H.B. 148 Tax Return Donation Amendments: transcript

Thank you, Mr. Chair. Members of the committee. This is a pretty simple bill. Um, the substitute is a very, very minor change, but, but because we had to change the language of the effective date, it does require a substitute according to our rules now. So that's the purpose of the, uh, of the sub itself. Um, but the bill itself, again, pretty simple. If you notice, when you fill out your state tax return at the very end of the tax return, there's a couple of sections where you can make some donations if you'd like to, a couple of different locations. Um, this would just simply add as a separate, uh, field a fund for the school, um, meals debt fund, that essentially the State Board of Education would identify the total meals debt that's outstanding by, uh, school district, and then would receive the funds that come from this account and would appropriate it out appropriately to districts based on need. There would be also a mechanism in here with all these funds that if it ever collected less than $30,000 in any, uh, I think it's two, uh, tax years that the fund would be automatically closed and this would be discontinued. And that is effectively the bill. It's pretty simple. Um, and it does have a very minor fiscal impact as far as setting up the fund. Um, and it's expected to generate at least $30,000. But again, if it doesn't, then whatever costs associated, this will not be ongoing because the fund would close. Thank you.

Thank you, Mr. Chair. Uh, I, I'm really supportive of this. I think this is long overdue. I do have some technical questions with this. Um, how would you be distributing the funds that's collected to make it more fair across the different LEAs? So what we're doing is we're relying on the State Board of Education to make those determinations. So essentially they're, they're required in here to establish, um, a reporting mechanism for, for LEAs to report to them what their meal debt, um, totals are. And then the state board, depending on the amount of money that comes in to this fund, will make, uh, um, distributions based on that. There's not a ton of, if I remember correctly, prescriptive language in here, but we're mostly just allowing the state board to determine how to appropriate that money out where it needs wherever the most need is. Do you know, on the average, what's the annual amount of school lunch debt is? It's a lot. It's in the millions. Um, so this is not intended to solve the problem, but perhaps make a dent on it. But it could provide an opportunity for those that are, um, doing tax returns to perhaps have an avenue. Sometimes it's difficult if you've ever tried to pay off a school lunch debt, like say through your business, which I have done before, sometimes it's very difficult to contact a school and find out even where to do it or how to do it. Um, and there are a lot of organizations and individuals that would like to make contributions towards this problem. It'd be nice if we just had one location where you can make that distribution and perhaps, uh, get it covered. Do you have a sense of whether this per school? I don't, no. I'm sorry. How much will you be asking on the registration? Is it $2, $3? So it's an open field, so they can put in any amount they'd like. I know of one, um, nonprofit that's already on there, and they reported that they receive over a hundred thousand dollars annually from just having that on the registration. So I think this is a great bill. Thank You. Thank you.

So currently it just sits in the fund, the State Board of Education that can maintain that fund. There is not a, um, an expectation that the fund would be taken care of through this, but if that were to happen right now, it would be a fund that would be used only for school debt, uh, meals, I should say debt. Um, so there may need to be some adjustments if that were to ever happen so that the fund could potentially be utilized in some other way, um, or to ensure that there wouldn't be any abuses of the system moving forward. But for now, this is intended to try to pick, make a dent into what is most likely an insurmountable problem at the moment.

So currently the fund is established and created. I, um, I may have to double. Would That, would that be under the treasurer's Review? I think the tax commission establishes the fund, and then the, the state board manages it, is what I believe I recall.

Mr. Chair. Do you know if this is a tax deductible donation? It is not. Okay, thank you. So it doesn't really say, okay, we're just looking at the bill itself. It just looks like it's just straight passed through, right. Collected, then they disperse it. But there may not be wording that says if it ever is paid off for some reason, then there wouldn't be, we'd have to come back and address that probably at that time. Yeah, Probably. I, I don't expect that would ever, uh, we'd get there, but it would be very happy day if we did.

Mm-hmm. I'd be happy to run a new bill to correct that. Um, if we had some sort of slush fund there to access, uh, for, uh, education meals, that'd be great. Perfect.

You, Mr. Chair. I'd like to mur move first substitute house bill. Uh, thank you. 1 48. That, uh, motion is in order.

Thank you. And thanks for your patience. I am really, really excited that I was first on the button to be able to make this motion. Thanks for running this legislation. It's long overdue and I like the creative way to solve this tricky problem.

Thank you, Mr. Chair. I'd like to make a motion to pass out favorable first substitute house bill 1 48 tax return donation amendments.

Um, thank you committee. And I'll just be really brief. I, I also agree that this is a really simple way that we could perhaps provide an avenue for taxpayers in the state to try to help tackle a, a problem. And it would allow pretty much anyone to make, uh, a dent into this in any amount, small or large, in a mechanism that's already established and has operated successfully in a lot of other ways. So there's no impact to the state on tax. 'cause again, this is not a tax deductible donation. It's just simply to facilitate the process, make it easier. And I'm open to suggestions if you, if we feel like that there's a strong chance that this may solve the problem, that we may need to adjust the language of the bill for that future situation. Just please let me know. And I'm happy to work with you. I was being optimistic, just hoping that lots of people would be generous and we'd be often like the first tier, you know, If so, I'd be ecstatic to, uh, uh, update it. Right.

