BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 789|
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THIRD READING
Bill No: SB 789
Author: Price (D)
Amended: As introduced
Vote: 21
SENATE TRANSPORTATION & HOUSING COMMITTEE : 9-0, 5/7/13
AYES: DeSaulnier, Gaines, Beall, Cannella, Galgiani, Hueso,
Lara, Pavley, Roth
NO VOTE RECORDED: Liu, Wyland
SENATE APPROPRIATIONS COMMITTEE : 6-0, 5/20/13
AYES: De León, Walters, Gaines, Hill, Padilla, Steinberg
NO VOTE RECORDED: Lara
SUBJECT : Special interest license plates: Arts Plates
SOURCE : California Arts Council
DIGEST : This bill allows the California Arts Council
(Council) to use specified revenues from the sale of the arts
special interest license plate for administrative expenses.
ANALYSIS : The Council is a state agency, and state law
charges it with:
1. Encouraging artistic awareness, participation, and
expression.
2. Helping independent local groups develop their own art
programs.
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3. Promoting the employment of artists and those skilled in
crafts in both the public and private sector.
4. Providing for the exhibition of artworks in public buildings
throughout California.
The 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
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.
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
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% 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 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,
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about $2 million results from these fee increases. SB 1213 also
prohibited the Council from using the revenue generated from its
fee increases for the Council's general administrative costs.
This bill repeals that prohibition, thus allowing the 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
The author introduced this bill at the request of the Council to
address issues raised in a Department of Finance (DOF) review of
the Council's use of its Arts Plate revenue. The DOF asserts in
its review that the Council may expend no more than 25% of that
revenue on general administrative costs. Historically DMV,
committee staff, and others have read that 25% restriction to be
on administrative costs associated with the license plate
program itself. The Council reports that it spends less than 5%
of its plate revenues on these costs.
SB 1213 of 2004, which increased additional fees for the Arts
Plate, clearly prohibits the Council from using the revenues its
fee increases generated for any administrative purposes. DOF is
claiming that the Council may spend only 25% of the pre-SB 1213
Arts Plates revenues on its administrative expenses and that the
Council actually spends more like 60%. The Council is pursuing
this bill in order to access up to 25% of all revenues derived
from the Arts Plate to pay administrative expenses of the
agency. By expanding the revenues against which DOF calculates
the 25%, the Council will address the DOF's concern about its
spending Arts Plate revenues on administrative expenses.
DOF 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 DOF to review all ten
special interest license plates programs. In August 6, 2012,
DOF issued its review of the Arts Plate fund (officially known
as the Graphic Design License Plate Account). DOF 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%
cap on administrative expenses from the fees for the Arts Plate
that existed before SB 1213, attributing over 60% of charges as
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administrative.
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% 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 DOF is asserting that there is a 25%
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."
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.
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
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a state agency, or the official policy, mission, or work of a
state agency. Under AB 84, the Council 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."
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
According to the Senate Appropriations Committee:
No new state costs to the Graphic Design License Plate Fund.
This bill clarifies that license plate revenues derived from a
fee increase in 2004 may be used as part of the Council's
overall administrative costs. This provides parity for the
Council license plate with other special interest license
plate programs.
SUPPORT : (Verified 5/21/13)
California Arts Council (source)
Californians for the Arts
San Diego Youth Symphony and Conservatory
Theatre Bay Area
JJA:d 5/22/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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