BILL ANALYSIS Ó
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: sb 789
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: price
VERSION: 2/22/13
Analysis by: Carrie Cornwell FISCAL: no
Hearing date: May 7, 2013
SUBJECT:
Special interest license plates: Arts Plate
DESCRIPTION:
This bill allows the California Arts Council to use specified
revenues from the sale of the arts special interest license
plate for administrative expenses.
ANALYSIS:
The California Arts Council is a state agency, and state law
charges it with:
Encouraging artistic awareness, participation, and expression.
Helping independent local groups develop their own art
programs.
Promoting the employment of artists and those skilled in
crafts in both the public and private sector.
Providing for the exhibition of artworks in public buildings
throughout California.
The Arts Council receives about $5.2 million annually in funding
with about $1.1 million coming from the state's General Fund,
$1.1 million from federal funds, and $3 million from the Arts
Plate.
AB 3632 (Polanco), Chapter 1282, Statutes of 1993 directed the
California Arts Council to participate in what was then the
state's special interest license plate program, which that bill
also created. The court has since enjoined the state from
issuing new special interest license plates under this program.
(See comment #4 below.)
The special interest license plate program law applies to all
ten of the special interest license plates issued prior to the
court order in 2004. It specifies that before the Department of
Motor Vehicles (DMV) could issue a special interest license
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plate, the Legislature had to enact a bill to authorize the
specific plate, and the sponsoring organization had to qualify
for tax-exempt status, submit a financial plan describing how it
would use the resulting revenues, and collect 7,500 paid
applications for the plate. The general special interest
license plate law also restricts the sponsoring organization to
using no more than 25 percent of the resulting revenues annually
on administrative costs, marketing, or other activities
associated with ensuring application for, or renewal of, its
special license plates.
Specific to the Arts Plate, AB 3632 set the additional fees for
that plate at $20 for issuance and $10 for renewal. A vehicle
owner pays these fees in addition to the regular fees to
register the vehicle. That bill specified that the Art Council
use the revenues generated for arts education and local arts
programming.
Later legislation increased those additional fees for the Arts
Plate. Most recently that occurred when SB 1213 (Scott),
Chapter 393, Statues of 2004, increased the additional fees from
$30 to $50 for issuance of an arts plate and from $15 to $40 for
renewal. Of the $3 million the Arts Plate generates today,
about $2 million results from these fee increases. SB 1213 also
prohibited the California Arts Council from using the revenue
generated from its fee increases for the Arts Council's general
administrative costs.
This bill repeals that prohibition, thus allowing the Arts
Council to use the portion of its license plate revenues
attributable to SB 1213's fee increases to cover the council's
administrative costs.
COMMENTS:
1.Purpose . The author introduced this bill at the request of
the California Arts Council to address issues raised in a
Department of Finance review of the Council's use of its Arts
Plate revenue. The Department of Finance asserts in its
review that the Arts Council may expend no more than 25
percent of that revenue on general administrative costs.
Historically DMV, committee staff, and others have read that
25 percent restriction to be on administrative costs
associated with the license plate program itself. The Arts
Council reports that it spends less than five percent of its
plate revenues on these costs.
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SB 1213 of 2004, which increased additional fees for the Arts
Plate, clearly prohibits the Arts Council from using the
revenues its fee increases generated for any administrative
purposes. Finance is claiming that the Council may spend only
25 percent of the pre-SB 1213 Arts Plates revenues on its
administrative expenses and that the council actually spends
more like 60 percent. The Arts Council is pursuing this bill
in order to access up to 25 percent of all revenues derived
from the Arts Plate to pay administrative expenses of the
agency. By expanding the revenues against which Finance
calculates the 25 percent, the Arts Council would address the
Department of Finance's concern about its spending Arts Plate
revenues on administrative expenses.
2.Department of Finance review . Last year after concerns arose
in press stories about the use of revenues derived from
special interest license plates, the Governor's Office
directed the Department of Finance to review all ten special
interest license plates programs. In
August 6, 2012, Finance issued its review of the Arts Plate
fund (officially known as the Graphic Design License Plate
Account). Finance found in that review that "the Council has
ensured (SB 1213 fee increase) revenues are used exclusively
for arts education and programming." It also found that the
Council exceeded the 25 percent cap on administrative expenses
from the fees for the Arts Plate that existed before SB 1213,
attributing over 60 percent of charges as administrative.
3.Non-plate administrative costs . State law governing the
special interest license plates states that an organization
participating in the program "shall not expend more than 25
percent of those funds on administrative costs, marketing, or
other promotional activities associated with encouraging
application for, or renewal of, the special license plates."
In no place does the special interest license plate statute
restrict the expenditure of the funds on other administrative
costs. It is unclear, therefore, why the Department of
Finance is asserting that there is a 25 percent cap on using
the revenues to support general administration of an agency.
In the case of the Arts Plate, its specific authorizing
statute says that the revenues from the Arts Plate shall be
used for "arts education and local arts programming."
It would appear that much of the administrative work of the
Arts Council directly supports arts education and local
programming and is therefore eligible to be paid for with Arts
Plate revenues outside of the 25 percent cap, with the
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exception of those revenues stemming from the SB 1213 fee
increases. This bill would most likely be unnecessary absent
the Department of Finance's interpretation of how broadly the
25 percent administrative costs cap applies.
4.Court ends special interest license plate program . In 2004, a
federal court decision, Women's Resource Network v. Gourley,
E.D., Cal 2004, F.Supp.2d, 2004 U.S. Dist., invalidated the
provisions of the Vehicle Code allowing an organization to
sponsor a special interest license plate provided it had met
certain conditions, including the passage of legislation
authorizing the specific plate. In the Gourley decision, the
court declared California's special interest license plate
statutes unconstitutional because they violated the First
Amendment right to freedom of speech. The court specifically
objected to the Legislature "picking and choosing" special
license plates that private organizations propose, in essence
promoting the message of some organizations while denying this
right to others.
The court did allow the ten special interest license plates
existing at the time of its decision -- including the Arts
Plate -- to remain in use and available to new applicants, as
they are today.
5.Buying the plate to support a state agency . In response to
the court decision, AB 84 (Leslie), Chapter 454, Statutes of
2006, established the current specialized license plate
program to provide a forum for government speech that promotes
California's state policies. AB 84 excludes private
organizations from seeking specialized license plates as a
forum for private speech, and thus addresses the court's
objection. Plates now created and the revenue they generate
must publicize or promote a state agency, or the official
policy, mission, or work of a state agency. Under AB 84, the
California Arts Council, a state agency, could sponsor a new
license plate and use the proceeds for "projects and programs
that promote the state agency's official policy, mission, or
work." It seems as though general administration would fit
within this restriction. As the Arts Council is a state
agency, but for the timing of its creation, this plate could
have been created pursuant to AB 84 and used to pay for
general administration.
6.Double-referral . The Rules Committee referred this bill to
both the Transportation and Housing Committee and to the
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Appropriations Committee. Therefore, if this bill passes this
committee, it will be referred to the Committee on
Appropriations even though it is designated nonfiscal.
POSITIONS: (Communicated to the committee before noon on
Wednesday, May 1,
2013.)
SUPPORT: California Arts Council (sponsor)
Californians for the Arts
San Diego Youth Symphony and Conservatory
Theatre Bay Area
OPPOSED: None received.