What Representative MacPherson just said.

Representative MacPherson. Thank you, Mr. Chair. Great to be back in the committee again. Um, So, uh, this bill, um, originated because, um, I, like many others, um, and, and through my businesses have made contribution towards, um, school lunch debt in the past for my local schools. Um, but yet year after year that lunch debt continues to build up. Um, and it does hang on LEAs individual budgets. It allows, uh, it, it requires them to, uh, prioritize paying for those expenses and it can take money from edu. Other educational priorities, and I know there's been a number of bills have been trying to tackle this issue statewide. Um, but what I had, um, discussed with trying to put together here was something that wouldn't have a fiscal impact on the state of Utah, at least not from tax revenue. And so what this bill essentially does is establish a school meals debt relief fund that's managed by the State Board of Education. It does require LEAs to report at the end of every school year, um, the total school lunch of debt they have, and the status of those debts. And then it creates on individual and corporate tax returns, an additional checkbox. There's a section at the end of tax return that allows an individual or a corporation to make a donation to a small list of, um, charities and other organizations. These are not tax deductible, um, donation spots, but is in place that you can put there and on certain tax returns, you can even, um, on a TC 30, for example, I think you can even have your tax return, either a portion or the entirety of it designated to go to these accounts. And so, um, this, uh, also establishes in code under the same section here that, um, if this fund, and this is actually similar to the other accounts that are listed on tax returns right now, that if it generates, uh, ever less than $30,000 in three calendar, uh, consecutive years, that'll be automatically removed from the tax return form. And then it, it designates to the State Board of Education on how to distribute those funds. That indicates that they have to be used for the school, uh, debt. And that if an LEH, uh, uh, is distributed those funds, um, but doesn't use it for that purpose within 60 days, and it will be swept back into the state board's coffers. And this is just to allow, um, depending on, uh, the fund itself, these funds generally across the state, sometimes generate in the tens, sometimes in the hundreds of thousands of dollars that typically fluctuates based on media coverage and on other sort of, uh, visibility, um, to these accounts. Um, but depending on how much money goes into that account, allows the state board to prioritize that funding. If it's a small amount, it may not make sense to distribute it evenly across all the, uh, LEAs in the state, uh, where they may want to tackle, um, particular, uh, trouble, uh, locations. Or if it's a larger amount, they, they kind of have the flexibility on how to utilize those funds. That's the entirety of the bill, and I'm open to any discussion.

Uh, thank you Mr. Chair. And I wanna make a motion that we favorably recommend for substitute HB 1 48 to the Senate.

Yeah, I, you know, we're trying to get creative here in how we help and allowing people to make that choice. And it has good safeguards in terms of if you don't meet certain, um, threshold, it eliminates on its own. Uh, it's a really good opportunity to help people and sometimes people wanna help. They just dunno where to write a check. This allows people to make that choice if they, if they choose to and, and help, um, kiddos with a meal. Yeah. Thank you very much. Um, okay.

So, um, in order to include it on that section, on the back of the tax return, um, none of those are actual tax deductible right now. There, there is, as I understand at least one charitable organization in the state that does allow, um, um, contributions on a tax deductible basis for that. The hard part right now is, is that the schools don't aggregate this data. So you might be able to, uh, call your local school or possibly even a district to get information on the debt for your particular area, but if you want to try to make an impact for the entirety of the state, you really have to kind of navigate each one of those districts individually, or even the schools down to the school level individually, um, to try to, um, find out what that amount is and, and what would have to be done. So it's actually pretty difficult as it stands right now to, to try to make a donation that would be tax deductible. Um, because the current organizations out there, they don't have access to the data. So this will create that data piece that might be helpful for this long term as well, in addition to what we're doing on the tax return.

Okay. The other thing you may consider, and again, this is just tr trying to, you know, I, I mean, I like the policy. So it's question is how do we make it better? Or how, you know, how can we fund it? How can we, so I mean, the other thing is you could add a matching program, right? Where we have a, uh, matching component and we, you know, if we're talking about a 30, you know, we're not talking about big numbers here, right? And so if, if the state, you know, receives in this fund and we could, you know, match it from the income tax, you know, component, I think in that way you could create a sustainable program that, you know, may help solve your problems. Uh, the other thing you may, may also consider is a couple years ago we took, um, interest from unclaimed property and we gave that to education. And it's just being jumped in, dumped into the general, you know, and I've looked at that several times and thought maybe that's not a good idea. Um, but I'd say maybe this would be a laudable purpose. And the other part of it too, uh, you know, I'm just trying to figure out how you, you fund it, uh, and try and find ways that nobody else is already claiming. And so these are just, you know, some ideas to, to try and look at it. 'cause I think a matching component to this may help, you know, kind of move the conversation forward a little bit. 'cause that's, I think where you're going anyway is once that data is there. So, I don't know, we're not talking about big numbers here, and so it might be something that's easy to, to do that too. So anyway, appreciate the creativity. Okay.

