BILL ANALYSIS Ó
SB 398
Page 1
SENATE THIRD READING
SB 398 (Galgiani)
As Amended April 1, 2013
Majority vote
SENATE VOTE :36-0
GOVERNMENTAL ORGANIZATION 16-0 APPROPRIATIONS 17-0
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|Ayes:|Hall, Nestande, Bigelow, |Ayes:|Gatto, Harkey, Bigelow, |
| |Campos, Chesbro, Cooley, | |Bocanegra, Bradford, Ian |
| |Gray, Hagman, Roger | |Calderon, Campos, |
| |Hernández, Jones, | |Donnelly, Eggman, Gomez, |
| |Jones-Sawyer, Medina, | |Hall, Holden, Linder, |
| |Perea, | |Pan, Quirk, Wagner, Weber |
| |V. Manuel Pérez, Salas, | | |
| |Waldron | | |
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SUMMARY : Allows revenue raised by racing associations from
their charity racing days to be distributed to a non-profit
corporation or trust that supports recognized fairs within the
Network of California fairs.
EXISTING LAW :
1)Provides, Article IV, Section 19(b) of the Constitution of the
State of California, that the Legislature may provide for the
regulation of horse races and horse race meetings and wagering
on the results.
2)Grants the California Horse Racing Board (CHRB) the authority
to regulate the various forms of horse racing authorized in
this state.
3)Provides that each licensed racing association shall designate
three to five racing days during any one meeting (depending on
the length of the meeting), as charity days by the licensee
for the purpose of distribution of the net proceeds to
charitable beneficiaries.
4)Provides that at least 20% of the distribution from charity
day racing must be made to charities associated with the horse
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racing industry. In addition to this 20%, another 5% of the
distribution must go to a welfare fund established for the
benefit of horsemen, horsewomen and backstretch personnel, as
specified, and another 5% of the distribution must be provided
to a nonprofit corporation assisting horsemen, horsewomen and
backstretch personnel who are affected adversely as a result
of alcohol or substance abuse.
5)Requires that an additional 20% of the distribution from
charity day racing, up to a maximum of $2 million, be provided
as an endowment for a nonprofit corporation or trust which
assists disabled jockeys.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, there are no significant state costs associated with
this legislation. Each year, racing associations donate
approximately $600,000 to charity. The funding is raised
through their charity racing days. Under current law, at least
half of the proceeds from charity racing days must be
distributed to charitable groups within the horse-racing
industry.
COMMENTS :
Purpose of the bill : The author's office points out that for
more than 75 years, horse racing license fees was the primary
source of funding for fairs. In 2009, as part of the State
Budget negotiations, SB 16 X2 (Ashburn), Chapter 12, Statutes of
2009-10 Second Extraordinary Session shifted the responsibility
for funding fairs from horse racing license fees to the state
General Fund. Elimination of the license fees was intended to
help the racing industry and provide a dedicated revenue stream
from the General Fund ($32 million) to the network of fairs. In
2011, the General Fund support for fairs was eliminated as part
of a package of cuts designed to help deal with the state's
ongoing fiscal crisis. According to the author's office, this
measure is intended to give the horse racing industry the
ability to, once again, contribute to the well-being of
California's fairs.
Background : Since the early 1940's, California racing
associations have been required to conduct charity racing days.
By law, each racing association must conduct a specified portion
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of its race meeting for the benefit of charities meeting the
statutory criteria and approved by the CHRB. The law also
requires that at least 50% of the proceeds be distributed to
charitable groups within the horse-racing industry. While
recognizing the worthwhile nature of all the charitable
organizations favored by the various distributing foundations,
the CHRB encourages the foundations to exceed this minimum
percentage. According to the CHRB, charity racing day donations
in the 2011-12 Fiscal Year totaled just over $577,000.
On charity racing days, the racing association furnishes the
facilities and personnel necessary for the conduct of racing.
The income from all operations of the race meeting on charity
racing days, less deductions for actual expenses, is dedicated
to charitable purposes. The following racing associations
distributed funds last year: Los Angeles Turf Club, Hollywood
Park Racing Association, Del Mar Thoroughbred Club, and Los
Alamitos Quarter Horse Racing Association.
California's Network of Fairs includes 80 fair organizations
divided into four categories: 1) 52 DAAs - a state government
entity; 2) 23 county fairs - six county government and 17
not-for-profit organizations; 3) two citrus fruit fairs -
not-for-profit organizations; and 4) The California Exposition
and State Fair (Cal Expo) - a state agency.
Related legislation : SB 741 (Cannella) of the current
legislative session. Among other things, would delete
provisions requiring satellite wagering license fees be
deposited into a separate account in the Fair and Exposition
(F&E) Fund for specified purposes and would instead require
certain revenues paid by racing associations and fairs generated
by pari-mutuel wagering and certain revenues from live races
paid by fair racing associations as license fees be deposited
into the F&E Fund for various purposes, including, among others,
capital improvements at fairgrounds. (Pending in Assembly
Appropriations Committee)
Prior legislation : SB 1227 (Negrete McLeod) of 2012 would have
deleted an existing requirement that 1% of the total amount
handled in daily conventional and exotic pari-mutuel pools be
distributed to the F&E Fund, and instead would have required
that those funds be equally distributed as commissions and to
the horsemen and horsewomen who participated in the racing meet
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(as purses). (Held in Assembly Appropriations Committee -
Suspense File)
SB 16 X2 (Ashburn), Chapter 12, Statutes of 2009-10 Second
Extraordinary Session. Among other things, eliminated the $40
million floor on the amount the horse racing industry is
required to pay annually for support of the network of
California fairs, the CHRB, and the Kenneth L. Maddy Equine
Analytical Chemistry Laboratory at UC Davis. Other than the
supplemental 1% assessed against fair meets, it also eliminated
the license fee on horse racing wagers and provided that
beginning on July 1, 2009, and annually thereafter, $32 million
shall be appropriated from the state's General Fund and paid
into the F&E Fund for the financial support of the state's
network of fairs.
SB 1337 (Vincent), Chapter 904, Statutes of 2002. Increased,
from 20% to 40%, the amount of designated charity day racing
proceeds that must be distributed to charities associated
with the horse racing industry. The additional 20% must be
distributed through a specified nonprofit corporation or trust
as specified, to qualified disabled jockeys, as defined.
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531
FN: 0001691