BILL ANALYSIS Ó
SB 741
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Date of Hearing: August 30, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 741 (Cannella and Galgiani) - As Amended: August 19, 2013
Policy Committee: Governmental
Organization Vote: 15 - 0
Agriculture 6 - 0
Urgency: Yes State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill makes substantive changes to current law related to
the operation, oversight, and funding of the network of
California fairs. Specifically, this bill:
1)Removes the provision requiring that a portion of satellite
wagering fees be deposited into a separate account in the Fair
and Exposition Fund (F & E Fund) and instead requires that
other revenue generated by racing fairs be deposited into the
F & E Fund.
2)Permits, as determined by the Secretary of the California
Department of Food and Agriculture (CDFA), a reasonable amount
of the remaining unallocated balance in the F&E Fund be used
by the Division of Fairs and Expositions (DFE) to provide
oversight and administration of the network of California
fairs.
3)Repeals the requirement that CDFA perform annual fiscal audits
of the network of California fairs and instead requires annual
reviews by an independent accounting firm.
4)Repeals annual legislative appropriations to CDFA for
oversight and auditing of the network of California fairs and
instead allows that the funding for oversight of the fairs be
continuously appropriated.
5)States declarations and findings of the Legislature that
funding for the network of California fairs is a cooperative
venture and is anticipated to be generated from multiple
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sources, public and private. Requires fairs to work
collectively to identify and designate new funding sources to
benefit all fairs in the network.
6)Exempts the fairs from paying their share of pro rata
administrative costs to the state.
7)Exempts fairs from public contracting laws as it pertains to
certain types of contracts.
8)Provides that the title, control, and possession of all
personal property acquired, held, managed, or operated by a
District Agricultural Association (DAA) vests with the
association.
FISCAL EFFECT
1)This bill states legislative intent that a new funding source
be found for the network of fairs. In addition the bill
exempts the fairs from paying their pro rata share of state
administrative costs. Therefore, based on the $32 million
historical funding level of the fairs, if those funds are
restored in the future, the state could potentially lose over
$2.5 million in pro rata funding.
2)This bill removes the requirement that the budget for the
state network of fairs be approved by the Legislature through
the annual Budget Act and modifies and expands how the funding
can be spent.
Allowing funds deposited in the F & E fund to be used for
capital improvements for fair grounds and for the payment of
expenses incurred developing and operating revenue generating
projects such as horseracing facilities and industry training,
could result in CDFA shifting hundreds of thousands and
potentially millions of dollars per year from their current
purposes to the new purposes outlined in the bill without
legislative or Department of Finance approval and oversight.
3)This bill gives DAAs title, control and possession of all
personal property held by a DAA. Therefore, this bill shifts
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hundreds of thousands, if not millions, of dollars in state
assets, including any artwork and cultural artifacts, from the
state to the DAAs.
4)This bill continuously appropriates money credited to the F &
E Fund and allows that funding to be used for state oversight
of the fairs, among other purposes. The proposed continuous
appropriation of funds is contrary to general committee policy
to avoid continuous appropriations.
COMMENTS
1)Rationale . According to the author's office, this bill is
intended to help DAAs deal with the new reality facing the
network of California fairs as they exist today without state
funding. The author's office notes that this bill is an
attempt to start the process of moving fairs away from state
oversight and providing them with some ability to operate more
as private businesses or non-profit agencies. It is the
author's belief that this bill will give fairs the necessary
flexibility to operate more efficiently, save money and
preserve jobs.
2)Background . There are a total of 78 fairs statewide. This
network of fairs is composed of 52 DAAs, 23 county fairs, 2
citrus fruit fairs, and The California Exposition and State
Fair (Cal Expo). DAAs are state government entities that are
governed by nine-member gubernatorial appointed boards of
directors. In contrast, county fairs are county government or
not-for-profit organizations; citrus fruit fairs are
not-for-profit organizations; and Cal Expo is a state agency.
The Division of Fairs and Expositions within CDFA provides
fiscal and policy oversight for the network of California
fairs, and the Department of General Services (DGS) provides
oversight for use of state property, procurement, and services
contracts.
Prior to 2009, funding for these fairs was supported in part
by horse racing license fees. Beginning in 2009, $32 million
was continuously appropriated from the General Fund into the
F&E Fund to provide funding for the network of fairs. However,
the General Fund support was eliminated in the 2011-12 budget,
thus requiring the fairs to be self-sufficient. However, the
governor and the Legislature have both expressed an interest
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in finding a new funding source for the fairs in order to
restore the funding.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081