Madam Reading Clerk First substitute House bill 1 48. Tax return donation amendments by Representative MacPherson. This bill was heard in revenue and taxation with the vote of 10 0 1 Representative Ox Sierra.

Thank you Mr. Speaker. This bill's pretty simple. Colleagues. Um, currently, uh, when you fill out a tax return at the very end of your return, there is a couple of check boxes where you can make, um, some donations if you'd like to a couple of different funds. These aren't tax deductible, uh, uh, donations, but they exist right there on the tax return phone form. What this bill does is establishes a new section, um, called the School Meals Debt Relief Fund. We'll acquire the State Board of Education to create and manage a fund for school meal debt and will allow anyone that's filing a tax return, both personal or corporate in the state of Utah to make a optional donation if they'd like. That would be directed to this particular fund to allow the school board to direct those to pay off this debt. Um, it also includes a provision like most of these funds, that if it collects less than, uh, $30,000 in any three year window, then it would automatically, um, be removed from both the tax return, uh, form, as well as, uh, would, uh, self repeal essentially. And with that, I'm open for any questions.

Thank you, Mr. Speaker for the question. So currently this allows the state board to establish the fund and manage it. The concern comes in is based on just a practical question of if, for example, the amount of funds collected, and this is very small, distributing that evenly across the entire state when we're talking millions of dollars of school debt right now, um, may not be very beneficial and it might be best for them to target those areas that might see the most need. Whereas if there is a collected a larger amount of funds, we're giving them basically the flexibility to direct where those funds go. So they might be able to establish something and rule, but this doesn't statutorily require them to distribute them in any particular way other than it gives them authority to do so. Thank You, Mr. Speaker.

Thank you, Mr. Speaker. I think the things that I think that things that can be dealt with at the local level are better than having been dealt with at the state. I've run a social media page for my community for over eight years, and in those years I've watched our community come together to help each other pay, pay off lunch debts on our own. In fact, our community helped pay off debt that it made the news that we were able to pay off over $7,000 worth. Um, giving this option as at income tax while a nice idea pulls at the heartstrings, pulls at my heartstrings. And I don't like being baited into donating something that I, um, that I don't even know why it happens. I'm not a fan of picking winners and losers of who receives a surplus or over edge of funds. And I'm also not a fan of giving rulemaking authority to anyone. How do we know that trust is there between the LEAs and their state board? And for this reason, I'm a no

Uh, yeah, just briefly. I'll just say that again. This is voluntary. This, there's already multiple categories on the tax return that you can donate to. Um, this is only allowing the state board to establish a fund right now, if you have like me, uh, tried to pay off a school debt, a lot of times it's actually difficult to do. You can contact your local school, you can contact your local district. You can contact, um, perhaps certain individuals. But as far as trying to tackle this from a statewide issue, it's pretty difficult to do. And businesses and individuals that have tried to make, um, donations in this regard do struggle with how to appropriately and properly do that. This allows this fund to be created and allows an optional donation category. Again, there's no impact on the state, doesn't cost the state anything to set this up. It's just allowing them to create a fund so that people can make their own donations to this place if they would like to. Thank you.

Thank you Mr. President Pro Temp. Um, this bill is fixing, you know, trying to fix one of our biggest issues that we have in our state, which is a lot of the student debt, um, related to school launch. Um, the sponsor has been working on this for a couple of years. We represent, we share a big portions of districts together and we know this is a big, um, issue in our districts that we, um, share those constituents. And sometimes the barrier for helping is people wanna provide, uh, assistance. They just don't know how to do it. So the, the build through the good, um, work of the, of the sponsor creates a solution by simplifying a, um, a process which adds a donation field on your state income tax return. So if you choose to, um, help and wanna help families in schools with school lunch debt, you will have that opportunity through your voluntary donation in the, uh, field that will be in your state income tax return. It's just a clean process that allows people to participate. I think it resonates well with Utah. Many people wanna help and they don't have a way to do it. This actually provides that mechanism. And without Mr. Uh, president Pram, I'm open for questions.

Um, and with that, um, Mr. President Pram call the questions.

Thank you. Um, this bill is just bringing one tool in addressing school launch debt in our state. And you know, we, it is run in the millions of dollars and there's great people in our state that want to help. And right now it's really difficult to create a me what it does to create this mechanism. So regular citizens that wanna at the end of the year as they're, um, finalizing their taxes, wanna actually provide some support to school lunch debt. What it does is through a simple process, it creates, um, the school meals debt relief fund and it will, what it does, it places, um, check off box on the individual income tax return for this specific fund, it will just be an option piece. It's just in there for individuals that wanna help, they can do that. So it's a very, um, simple bill and again, creates a help and it gives a timeline. If it doesn't collect a specific amount of money a year, it will also be removed by, um, a timeline of three years. If it's not collecting any money, at a minimum, I think $30,000. So I think it's just, again, another way of helping our LEAs and families that may be struggling with paying school lunch. That, and that is the bill. Mr. President, I'm open for questions. Thank You. Senator

Waive summ motion and call the question.