“In this state” means within the exterior limits of California and includes all territory within these limits owned by or ceded to the United States of America.

(g)“Retail sale” has the same meaning as defined in Section 6007.

(h)“Untaxed candy” means any candy that has not yet been distributed in a manner as to result in a tax liability under this part.

(d) “Fund” means the Candy Tax Fund created pursuant to Section 31220.

CHAPTER  2. Imposition of Tax Sales Tax Returns for Gross Receipts From the Sale of Candy
31213.

A distributor shall pay a tax upon the distributor’s distributions of candy at the rate of five cents ($0.05) for each untaxed candy distributed.

31213.
 (a) A return filed with the department to report gross receipts for sales tax purposes shall segregate the taxable sales attributable to the sale of candy on a line or a separate form, as prescribed by the department.
(b) (1) The department shall report the amount of the total gross receipts segregated on the returns filed for the prior fiscal year pursuant to subdivision (a) to the Department of Finance on or before November 1 of each year.
(2) (A) The total gross receipts reported pursuant to paragraph (1) shall be subject to review, which may be a review of a sample of returns, by the department for errors.
(B) The department shall note any errors identified in the review and the approximate impact of those errors on the total gross receipts in the report to the Department of Finance required by this subdivision to allow an adjusted total gross receipt amount to be determined.
(c) An amount equal to the total amount of gross receipts, or adjusted gross receipts, for the prior fiscal year reported to the Department of Finance by the department pursuant to subdivision (b) shall be deposited into the fund as soon as reasonably possible.

CHAPTER  3. Candy Tax Fund
31220.

(a)All revenues, interest, and penalties derived from the candy tax shall be deposited into the Candy Tax Fund, which is hereby created in the State Treasury, less payments for refunds and reimbursement to the department for expenses incurred in the administration and collection of the tax.

(b)Notwithstanding Section 13340 of the Government Code, all amounts in the Candy Tax Fund are continuously appropriated without regard to fiscal year to the Mental Health Services Fund created by Section 5890 of the Welfare and Institutions Code.

31220.
 (a) There is hereby created in the State Treasury the Candy Tax Fund.
(b) All moneys in the fund shall be distributed to the Child Welfare Grant Program Fund created by Section 13951 of the Welfare and Institutions Code.

CHAPTER  4. Administration

31225.
 (a) (1)The department may prescribe, adopt, and enforce regulations relating to the administration and enforcement of this part, including, but not limited to, collections, reporting, refunds, and appeals. part.

(2)(A)

(b) (1) The department may prescribe, adopt, and enforce emergency regulations as necessary to implement this part.

(B)

(2) An emergency regulation prescribed, adopted, or enforced pursuant to this paragraph shall be adopted in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, and, for purposes of that chapter, including Section 11349.6 of the Government Code, the adoption of the regulation is an emergency and shall be considered by the Office of Administrative Law as necessary for the immediate preservation of the public peace, health and safety, and general welfare.

(b)(1)The department shall collect the candy tax pursuant to the Fee Collection Procedures Law (Part 30 (commencing with Section 55001)).

(2)For purposes of this part, the references in the Fee Collection Procedures Law to “fee” shall include the candy tax, and references to “feepayer” shall include any distributor liable for the payment of the candy tax.

SEC. 2.

No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.

SEC. 3.

 Chapter 6.6 (commencing with Section 13950) is added to Part 3 of Division 9 of the Welfare and Institutions Code, to read:
CHAPTER  6.6. Child Welfare Grant Program

13950.
 As used in this chapter:
(a) “Fund” means the Child Welfare Grant Program Fund created pursuant to Section 13951.
(b) “Qualified recipient” means an individual who is a resident of the state and meets either of the following criteria:
(1) The individual filed a joint income tax return for the preceding taxable year that reported gross income in an amount not exceeding one hundred fifty thousand dollars ($150,000).
(2) The individual filed an individual income tax return for the preceding taxable year that reported gross income in an amount not exceeding one hundred twelve thousand dollars ($112,000).

13951.
 (a) (1) There is hereby created in the State Treasury the Child Welfare Grant Program Fund under the administration of the department.
(2) Notwithstanding Section 13340 of the Government Code, the moneys in the fund shall be continuously appropriated to the department for the purpose of providing grants pursuant to subdivision (c).
(b) There is hereby created, under the administration of the department, the Child Welfare Grant Program.
(c) The department shall annually, on or before December 31, distribute to any qualified recipient a Child Welfare Grant Program grant in an amount determined pursuant to both of the following:
(1) For each dependent minor of the qualified recipient under six years of age, the amount of the grant shall be three thousand dollars ($3,000).
(2) For each dependent minor of the qualified recipient between 6 and 17 years of age, the amount of the grant shall be two thousand five hundred dollars ($2,500).

13952.
 (a) The department may adopt regulations necessary for the purposes of this chapter.
(b) Notwithstanding Section 19542 of the Revenue and Taxation Code, the Franchise Tax Board may, upon request of the department, share with the department taxpayer information necessary to perform the department’s duties under this chapter.

13953.
 This chapter shall remain in effect only until January 1, 2029, and as of that date is repealed.

SEC. 4.

 (a) Section 1 of this act amends Proposition 163, an initiative measure approved by the voters at the November 3, 1992, general election, and shall become effective only when this act is submitted to and approved by the voters. The Secretary of State shall submit Section 1 of this act to the voters at a statewide election in accordance with Section 9040 of the Elections Code.
(b) Sections 2 and 3 of this act shall become operative only if Section 1 of this act is approved by the voters and takes effect.

SEC. 5.

 Sections 1 to 3, inclusive, of this act shall become operative only if Assembly Constitutional Amendment __ of the 2023–24 Regular Session is approved by the voters and takes effect.